The Assistance of Examples of the Application of the Principal Purpose Test Listed in the Commentary on Article 29(9) of the OECD Model in Establishing the Legal Certainty of the Test

In this article, the author discusses the assistance of examples of the application of the principal purpose test (PPT) listed in the Commentary on Article 29(9) of the OECD Model (2017) in establishing the legal certainty of the test. To demonstrate the weak elements of the PPT, the author analyses the connection of the principle of legal certainty with the application of the PPT through the main characteristics of the principle of legal certainty, its sources, and notable instances of its application under the case law of the European Union. In this context, to suggest ways on how to improve the mechanism of the PPT, the author dives into the characteristics of the test. The author focuses mainly on the analysis and grouping of the 13 examples related to the application of the PPT listed in the Commentary on Article 29(9) and the explanation how the examples related to the conduit arrangement may also be useful for the application of the PPT. Finally, the author concludes that the examples developed by the OECD do not assist in establishing the legal certainty of the PPT. To that end, the author tries to find the solution on how to enhance the legal certainty regarding application of the PPT by analysing the importance of the economic substance, by suggesting the author’s own, clearer examples, and by introducing a set of long-term and short-term measures that can be undertaken to guarantee the legal certainty of the PPT.