The Relevance and Role of Economic Substance under the First Test of the PPT

The aim of this paper is to determine the relevance and role of economic substance of an interposed company in a treaty shopping situation, for purposes of the first of two tests foreseen by the Principal Purpose Test (article 29(9) OECD Model). Economic substance refers to the objective factors (e.g. employees, personnel, functions and risks) that indicate that a company carries out economic activities.