Music. I've always liked to shop, not at the mall, but shop for treaty benefits. You could set up great international structures that could drastically reduce your withholding taxes on just about anything. The best things were interest, dividends, and royalties. With the right structure and the right treaties, you could get to zero. This sort of treaty shopping isn't illegal or even unusual, but the IRS hates it, even if it doesn't involve US taxes. Congress enacted several things to reduce treaty shopping in cases that do involve US tax. There are limits in the branch profits tax to make sure it's paid by foreign corporations owned by non-treaty country shareholders. For outbound payments, there are the conduit financing rules under Section 7701(l). There are also some cases and rulings that treat back-to-back loan arrangements as shams to be disregarded. All treaties adopted in the last twenty years have a provision that prevents or limits treaty shopping. It cuts both ways though, and sometimes it has odd side effects. These limitation of benefits articles, as they're called, put some significant limits on the definition of resident under the treaty. They usually don't have much effect on individuals or on corporations owned by individuals resident in one of the treaty countries. They don't have much effect on treaty country corporations owned by treaty country public companies. There's not much treaty shopping going on there. The limitation on benefits articles do have a major impact on other corporations though. Here's an example structure that is squarely hit by most LOB articles: a no-man individual owns a Swiss corporation, which owns a US subsidiary. Payments by the US sub to the Swiss corporation don't qualify for any reduction of withholding tax under the Swiss treaty. There are two key aspects of most of the LOB articles....