On 29 February 2016, the Organisation for Economic Cooperation and Development (OECD) released for public comment a discussion draft that includes proposals for changes to the OECD Model Tax Convention concerning the treaty residence of pension funds.
The discussion draft includes changes to Articles 3 and 4 of the OECD Model Tax Convention, and to the Commentary on these Articles, that will ensure that a pension fund is considered to be a resident of the State in which it is constituted for the purposes of tax treaties.
The issue of whether a pension fund should be treated as a resident for treaty purposes was incorporated into the OECD’s Base Erosion and Profit Shifting (BEPS) Project, in the work on Action 6. The final report on Action 6, released on 5 October 2015, suggested that recognised pension funds should be treated as residents for treaty purposes, and acknowledged that additional work would be required in the first part of 2016 to define a 'recognised pension fund'.
The final report also suggested that certain criteria would need to be met in order to be considered a ‘recognised pension fund’, including that the fund must be:
The OECD deadline for comments on the discussion draft is 1 April 2016.