7.3.5 Reorganization clauses

Similar to the MD, rules to remove tax obstacles with respect to reorganizations could be introduced on a tax treaty level. The main problems that are not always solved in the current framework are timing mismatches and differences in characterization. A reorganization clause in the OECD MTC would contribute to the flexibility of multinational entities and would lead to a more neutral tax system. A provision that fully restricts the source state from taxation seems a desirable solution, as it would eliminate double taxation without providing tax avoidance possibilities. For the source state the deferred claim on the underlying assets remains available.