Management, control, and operating

[blockchain4ever]

Can someone clarify the usual analysis done by the tax office when:

- The company is registered in tax-haven (H)
- Owners are resident in countries A, B, C, and D. No CFC rules are in effect as ownership is less than whatever rules those countries have.

Then these are the two questions I have:
a) When owner resident in country A works for the company inside country A, will the "place of business" test make it (partially) tax-resident? What if the owner is a consultant working at a customer's site?

b) Consider owner resident in country A working for the company while on vacation in country V. Could there ever be a "place of business" in country A if no work happens in country A, but a resident of country A who has some control over the company works for the company (but outside of country A)?

Thanks!

 

[JohnLocke]

If some of the owners or just one work in the same country as the company is registered it is considered to be controlled and managed that place. Of course only if the owner is registered in the company as owner, director or sharholder and has a working position in the company.

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[blockchain4ever]

Thanks. My original question was about being partially tax resident (for the part of the business conducted within countries A, B, C, and D), but of course management and control is also important, and maybe the first issue to clarify.

--

So in this case the owners live in A, B, C, and D. None of them live in H (tax-Haven) where the company is registered.

So all of A, B, C, and D have some control, but none have 50% or more (or else they would typically go under controlled foreign company (CFC) rules and be taxed fully there).

There is a big difference between proving that the company is controlled from within its own jurisdiction, and proving that the company is not controlled within some high-tax jurisdiction.

In the case I'm drawing up, it's easy to see that the company is not controlled in neither A, B, C, or D individually (say it's a 25%,25%,25%,25% split). But it's also true that H doesn't control it.

I'm assuming that the default action is to assume that the company is resident where it is registered if it's not controlled from any single other jurisdiction (but is rather controlled by a group of jurisdictions).

Maybe this depends on having a DTA between the H and the individual countries, so they don't claim an overly broad jurisdiction over the company?