Are LOB Provisions in Double Tax Conventions Contrary to EC Treaty Freedoms?

Double tax conventions (DTCs) generally include clauses that refuse to residents of a contracting state the right to claim treaty benefits with respect to income derived from the other contracting state if they are not 'beneficial owners' of the income. 'Limitation-on-Benefits' (LOB) clauses in DTCs, particularly where the United States is a contracting state, provide objective criteria for limiting taxpayer rights under DTCs. LOB clauses, which are designed to prevent treaty abuse, may, however, be in violation of the Treaty Establishing the European Community (EC Treaty) freedoms. This article explores the issue of the compatibility of LOB with EC freedoms of establishment and movement of capital. [ABSTRACT FROM AUTHOR]