International Tax

U.S. Income Tax Treaties — The Limitation on Benefits Article (Portfolio 936)

  • U.S. Income Tax Treaties – The Limitation on Benefits Article discusses in detail the limitation on benefits (LOB) article of U.S. income tax treaties.


The United States is a party to numerous income tax treaties with foreign countries. In order to enjoy the benefits of a U.S. income tax treaty, a person must satisfy a number of requirements, including residence in one of the treaty countries. Residence alone, however, is not sufficient. The United States is very concerned about “treaty shopping,” and thus most U.S. income tax treaties, including all modern U.S. income tax treaties, include a “LOB” article. The purpose of the LOB article is to determine whether a resident of a treaty country has a sufficient connection with that country to justify entitlement to treaty benefits.

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Table of Contents

I. Introduction
II. The LOB Article in the 2006 U.S. Model Treaty
III. Avoiding Disqualification Under an LOB Article
IV. Limitations Outside of a Treaty
V. History of the LOB Article in U.S. Income Tax Treaties
VI. Future of the LOB Article

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Howard Levine
Roberts and Holland LLP
Michael Miller
Roberts & Holland LLP