Tax Residence Research Articles

Tax Residence in the Era of e-Residency and Digital Nomads: International Experience and Ukrainian Context

Tax Residence in the Era of e-Residency and Digital Nomads: International Experience and Ukrainian Context

Article: Balancing Digitalization and Proportionality: The Progress of the FASTER Initiative*

The European Commission’s proposed directive ‘Faster and Safer Relief of Excess Withholding Taxes’ (FASTER) aims to standardize, modernize, and digitalize the EU-wide withholding tax procedure to enhance efficiency and fraud resistance. The Council of the EU, through Economic and Financial Affairs Council (‘ECOFIN’), has agreed on a revised directive that retains the core objectives but introduces significant modifications. The initiative focuses on simplifying tax relief procedures, introducing a digital EU tax residence certificate, and implementing fast-track refund systems. The Council’s adjustments include extended deadlines for issuing certificates and fast-track refunds, as well as expanded obligations for financial intermediaries to report transactions and prevent fraud. The directive emphasizes digitalization and proportionality in its implementation. However, concerns about the proportionality of imposed liabilities on financial intermediaries and data protection remain critical issues. The revised directive is pending further consultation with the European Parliament and formal adoption by the Council, with an anticipated implementation deadline extended to 31 December 2028, and national application starting 1 January 2030.

Corporate Tax Residence Reform under Italian Law

Corporate Tax Residence Reform under Italian Law

TAXATION OF RESIDENTS IN ARMENIA: ON THE EXAMPLE OF SOLE PROPRIETOR AND LLC / НАЛОГООБЛОЖЕНИЕ РЕЗИДЕНТОВ В АРМЕНИИ: НА ПРИМЕРЕ ИП И ООО

The article is devoted to the legal study of the taxation of residents of the Republic of Armenia, comparative legal analysis with the legislation of the Russian Federation. Mainly focused on the taxation of limited liability companies and sole proprietor. Recently, there are more and more relocants in Armenia, and in this regard, the issue of studying the taxation of small and medium-sized businesses remains relevant. The authors study the legal nature of business relocation, the status of relocants, the legal privileges of residents and relocants.

Common Reporting Standard as a model for tax information exchange: mechanism of operation and implementation status in Ukraine

The article studies the Common Reporting Standard (CRS), an information standard for the automatic exchange of tax information between states that are parties to the Multilateral Competent Authority Agreement (MCAA). It also explores the prospects of Ukraine’s participation in the exchange under this standard. The study analyzes the information subject to international exchange, types of financial institutions required to collect and submit tax-relevant information to authorities for international exchange, account types, tax residents, and methods of verifying client integrity when opening accounts. The article aims to systematize knowledge about the prerequisites for creating, the mechanism of intergovernmental tax cooperation within the CRS framework, current results achieved under this standard, Ukraine’s accession status, steps taken by Ukraine towards implementing automatic exchange of tax information, and recommendations for accountable entities and account holders on complying with CRS rules. The study employed a comprehensive research methodology, including a literature review, analysis of normative documents, and comparative analysis. The conclusions emphasize the crucial importance of Ukraine’s accession to the CRS standard for ensuring proper tax compliance and budgetary revenues, particularly amid full-scale Russian aggression. The study also describes the challenges, especially regarding compliance with tax data exchange requirements by financial institutions and account holders. It underscores the need for strong political will from Ukrainian authorities to overcome obstacles and ensure effective CRS implementation. Overall, the study highlights the significant role of CRS in improving tax collection while acknowledging the hurdles ahead. The research perspective on this topic is extensive, given that automatic tax information exchange, particularly under the investigated standard, is currently being established and is relatively underexplored by researchers.

