An assessment was issued where the tax administration denied the application treaty benefits, understanding that the dividends distributed by X S.A. a company with tax residence in Panama, to its shareholder NL Corp in the Netherlands did not qualify for the reduced rate provided for in the DTA because the latter was not the “beneficial owner” of the dividends.
Judgement of the Tax Court
The court upheld the assessment.
“By virtue of the above, we consider that the possibility that the tax administration of the State in which the benefits of the Convention are requested, in this case Panama, also depends on the analysis of the body of evidence, and it is not apparent that the taxpayer has provided, in a timely manner, documentation related to the elements described above, therefore, we do not consider the request to be admissible, as it has not been duly supported by the taxpayer.
By virtue of the foregoing considerations, and the fact that access to the benefits provided for in Article 10(a)(iii)(3) of the Panama-Netherlands Convention depends on compliance with all the requirements detailed in the preceding paragraphs, which have only been partially met, revealing significant evidentiary deficiencies, which lead us to conclude that there are insufficient reasons to revoke the contested acts, in light of the regulations, doctrine and case law analysed in this resolution.”Panama BO Exp- 215-18