1. Introduction

Does Art. 3(2) of the tax treaties permit recourse to a ‘legal fiction’ (deeming provision) in a contracting state’s (domestic) tax law for interpreting an undefined tax treaty term? That was the central question in a recent decision of the UK Supreme Court. The UK Supreme Court reversed the decision of the Court of Appeal of England and Wales. Before that, the Court of Appeal (by majority) had reversed the decision of the Upper Tribunal, which had reversed the decision of the First Tier Tribunal. Thus, the issue has intrigued the courts at all levels.

This article analyzes in-depth (with the author’s critical comments) the above-mentioned judicial precedents.