3.3.2 The OECD level

The OECD IHTMTC has undoubtedly become a valuable tool for dealing with the problems of cross-border inheritances and donations. The model primarily aims at resolving the double taxation problem of cross-border inheritances and donations due to the parallel and uncoordinated application of the states’ inheritance and gift tax legislations. It also aims at the avoidance of double non-taxation arising from the application of an inheritance and gift tax treaty or the domestic law classifications. It further includes a non-discrimination provision and some provisions that facilitate the administration of the cross-border inheritances and donations by the tax authorities of each Contracting State.

It follows that the OECD level is a suitable level for addressing the problems of cross-border inheritances and donations. It could be argued, however, that certain provisions of the OECD IHTMTC and its Commentary can be improved, having regard to the objectives of the model and the principles reflected in its Commentary. In my view, a model that is in line with (some of) these principles seems to address the problems of cross-border inheritances and donations in a more comprehensible manner (considering the objectives of the OECD IHTMTC) than a model that is not in line with (some of) these principles.

Furthermore, the low number of such treaties demonstrates, in my view, that the OECD member countries have not endorsed the model as readily as they did the income and capital tax model. A quick search of the IBFD online research platform (January 2020) reveals that at the time of the writing of this study there are only 87 inheritance tax treaties in force worldwide (some of which are also applicable also to gift taxes) contrary to 4060 income and capital tax treaties (a figure which changes regularly).1