Canadian Supreme Court Endorses Treaty Shopping Arrangement

Our previous article[i] was written in anticipation of the ruling from the Supreme Court of Canada (the SCC) in Canada v. Alta Energy Luxembourg S.A.R.L.[ii] (Alta Energy). Six of the nine SCC justices in Alta Energy held that the statutory general anti-avoidance rule (GAAR) did not deny treaty benefits under the Canada-Luxembourg Tax Treaty (Treaty). This milestone decision promises to be a leading authority in treaty shopping jurisprudence both within Canada and internationally. Further, the SCC’s decision provides important commentary on both the GAAR and the interpretation of tax treaties.

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