According to the OECD model, which factor is most indicative of where a company will be resident for tax purposes?

According to the OECD model, which factor is most indicative of where a company will be resident for tax purposes?

• A. The country it is incorporated in
• B. The country where main business activities are carried out
• C. The country where senior management exercises control from
• D. The country where finance is raised and is quoted on the stock exchange

Answer: (C)

Place of effective management is what determines corporate tax residence under the OECD Model. This means the country where senior management exercises control and where the board makes strategic decisions. That location best reflects where real management and control of the company occur, not merely where it is incorporated or where its main activities or financing are located. While incorporation, where activities take place, or where finance is raised can influence other tax outcomes or be used in tie-breaker rules in dual-residence situations, they do not define residence on their own. Therefore, the country from which senior management exercises control is the most indicative of where a company is resident for tax purposes.

Place of effective management is what determines corporate tax residence under the OECD Model. This means the country where senior management exercises control and where the board makes strategic decisions. That location best reflects where real management and control of the company occur, not merely where it is incorporated or where its main activities or financing are located. While incorporation, where activities take place, or where finance is raised can influence other tax outcomes or be used in tie-breaker rules in dual-residence situations, they do not define residence on their own. Therefore, the country from which senior management exercises control is the most indicative of where a company is resident for tax purposes.