Treaty Shopping Articles

What Is the Limitation on Benefits (LOB) Clause in a US Tax Treaty?

A Limitation on Benefits (LOB) article restricts access to specified treaty benefits to prevent treaty shopping: routing income through a treaty-country person chiefly to obtain benefits intended for qualifying residents. Treaty residence is the starting point. Where LOB applies, the claimant must satisfy an available treaty-specific route, such as qualified-person status, an income-linked business test or competent-authority relief. Other treaty conditions still apply.