The following Tax guidance note provides comprehensive and up to date legal information covering:
Each jurisdiction applies its own domestic law test to determine when a company is treated as tax resident there. A company can be resident in more than one jurisdiction, and potentially taxed more than once, on the same profits. For instance, a company incorporated outside the UK whose board of directors takes all its decisions in the UK could be treated as tax resident in both the other jurisdiction (since it is incorporated there) and the UK (since the board takes its decisions in the UK). This is where a double tax treaty, and in particular, a residence tie breaker clause, can help.
A residence tie breaker is only relevant if:
a company is tax resident in two jurisdictions under their domestic rules, and
there is a double tax treaty containing a tie breaker between those two jurisdictions
If there is no relevant double tax treaty, dual residence persists. Dual residence may have adverse effects on the availability of certain tax reliefs, as is the case for dual resident investing companies that are tax resident in the UK and another jurisdiction. For further detail, see Practice Note: Dual resident investing companies (DRICs). A dual resident company can, of course, change its circumstances to ensure that it is only tax resident in one jurisdiction. Before making any such change, it is important to consider
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234