Do states have to accept Tax Residence Certificates of another country if they have a DTA with each other??

[thedark]

Hi, I am looking for an answer if other states have to accecpt TRCs if they have a DTA with each other?

For example: I live in a country which does not create TRCs with a special remark.

Spain is asking for:

This certificate must expressly state that the taxpayer is a resident within the meaning of the agreement.
Click to expand...

Here is an example how this looks:

Any experience on that topic?

Last edited: Apr 6, 2023

 

[Don]

They should accept it yeah.
Then its up to the "competent︀ authority procedures" to collaborate and dispute it if needed.

 

[thedark]

Are you sure about that? I am looking for real-world experience. Thanks anyway 😉

 

[Fred]

real world experience answer is: case by case.

We see UAE sometimes‍ not issuing a TRC without further comments despite all requirements full filled.

No state has⁠ to if they don't want - it's then a thing of a court to justice.⁤

 

[Don]

In most cases tax residency certificates should include this special remark. Otherwise‍ its less likely to help you to avoid dual tax residency.
Its a question whether⁠ the tax residency certificate is issued based on domestic legislation or an international treaty. If⁤ it has reference to a DTA then its purpose is to avoid dual tax residency.⁣

 

[thedark]

It's not about the issuing, its about the recognition of an issued TRC from other‌ countries. Like in the example:
State A issue a TRC without the remark, State B‍ is requesting TRC with remark.

My question is why they have a dta in place⁠ at all, if they don't trust each others government documents?

 

[Martin Everson]

Absolutely not. You‍ can have dual tax residency. Any CRS form will show that you can have more⁠ than one tax residency (TIN providing) and both countries can claim you are a tax⁤ resident of theirs.

The DTA is there just to make sure the same "income" is not taxed twice. You really need to read the DTA between both countries⁣ well and look for any tie-breaker clauses etc.

A TRC is nice to claim tax⁢ residency in one country but does not stop the other country saying you are tax︀ resident their also or a dual tax resident hence start digging into DTA clauses.