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Multilateral tax treaty

On Thursday 16 November, Dirk Broekhuijsen will defend his doctoral thesis entitled ‘A multilateral tax treaty: designing an instrument to modernise international tax law’. The defence will take place at 15.00 hrs at the Academy Building of Leiden University. The supervisors are Professor F.A. Engelen and Professor S.C.W. Douma.

Dirk Broekhuijsen
Dirk Broekhuijsen

In his doctoral thesis, Broekhuijsen addresses the legal and political aspects of a multilateral tax treaty. Broekhuijsen: ‘International tax law consists of bilateral tax treaties. These tax treaties are outdated. But it has proved hard to modernise them in a quick and comprehensive fashion.’ A multilateral tax treaty may be used to address these concerns.

Broekhuijsen: ‘Regrettably, a multilateral tax treaty will not provide a quick fix for most of international tax law’s modern collective action problems, such as tax competition and tax arbitrage. But a multilateral tax treaty may be used to facilitate inter-state discussions about such problems. Moreover, the prospect of a multilateral agreement is indeed a quicker tax treaty amendment process.' A procedural framework treaty similar to the one Broekhuijsen proposes is used to facilitate cooperation in the area of climate change.

The OECD Multilateral Instrument

Broekhuijsen uses his legal and analytical framework to evaluate and explain the recently adopted text of the OECD Multilateral Instrument, a multilateral tax treaty against tax avoidance developed by the OECD. Broekhuijsen: ‘The Multilateral Instrument does not fully prevent tax avoidance. But classifying the Instrument’s substantive tax measures as “flawed”, is fruitless. What may be expected of a multilateral treaty for the area of international taxation, should not be overestimated.’ Nevertheless, Broekhuijsen is less appreciative of the Multilateral Instrument’s procedural elements. ‘The OECD Multilateral Instrument lacks a robust forum for continuous discussions,' he says. Such a forum for discussions would enable fairer and more integrative forms of cooperation in international taxation. A more structural solution to cooperation in international taxation would, in other words, have been welcome. By focusing on the short term, the OECD Multilateral Instrument is above all an ‘instrument’ to implement the outcomes of the Base Erosion and Profit Sharing (BEPS) Project. Nevertheless, Broekhuijsen says: ‘There are a lot of reasons to be excited about this new Instrument. Its adoption marks a development in international tax law that few would have thought possible a few years ago.’

About the author

Dirk (D.M.) Broekhuijsen worked from September 2011 to April 2017 as a PhD fellow and lecturer at Leiden University’s Institute for Tax Law and Economics, teaching in LLB and LLM courses. In 2014, he was Ernst Mach Visiting Research Scholar at the Institute for Austrian and International Tax Law at the Wirtschaftsuniversität Wien. In that same year, he won the IFA President YIN Scientific Award for his article ‘A modern understanding of article 31(3)(c) VCLT: A new haunt for the Commentaries to the OECD Model?’. As of April 2017, Broekhuijsen  works for the Dutch Tax Authorities and the Dutch Ministry of Finance.

Professor S.C.W. Douma

"Dirk has demonstrated empirically that it is impossible to implement systematic changes in the international tax system using the official explanatory notes to tax treaties, as the Organisation for Economic Co-operation and Development (OECD) has attempted up to now. This was the reason for Dirk to search for a solution, partly in light of society’s call for more justice in international tax matters. His approached the issue on the one hand by carrying out research into political theory formation in the field of international relations and on the other hand researching comparable issues in general public international law. In the end, Dirk was able to formulate an international tax framework treaty, in which States can work in a structured manner towards the modernisation of tax regulations. A very exciting, important and well substantiated idea, with which I congratulate Dirk most warmly. I am sure that the results of Dirk’s research will be received with great interest by the OECD and the United Nations."

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