Breaking the Double Tax Paradigm

Jeroen Lammers, Tarcisio Diniz Magalhaes

Publikation: Working paperForskning

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The success story of economic globalization is often linked to increased freedom of capital movement between countries, facilitated by the existence of more than three thousand bilateral tax treaties whose primary purpose is to prevent double taxation. Even the most outspoken critics of the international tax regime subscribe to the notion that double taxation is detrimental to global growth and development, yet they argue, all things considered, tax treaties might not be worth signing. Based on an extensive review of the available tax policy and economics literature, this Article shows that there is not enough normative or empirical basis for thinking that double taxation will necessarily restrict trade and capital flows, provided that the combined effective tax burden is kept at a reasonable level. At the same time, treaties provide investors with legal certainty that is key to cross-border business activity. This Article thus posits that relaxing the double tax paradigm could help improve tax treaties, with a view to preserving their role in fostering international commerce and investment. We propose a simplified tax treaty model that, by allowing a limited overlap between home- and host-state taxes, would diminish overall implementation costs, thus benefiting both taxpayers and tax administrations. The Article further demonstrates that this approach is superior to the current Pillar One proposal and other popular systemic reform suggestions in the literature, specifically the destination-based cashflow tax (DBCFT) and global formulary apportionment.
UdgiverCBS LAW. Copenhagen Business School
Antal sider52
StatusUdgivet - 2023
NavnCBS LAW Research Paper


  • Double taxation
  • Tax treaties
  • Taxation of multinationals
  • Pillar One
  • Formulary apportionment
  • Developing and low-income countries
  • Inter-nation equity