In a previous post, Maarten van der Weijden indicated that a decision by the Amsterdam Court of Appeal on 22 December 2020 set the stage for a principled decision by the Dutch Supreme Court on how to deal with changes to provisions of the OECD model tax convention and OECD commentaries published after a treaty between the Netherlands and a third state is concluded.
While the Supreme Court has not yet decided that particular case, a decision on 14 October 2022 in another case clarifies the limits of using later OECD commentaries in interpreting earlier Dutch tax treaties on the basis of the rules of interpretation in the Vienna Convention 1969. The Dutch Supreme Court's approach in the decision of 14 October 2022 can be summarised as follows:
- Later OECD commentaries can, at best, have the status of a supplementary means of interpretation within the meaning of Article 32 of the Vienna Convention. As such, later OECD commentaries can be described as being of "limited relevance".
- These later commentaries are of "limited relevance" if the text of the Dutch tax treaty provision in question follows the wording of the relevant OECD model provision as closely as possible and the later OECD commentaries further elaborate on or clarify the relevant provision of the (earlier) OECD model or earlier OECD commentary.
- Later OECD commentaries have "no relevance" if they go beyond clarifying a relevant provision of the OECD model or earlier OECD commentaries.
This approach means that the Supreme Court attaches less importance to later OECD commentaries than paragraphs 33 to 36.1 of the introduction to the OECD commentaries (2017). Based on these paragraphs, later changes to the OECD commentaries would be of "no relevance" only if they directly resulted from "substantive" amendments to OECD model provisions (para. 35). In its decision, the Supreme Court adopts a different, broader criterion for determining whether changes to the OECD commentaries are of no relevance: changes are of "no relevance" if they go beyond elaborating on or clarifying a provision of the OECD model or related commentaries. The Supreme Court's criterion thus entails that changes to the OECD commentaries that do not directly result from "substantive" amendments to OECD model provisions can also be of "no relevance" when interpreting Dutch tax treaties .
The 14 October 2022 decision further indicates that the Dutch Supreme Court is not adopting the OECD's position that changes to the OECD commentaries apply to the interpretation and application of tax treaties in the same way as earlier OECD commentaries, because these changes should be regarded as reflecting the consensus of the OECD member countries "as to the proper interpretation of existing provisions and their application to specific situations" (para. 35). Instead, it decided that the status of later OECD commentaries is limited to that of a supplementary means of interpretation within the meaning of Article 32 of the Vienna Convention. In attaching only limited importance to later OECD commentaries, the Supreme Court explicitly ensures that the scope of obligations arising from Dutch tax treaties cannot be amended without the Dutch Parliament's consent.
The decision shows that a distinction must be drawn between earlier and later OECD commentaries when interpreting Dutch tax treaties. Earlier OECD commentaries can – effectively – be decisive for the purposes of interpreting a Dutch tax treaty provision if the wording of the provision follows the wording of the relevant OECD model provision as closely as possible (in that case, the earlier OECD commentaries would be "of great relevance"). By contrast, later OECD commentaries only have the status of a supplementary means of interpretation within the meaning of Article 32 of the Vienna Convention. This entails that the importance of those commentaries depends on the outcome of an autonomous interpretation on the basis of Article 31 of the Vienna Convention. If that outcome is that the meaning of a treaty provision is neither ambiguous nor obscure and does not lead to a result which is manifestly absurd or unreasonable, later OECD commentaries can only confirm this autonomous interpretation and could not determine the meaning of the treaty provision. However, if an autonomous interpretation on the basis of Article 31 does leave the meaning of a treaty provision ambiguous or obscure or would lead to a result which is manifestly absurd or unreasonable, it follows from Article 32 that later OECD commentaries could determine the meaning of that treaty provision.