1. Introduction

Art. 4(3) in the Model Conventions and the tax treaties contains a tie-breaker rule for determination of the Residence State in case of dual resident entities. That rule, in majority of the contemporary tax treaties, stipulates that the Residence State must be determined on the basis of the location of the ‘place of effective management’. But, the tax treaties do not define “place of effective management”.

Normally, the location of a company’s Board of Directors (i.e. where the Board meetings are held) may be treated as the situs of the company’s place of effective management.

Interestingly, it has been suggested in the BEPS Action Item 6 Final Report that the issue of dual residence of entities (other than individuals) should be resolved through Mutual Agreement Procedure (MAP). Accordingly, Art. 4 (Resident) the OECD Model Convention 2017 and the OECD Commentary have been appropriately amended. The OECD Commentary suggests that, for determination of the Residence State in case of a dual resident entity, the Competent Authorities of the Contracting States must take into account various factors, among which the situs of the Board meetings is at the forefront.

Thus, undoubtedly, the situs of the Board meetings is an important criterion for determination of a dual resident company’s Residence State. But, is that criterion sacrosanct?

This article examines the relevant aspects in the OECD Model Convention (2014 and 2017 versions), the OECD Commentary, and the BEPS Action Item 6 Final Report.

Thereafter, this article takes into account three important court decisions – from Australia, Switzerland, and the United Kingdom – wherein the location of the meetings of the Boards of Directors was rejected as a relevant criterion for determination of a company’s Residence State.

The court decisions discussed in this article are of very high persuasive value for cases involving dual resident entities in other jurisdictions as well.