International Tax

U.S. Income Tax Treaties — The Limitation on Benefits Article (Portfolio 6855)

  • This portfolio, 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 business or other nontax connection with that country to justify entitlement to treaty benefits.

This Portfolio may be cited as Miller, 6855 T.M., U.S. Income Tax Treaties — The Limitation on Benefits Article.

Table of Contents

I. Introduction
II. Putting LOB Into Context: Other Requirements for, and Limitations on, Treaty Access
III. Overview of the LOB Article
IV. A Deeper Look at the LOB Tests
V. Some Other LOB Tests
VI. Future of the LOB Article

Michael Miller
Roberts & Holland LLP
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