TAX RESIDENCE ISSUES FOR UKRAINIAN EMPLOYEES WORKING ABROAD

The tax resident status creates unlimited tax liabilities for individual in Ukraine. Today the war in Ukraine changes the employment of Ukrainians dramatically. Many Ukrainian enterprises have been forced to relocate business to other regions or states and have changed how their business is conducted (e.g. Ukrainian airlines relocated aircrafts and crew to other countries). This temporary dislocation of people can have tax consequences for those individuals and the businesses for which they work. In the article criterions of tax residency are researched and defined loopholes that may lead to tax residence avoidance or, contrary, may create a risk of dual residence conflict for the Ukrainian nationals, especially during the war time. It is proposed to widen the criterions of tax residency during the martial law in Ukraine for the proper definition of the tax residence of Ukrainians who stay abroad more than 183 days during the calendar year, but hold the center of vital interests in Ukraine.

How the states divide income or tax residence (on the example of Ukraine)

Introduction. The past years have once again emphasized the relevance of friendly interstate relations, which create the basis for trade cooperation. International cooperation of states in the unstable conditions of pandemics and wars helps not only to maintain international security, but also provides the development of international trade. The paper analyzes the features of the conditions for avoiding double taxation and determining the country of residence. The publication reveals the problems faced by residents of Ukraine in 2022, namely: multiple taxation and avoidance of double taxation. Features of interstate agreements that guarantee, in particular, to Ukrainian residents, the opportunity to engage in entrepreneurship are highlighted. In our opinion, the conclusion of international treaties by states on the avoidance of double taxation is an act that reflects the political interest of countries in long-term trade cooperation and stimulates the fulfillment of the obligations of countries under treaties in the field of international trade. The purpose of the paper is to study the nature of multiple taxation and the conclusion of agreements on the avoidance of double taxation, its expediency, as well as regulatory consolidation. Results. The research analyzed the regulatory basis of income taxation of Ukrainian business entities, established who is considered a resident. Considered a fairly new category – e-residency, also attention was paid to modern international unilateral acts, normalizing the support of Ukrainian entrepreneurs. Conclusions. Modernity poses new challenges to the world community that the states are forced to cope with. International law is, first of all, partnership, commonwealth, and guarantee of mutual security, including economic security. There is establishment of normative regulation of resident taxation processes and consideration of e-residency as the next stage of development of relations between the state and the resident.

Modernization and Digitalization of the EU Withholding Tax Procedure: Opportunities Offered by the FASTER Initiative

The EU’s Faster and Safer Relief of Excess Withholding Taxes (FASTER) initiative aims to modernize and digitalize the withholding tax procedure. It addresses two key issues: preventing tax abuse and double taxation for cross-border investors. Cum/Ex and Cum/ Cum scandals exposed vulnerabilities in the current system, leading to substantial tax losses. To streamline the process, FASTER introduces a uniform EU Digital Tax Residence Certificate (eTRC), enabling digital reimbursement applications. It also offers two fast-track procedures, ‘relief at source’ and ‘quick refund’, alongside standard reporting obligations for certified financial intermediaries to enhance transparency. While the initiative promises annual savings of EUR 5.17 billion for investors, it places a significant burden on financial intermediaries. Implementing eTRCs and meeting reporting requirements involve substantial costs. Concerns regarding data protection and implementation timelines exist. The proposal is currently under public consultation until 21 August 2023, and the implementation is targeted for 1 January 2027, subject to further developments and consultations. In summary, FASTER seeks to modernize the withholding tax process to combat abuse and facilitate cross-border investments, but its impact on financial intermediaries and data protection considerations remain noteworthy. FASTER, Withholding tax, Digitalization, Tax fraud, Double taxation, eTRC, data protection, reporting obligation, national register, cum/ex

International currency legal relations and international economic relations: interconnection and interaction

