argomento: News del mese - Diritto Internazionale e Comunitario

Articoli Correlati: OECD - residence - establishment

In April 2020, the OECD published an updated guide on the impact of COVID-19 on double taxation treaties (DTT), with particular reference to tax residence, tie breaker rules and permanent establishments. With reference to the tax residence of companies, the guide states that it is unlikely that the pandemic will result in a change in the tax residence of a company under a double taxation treaty. In fact, the temporary displacement of the directors of a company is an extraordinary and temporary situation in response to the pandemic. In the case of dual residency, the guidelines confirm that it is unlikely that the location of a company, under a tie-breaker rule contained in a DTT, will vary in the event that the persons involved in the management and decision-making process of a company cannot travel due to restrictive measures imposed by at least one of the competent jurisdictions to deal with the pandemic. Regarding the residence of individuals, the guide identifies two situations that could lead to the change of a person’s tax residence during the pandemic. First, an individual may be temporarily away from their home jurisdiction (for example, on vacation or to perform a temporary employment assignment) and, being unable to re-enter, become a tax resident in the other jurisdiction under the legislation. national. The guide notes that, under the tie-breaker rules contained in the relevant double taxation treaty, the individual is unlikely to be considered resident in the other jurisdiction. The second situation is that in which an individual works in a country and obtains residence there, but then returns temporarily to the country of origin, losing his residence in the jurisdiction in which he works or regaining residence in the country of origin. Also in this case, the person will hardly regain the status of resident due to the fact that he is “temporarily and exceptionally in the previous jurisdiction of origin”. Even if residency were regained under the domestic law of that jurisdiction, it is unlikely that, under a DTT, an individual would be considered resident due to such temporary relocation if his connection to the current jurisdiction in which he works is stronger than the connection with the previous jurisdiction of origin.