Anson - English Court of Appeal finds that an entity (here, an LLC) generally will not be fiscally transparent if its members have no proprietary interest in its assets

The English Court of Appeal has found that a U.S. LLC is not fiscally transparent, so that a distribution of its profits to a UK resident represented a source of income which was distinct from the profits when they were earned by the LLC in the first instance.  Accordingly, there was no double taxation of the same income when the US taxed the individual's share of the profits of the LLC (which was fiscally transparent for US purposes), and the UK taxed the distribution of those profits: hence, no relief from double taxation under the UK-US Convention.

Although the finding that an LLC is fiscally opaque is not startling from a Canadian perspective (see 25 October 1994 T.I. 941750, and see also TD Securities), the Court's approach may have some bearing in sorting out whether other foreign entities are partnerships (or trusts), or corporations, from a Canadian perspective.  Lady Justice Arden emphasized the question as to whether the members of the entity have any proprietary right to its assets; and, on the other hand, she indicated that a separate legal personality for the entity in question (e.g., a Scottish partnership) would not necessarily mean that it was not fiscally transparent.

Neal Armstrong.  Summary of HMRC v. Anson, [2013] EWCA Civ 63 under Treaties - Art. 24.  See also Memec and Sommerer.