International currency relations are considered through the prism of international economic relations. It is emphasized that the latter arise between subjects from different countries, between tax residents of different tax jurisdictions regarding the production, distribution, exchange and consumption of goods, provision and receipt of services, capital circulation.
 It is argued that international economic relations are manifested at different levels of the economy (micro-, meta-, macro-levels). Where the macro level is the level of state and interstate international processes; metalevel these are international ties of industry and regional importance; micro level is the level of connections between firms of different countries.
 International economic contacts, international economic interaction, international economic cooperation, international economic integration are considered in detail.
 It is proved that the existence of international economic relations gave impetus to the formation of international economic and international currency (monetary) law. So, in the context of international economic law, international currency law and the corresponding legal relations arose as early as the 19th century, and they received the greatest development in the second half of the 20th century. In the XIX-XX centuries currency and financial systems are actively developing both domestically and internationally. It also gave impetus to the formation and development of economic and financial science.
 The stages of the evolutionary development of the world monetary and financial system are considered. The main principles of the organization of currency relations in different periods are analyzed.
 Alternative options to the existing currency system proposed by various authors are critically considered.
 It is proven that the formation and development of international trade relations, the world economy, and the world currency system contributed to the formation of a certain system of legal norms regulating relations in the currency sphere. At the same time, such norms are considered within the framework of different legislation, studied in different academic disciplines.

The Portuguese Non-Habitual Tax Residents Regime

The Portuguese Non-Habitual Tax Residents Regime

Overriding the rules of international tax treaties by the means of the national law of one of the parties (“Tax treaty override”)

Subject of research. The article is dedicated to the “tax treaty override”; it outlines debatable aspects, associated herewith. “Tax treaty override” is an action (in certain cases - omission of action) to expand taxation beyond (jurisdictional boundaries), defined in double taxation agreements which is implemented mainly through the intentional alteration of national legis-lation. The correlation between national and international legal norms has major impact upon the agreements on double taxation of income taking into account that many states including Russia are participants to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting 2016, which modifies rules of the men-tioned agreements and therefore begets a large number of possible collisions.Goal of the article. The goal of the article is to demonstrate that even if constitutional pro-visions don’t prevent the adoption of legislation on taxes and charges in contradiction with international obligations – that doesn’t imply that the latter lack legal significance. The goal also includes revealing specific features of double taxation agreements one of which is deep integration with domestic tax legislation that doesn’t stand still, but is evolving constantly. Methods of research. The preparation phase included the following research methods: formallogical analysis, system-based analysis, description, juxtaposition, synthesis and summarizing.Basic outcomes. The author draws a conclusion that the alteration (expansion) of tax jurisdiction which impacts i.a. the contents of tax residents’ rights of one or both treaty countries (party countries, treaty states) is actually the essence of tax treaty override. The main objectives of regulatory impact are jurisdictional capabilities (distributive rules) of states and tax reliefs for residents (individuals for the tax agreements). The phenomenon under consideration represents an artificially generated collision between the provisions of tax treaties and more recent norms of domestic legislation of one of the countries subject to a tax agreement, while the mentioned issue should be resolved in favor of domestic regulations. The main goals of regulatory impact include: jurisdictional capabilities of states (dis-tributive rules) and tax reliefs or benefits for residents (individuals for the tax agreements). Tax treaty override emerges when a provision of a law prevails and cannot be overridden by the means of tax agreements, including the test of correspondence between a national legal definition and the agreement context. At the same time legal changes that have prevailing power may correspond with international law (reasonable protection of national tax base) since the treaty states seek to eliminate double taxation without creating possibility of taxation freedom or reduction of taxation through tax avoidance and tax evasion.

Asistensi Pelaporan Spt Wajib Pajak Pribadi Oleh Relawan Pajak Di Kota Dumai

The service carried out by STIE Tuah Negeri tax volunteers at KPP Pratama Dumai in 2023 aims to assist taxpayers in reporting their tax obligations every year in the form of SPT reporting, besides that this service also aims to assist KPP Pratama Dumai in assisting personal taxpayers. The method used by tax volunteers in assisting taxpayers to report their annual SPT by using E-Filling. The conclusion from the community service activities carried out by STIE Tuah Negeri tax volunteers for approximately 1 month at the KPP Pratama Dumai was obtained data on the number of assisted taxpayers by team 3, a total of 622 tax residents consisting of 346 tax residents filling out the 1770 S PT type and filling out the SPT type 1770 SS numbered 277 tax citizens. It can be said that this amount increases the effectiveness and efficiency in assisting taxpayers to report their Annual SPT.

