Commentary

D4.106 The 'tie-breaker' rule

Corporate tax
Corporate tax | Commentary

D4.106 The 'tie-breaker' rule

Corporate tax | Commentary

D4.106 The 'tie-breaker' rule

The 'tie-breaker' rule applies to a company which would otherwise be treated as resident in the UK under the incorporation rule or the case law rule, but is treated as resident in another country and not in the UK for the purposes of a double tax agreement1.

Such companies are called 'treaty non-resident' (TNR) companies. The purpose of this rule is to ensure as far as is possible that no mismatch arises between a company's residence status under domestic law and the relevant treaty, which could otherwise lead to double taxation. The rule does not apply where treaty residence would be awarded to the UK (because then there would be no mismatch between domestic law and the treaty), or where the treaty does not contain a tie-breaker clause.

HMRC's view is that all of the UK's DTAs include a residence tie-breaker clause for companies2. A company does not have to make a claim under a

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