Tax Convention Law and Legal Definition

A tax convention means a bilateral agreement made between two governments to resolve issues involving double taxation and tax evasion by the resident of one country earning income from another country. It helps in determining the amount of tax that a country can apply to a taxpayer's income and wealth.

The following is an example of a federal statute defining the term tax convention. According to 26 USCS § 6105 (c)(2), the term "tax convention" means:

(A) any income tax or gift and estate tax convention; or

(B) any other convention or bilateral agreement (including multilateral conventions and agreements) providing for the avoidance of double taxation, the prevention of fiscal evasion, nondiscrimination with respect to taxes, the exchange of tax relevant information with the United States, or mutual assistance in tax matters.