International taxation-*Model Tax Conventions Series* -KP 4 (10-07-2020)

#  *Chapter II: Definitions –Resident*

# *Resident*

  • *Resident of either CS* -A taxpayer has to demonstrate that *he is resident of one or both CSs to be able to gain access to a tax treaty and avail benefits thereunder*.
  • *Meaning of “Resident of a Contracting State”*  Any person who, under the laws of that State, is liable to tax therein by reason of his:



*Any other similar criterion*

*Place of Management*

*Place of incorporation(POI)*

This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that state or capital situated therein.

Note: OECD MC does not contain reference to place of incorporation

  • *Tie-breaker Rule*

*In case of Individuals*

Where an individual is a resident of both CSs as per domestic tax laws of that CS, then, his residential status shall be determined by applying the *Tie-Breaker Rule* in the following sequence:

*Permanent Home*

*Centre of Vital Interests*

*Habitual abode*


*Mutual agreement between Competent Authorities of the CSs*

*In case of Companies*

-Dual residence arises where one CS attaches importance to POI and the other CS to the POEM

-The tie-breaker test involves a case by case approach considering the no. of tax avoidance cases involving dual resident Cos.

-Request has to be mad by the tax payer through Article 25(MAP)

-Competent Authorities will rely on range of factors to resolve the question of dual residency.

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