Tax jurisdiction of the state: correlation of national legislation and international agreements for the avoidance of double taxation

This article investigates the theoretical and practical aspects of determining a state’s tax jurisdiction within the context of contemporary globalization processes and international tax relations. The relevance of the topic is driven by the increasing intensity of cross-border economic transactions, which gives rise to complex legal relationships where the classic understanding of state sovereignty, closely tied to physical territory, proves to be insufficient. The author analyzes the approaches of Ukrainian scholars to the definition of «jurisdiction» and identifies an internal contradiction when applying them to the tax sphere, which inherently extends beyond state borders. The purpose of the article is to refine the theoretical approach to defining tax jurisdiction and to develop a practical model for its application under the conditions of double taxation treaties. To achieve this goal, general scientific and special methods of cognition were used, including systemic, comparative-legal, and historical-legal analysis. The paper substantiates that tax jurisdiction should be defined not through territorial boundaries but through the concept of economic allegiance of a person to a state. This allegiance is realized through two fundamental principles: the residence principle, which extends jurisdiction to all residents of a state with respect to their worldwide income, and the source principle, which extends jurisdiction to non-residents with respect to income derived from the territory of the state. It is confirmed that this approach is implemented in the Tax Code of Ukraine, corresponds to the legislation of leading foreign countries (USA, UK, Germany), and has a deep historical foundation laid in the works of the Financial Committee of the League of Nations in the 1920s. Special attention is given to the problem of international legal double taxation as an inevitable consequence of the overlap of tax jurisdictions of different states. It is proven that the primary instrument for its resolution is bilateral treaties, which establish mechanisms for the voluntary self-limitation of states’ tax sovereignty. The scientific novelty of the article lies in the development and substantiation of a two-level algorithm for applying tax legislation in the presence of an international treaty. At the first level, the base tax liability is determined solely based on national legislation. At the second level, the international treaty acts as a corrective mechanism that limits, modifies, or cancels the state’s taxing rights determined at the first level. This algorithm systematizes law enforcement practice and ensures legal certainty for all participants in legal relations.