On 20 May 2022, the French Conseil d’État issued a significant decision in the Planet case addressing treaty-based withholding tax relief when royalties are paid through third-state intermediaries. The case concerned Article 12(2) of the 1979 France–New Zealand Tax Treaty (FRA/NZ Treaty) involving a French company paying royalties to a New Zealand entity via intermediaries in Belgium and Malta. The Conseil d’État held that the reduced 10% source tax rate under the FRA/NZ Treaty could still apply if the beneficial owner was a New Zealand resident despite third-state intermediary involvement.
This article critically examines the decision’s legal reasoning and focuses on the interpretative method under Article 31 of the Vienna Convention and the renvoi in Article 3(2) of the OECD Model. It argues that the Conseil d’État and the rapporteure publique overemphasized the OECD Commentary and teleological interpretation at the expense of the treaty’s text and context.
The article analyses Articles 10–12 of the OECD Model and its Commentaries and challenges equating ‘paid to a resident’ with ‘beneficially owned by a resident’, absent clear textual support. It concludes that treaty benefits under the tax treaty concluded between the source state and the beneficial owner’s residence state should be denied when income is routed through conduits unless explicitly allowed. This renders the Planet decision inconsistent with interpretative norms and the FRA/NZ Treaty’s renvoi clause.
Intertax