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


Michael Miller


Roberts & Holland LLP

At a glance

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


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.

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