Tax planning for indirect offshore transfers of real estate assets: treaty shopping and investment arbitration

Abstract

It is not new for multinational groups to use indirect offshore transfers of real estate assets as part of their controversial tax planning, taking advantage of source States' difficulties in taxing the capital gains arising from such transactions. More recently, however, taxpayers have included Bilateral Investment Treaties in their tax planning strategy to strengthen their position vis-à-vis the source State and to facilitate tax avoidance by including these legal instruments in their treaty shopping operations, which traditionally involved only double taxation treaties.