Nicolas Traut, Oxford University Centre for Business Taxation

Double tax treaties rely on the distinction between residence countries and source countries to allocate taxing rights. Determining residence is therefore crucial, and dual resident companies in particular pose significant challenges in this context. To address these challenges, tie-breaker rules are employed. Prior to 2017, Article 4(3) of the OECD Model Tax Convention (OECD-MC) relied on the Place of Effective Management (POEM) to decide dual residency cases. However, concerns over the definition of POEM and the potential for treaty abuse and tax avoidance led to the 2017 OECD-MC revision. The new rule employs a Mutual Agreement Procedure (MAP), allowing competent authorities to resolve dual residency case-by-case while denying treaty benefits. We examine dual residency under the lenses of state double tax treaty practice after the OECD reform, and critically evaluate the impact of the 2017 amendments to Article4(3) OECD-MC. We conduct a normative legal analysis of the POEM concept and the case-by-case MAP approach, alongside other potential tie-breakers, which is informed by a new empirical inventory of how the tie-breaker rules for dual resident companies have been negotiated and implemented in practice, considering the added perspective of the passage of several years since the amendment of Article 4(3) OECD-MC.