Principal purpose test denies treaty benefits when obtaining those benefits was a primary purpose of the arrangement, subject to object-and-purpose exception.

A Principal Purpose Test replaces the Convention's Limitation of Benefits rule: a treaty benefit shall not be granted if it is reasonable to conclude that obtaining the benefit was one of the principal purposes of any arrangement or transaction producing the benefit, unless granting the benefit accords with the object and purpose of the relevant treaty provisions. Where benefits are denied under this rule, the competent authority denying benefits shall notify the competent authority of the resident's State. Parties record a divergence on the textual placement and scope of this replacement in synthesised treaty texts.

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