Is the treaty text I downloaded the one actually in force?
Not necessarily, and this is the first thing to check rather than the last. The multilateral instrument rewrote parts of hundreds of existing treaties at once, so a copy of the original bilateral text can be accurate as published and still not describe the article in force between those two countries today. What you need is the modified text, read together with the reservations each country made, because those reservations decide which of the instrument's provisions actually took effect for that particular pair. Reading the article you relied on in its modified form is now part of taking any treaty position.
What is the principal-purpose test actually looking for?
It denies a benefit where obtaining that benefit was a principal purpose of an arrangement, unless granting it accords with the object and purpose of the treaty. Two things follow. It is about purpose rather than form, so an arrangement that is properly constituted can still fall within it. And the exception is a real one: a benefit consistent with what the treaty is for can survive the test. That makes the contemporaneous commercial reasons for an arrangement the substance of the analysis, not supporting colour added later.
Does the multilateral instrument apply to my treaty?
It depends on what both countries did, and that is checkable rather than guessable. The instrument modified parts of many treaties simultaneously, but each country made its own reservations, and a provision only bites for a given treaty where both sides' positions allow it. So the question is never whether the instrument exists; it is which of its provisions took effect for your pair of countries, and from when. Establish that before relying on an article, because the answer differs from one treaty to the next even for the same country.
Can a treaty benefit be refused even if our structure is lawful?
Yes. The principal-purpose test is not a test of legality. It asks whether obtaining the benefit was a principal purpose of the arrangement, and it denies the benefit where it was, unless granting it accords with the treaty's object. A structure can be properly incorporated, properly resident and properly disclosed and still be caught, because none of those things speaks to purpose. That is the shift people have not absorbed: a technically sound claim now needs a reason for the arrangement that is independent of the treaty result.
How do I show the treaty benefit was not a principal purpose?
With the reasons that existed at the time, recorded at the time. The test looks at the purposes of an arrangement, so the useful evidence is the commercial material generated when it was put in place: board papers, financing rationale, operational plans, correspondence with counterparties. An explanation composed once a benefit has been questioned is answering the wrong question and tends to read that way. Where the arrangement is still being designed, this is straightforward to get right, and it is far cheaper than reconstructing intent afterwards.
Where do the reservations each country made matter in practice?
They decide what you are actually reading. Two countries can both be party to the instrument and still end up with different provisions in force across their respective treaties, because each entered its own reservations. So the modified text for one treaty is not a guide to another, even where one country is common to both. In practice that means checking the position for the specific pair before applying a rate or an article, and recording which version of the text the position was taken under.
How do I claim a tax treaty benefit?
Three things usually have to line up: proof you are resident of the treaty country, a declaration to whoever is paying you so they withhold at the treaty rate rather than the statutory one, and the claim itself on the return of the country giving relief. Do it before the payment where a reduced rate is available — claimed afterwards it becomes a refund exercise instead, which takes far longer. See certificates of residency.
Is my foreign pension taxable?
Usually in at least one country, and which one depends on the treaty article covering pensions — some give the taxing right to the country paying it, others to where you live, and several treat government service pensions differently again. Withholding at source is common and often reducible by treaty, with an elective return recovering an over-deduction. See the pensions article.