The Taxation of ‘Digital Nomads’ and the ‘3 W’s’: Between Tax Challenges and Heavenly Beaches

Work mobility is not something new, but it certainly received an important boost with the COVID-19 pandemic as many people began working remotely which reflected on their lifestyle. In this context, the objective of the present study is to analyse the challenges imposed by what is known as ‘digital nomads’ from the exclusive perspective of individual taxation. The first part aims to understand the first ‘W’, i.e., who the ‘digital nomads’ are and the factors that favour the choice for this type of work. Subsequently, it examines the impacts caused by the ‘digital nomadism’ in determining the tax residence (second ‘W’ – where) and presents the measures, albeit incipient and indistinguishable, adopted by some countries in relation to this phenomenon. The third section delves into the taxation of income obtained by ‘digital nomads’ through either an employment relationship or the provision of services (third ‘W’ – what). Based on the analysis of examples and the presentation of some alternatives, this study seeks to demonstrate the need to adapt the tax residence rules at both of the levels of domestic law and double tax treaties (tiebreaker rules). The rules on the taxation of income from employment and the provision of independent services also demand modifications that detach them from the strict need for a physical presence. Digital nomads’, work mobility, international taxation, tax residence, employment income, digital economy

The Arrival Of The New Beps Pe Clause In Actual Tax Treaties Via The Mli: Impact, Risks And Need For Further Regulatory Changes (Particular Focus On Spain)

The present article seeks to analyse the overall potential impact that the new permanent establishment (hereinafter PE) concept that has emerged from the Base Erosion and Profit Shifting (hereinafter BEPS) Project is expected to have as it is gradually incorporated into actual tax treaties worldwide by using Spain as an illustrative example. Firstly, the role that the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (hereinafter MLI) is playing in the implementation of the new rule in tax treaties will be analysed (section 1). Secondly, the wording and scope of the new PE clause will be scrutinized, highlighting its obvious resemblance to ideas foreseen in both prior versions of the Commentaries to the Organization for Economic Cooperation and Development Model Convention (hereinafter OECD MC) and certain domestic administrative resolutions and judgments (e.g., the ‘Spanish PE approach’, a doctrine widely held by the Spanish tax administration and some courts advocating for a singular interpretation of the PE clause and the rules attributing profits to it) (section 2). Thirdly, there will be an attempt to advance the effects of the arrival of the new clause in actual tax treaties in terms of the expected volume of affected treaties, the expected reaction of tax administrations and courts (in respect of unaffected treaties keeping the classic version of the PE concept), the potential coexistence between the new treaty PE rule and current domestic PE rules and, lastly, the expected (extra) tax revenues for jurisdictions hosting these new forms of PEs (section 3). The intention throughout the contribution is to portray the risks derived from the implementation of this new rule and the need for further regulatory modifications to counteract such risks. Finally, some final remarks will be put forward (section 4). Digital nomads’, work mobility, international taxation, tax residence, employment income, digital economy

Налоговое резидентство физических лиц в России в условиях высокой трансграничной мобильности

The article explores rules on tax residence of individuals as set in the Russian nation legislation and double tax treaties. The author comes to the conclusion that in the context of high cross-border mobility of individuals the current Russian legal regulation of tax residence does not adequately protect the fiscal interests of the state, since it uses a criterion that allows taxpayers to choose if they want to be Russian tax residents or not in the current tax period and lose their tax resident status while maintaining real personal, social and economic ties with the state. At the same time the introduction of new criteria should not be based on blind copying of the experience of foreign countries or the provisions of double tax treaties, and the new rules should use unambiguous wording. In particular, if the terms “availability of a permanent home” or “centre of vital interests” are introduced to national legislation, their meaning should be explicitly defined.

