News / UK Government Amendment to DTA Residence Articles
According to UK’s tax authority HM Revenue and Customs (HMRC), changes will be made to the view of interpretation of the company residence articles in 16 double taxation agreements (DTAs).

Further to the review of an agreement with Jersey on the interpretation of the company residence tie-breaker article, HMRC stated that it now takes the view that the better interpretation of the equivalent provisions in those DTAs is that they include a tie-breaker clause to decide where a company is to be treated as resident for the purposes of the affected DTAs.

Previously the HMRC’s view was that a dual-resident company (resident in the UK by virtue of incorporation and resident in other jurisdiction in terms of management and control), was not a resident of either jurisdiction and was therefore outside the scope of the DTA.
According to the new change, HMRC states that for the purposes of applying the affected DTAs, the relevant provisions should now be read as treating a dual-resident company as a resident of the jurisdiction in which it is managed and controlled, whereas in cases that the company is managed and controlled both in the UK and the other jurisdiction, it will remain outside the scope.

The change of view will affect the UK’s DTAs with the following jurisdictions: Antigua, Belize, Brunei, Burma, Greece, Grenada, Guernsey, Isle of Man, Jersey, Kiribati, Malawi, Montserrat, St Kitts and Nevis, Sierra Leone, the Solomon Islands and Tuvalu.

Source: Robert Lee, 1 December 2015


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