Article 21 of the OECD Model Convention: Past, Present, and Future

Abstract

This paper describes the past, present, and future of Article 21 of the Organization for Economic Cooperation and Development (OECD) Model Convention (MC), also known as the ‘Other Income’ Article. Special attention is paid to the underlying principle of this Article and what income is covered. The League of Nations began dealing with double taxation in the early 1920s. In its draft conventions, there was no Other Income Article in its modern structure. However, the correlation of different articles in effect was no different than the modern Article 21(1) OECD MC. The Organization for European Economic Cooperation (OEEC) and OECD, which succeeded the League of Nations in its research on double taxation, were the first to adopt an Other Income Article in its modern structure. There was still some uncertainty in the beginning, however, as to what income was covered. Today, the OECD MC is still the most widely followed model in negotiations on double taxation conventions (DTCs). There are, however,some deviations from many articles. The income covered by the Other Income Article today seems quite clear. The underlying principle, which was the same from the very beginning of defining principles of international taxation, now possibly will undergo a change influenced by other MCs and current treaty practices.