Double taxation of Ukrainians abroad: what is it and how to avoid it

After the beginning of the full-scale invasion of the Russian Federation, many Ukrainians were forced to seek their fortunes in other countries, escaping from the war. In total, after the start of the full-scale war, about 6.3 million people found themselves abroad, many of whom began to look for work and work. Others continued to work remotely with Ukrainian employers at previous jobs, while paying taxes to the budget of Ukraine. This especially applies to teachers who continue to teach children remotely. Therefore, the purpose of the paper is to highlight the problems of double taxation that currently exist, and to outline the methods of their avoidance. Various aspects of the study of methods for preventing double taxation are highlighted in the works of domestic and foreign legal scholars, in particular K. Blankart, K. Vogel, L.K. Voronova, A.T. Kovalchuk, A.N. Kozyrina, M.P. Kucheryavenka, L.L. Lazebnyk, I.A. Laryutina, S.G. Pepelyaeva, I.Yu. Petrasha, S.F. Sutyrina, A.A. Shakiryanova, V.O. Shamraya, et al. However, tax relations are constantly developing, and their legal regulation is being improved, and in connection with such a situation that has occurred in our country, there is a need to review many related issues. In most European countries, there is a rule according to which foreigners can be recognized as tax residents and begin to be taxed, according to the legislation of the country in which they are located, after 183 days of stay on the territory of this state. Very often a situation arises when working citizens of Ukraine have to pay taxes both in the country in which they work and in Ukraine. That is, double taxation occurs, because many of those who leave do not know that after a certain period they become a tax resident. Therefore, the question arises how to prevent this.

Instruments Stimulating Taxpayers to Transfer Their Tax Residence to the Republic of Poland

The purpose of this article is to present two tax preferences, in force from 1 January 2022, dedicated to taxpayers transferring their residence to Poland. Their way of design is an incentive to become a Polish tax resident, and their introduction to Polish income tax is justified by both economic and demographic reasons. The first of the instruments is a lump-sum tax on foreign revenue amounting to PLN 200,000, addressed mainly to natural persons with very high foreign income (high net worth individuals), who are ready to allocate significant funds for the implementation of socially beneficial projects. The second instrument stimulating the transfer of residence is the tax exemption due to the return to the country, which can be considered a type of ‘tax holiday’, as selected domestic income during the four tax years from the transfer of tax residence is subject to a limited tax exemption. The article indicates the stimulating nature of both concepts by analysing the conditions for their application in the context of a deviation from standard taxation rules. Moreover, the paper indicates that similar solutions are also applied in other countries.

Analysis of the Functioning of the Automatic Exchange of Information about Financial Accounts after Implementation of the Common Reporting Standard

The adoption of the Common Reporting Standard (CRS) by the OECD in 2014 raised many concerns. Banks were particularly obliged to implement many changes in order to properly collect and aggregate data on tax residence of their clients and correctly report them to the tax administration authorities. The aim of this article was to assess the functioning of the CRS, taking into account the benefits of implemented changes and critical voices regarding the functioning of the standard. The efficiency of the solution based on OECD data and a critical analysis of some aspects of the CRS were presented. The adopted research method was based on verification of official OECD documents and comparative analysis of data presented by the organization with the research conducted by scientific institutions and other private and public entities. According to the results of the research, the automatic exchange of financial information is not functioning optimally, and reforms need to be carried out. The additional revenues generated by the CRS are relatively low compared to the tax losses still generated by tax optimization.

A Critique of the Tiebreaker Rule for Tax Residence of Companies under the MLI

A Critique of the Tiebreaker Rule for Tax Residence of Companies under the MLI

Council of State Decides Participation of an Individual on Greek Board of Directors not Sufficient to Presume Greek Tax Residence

In this note, the author discusses the Greek Council of State decision in Case 418/2020, wherein the Court determined that participation in the management of a board based in Greece was not sufficient, by itself, to establish that an individual, who had moved abroad, had retained his tax residence in Greece.