Fowler Case: domestic law and treaty interpretation

Abstract

Accordingly, this article aims at briefly discussing a highly complex, controversial issue in international taxation: the resort to domestic law in the interpretation of tax treaties. For this purpose, this article elects as object of analysis the Fowler Case, recently judged by the Supreme Court of the United Kingdom. The issue at dispute in the case is whether Mr. Fowler’s income should fall within article 7 (business profits) or article 14 (employment income) of the double taxation convention between the UK and South Africa (“UK-South Africa DTC”). Since Prof. Rainer Prokisch has very much contributed not only to the study of tax treaty interpretation but also specifically to that of employment income taxation as the responsible for article 15 of the OECD Model in Vogel’s Commentaries, the discussion of the Fowler Case somewhat celebrates the particular importance of Prof. Rainer Prokisch to these two research fields. Without intending to “solve” the Fowler Case in place of the UK Supreme Court, this article intends to sustain the primacy of the autonomous interpretation of treaty concepts, showing that the UK Supreme Court did not take this approach when ruling the Fowler Case. First, this article (1) presents the Fowler Case along very general lines. It focuses on the decision of the case by the UK Supreme Court. Lower courts decisions on the case are not considered. Second, this paper (2) articulates the authors’ fundamental position regarding the interpretation of tax treaties. Lastly, this article (3) criticizes the interpretative approach undertaken by the UK Supreme Court in view of the authors’ position.