CA Final · Direct Tax Laws & International Taxation · Overview of Model Tax Conventions
Under Article 4 of the OECD Model Convention, a person is resident of both Country X and Country Y under their domestic laws. Rank the tie-breaker tests for an individual in the correct order of application.
For a dual-resident individual the OECD Model applies, in order, permanent home, centre of vital interests, habitual abode and nationality, and if none decides the matter the two states' competent authorities resolve it by mutual agreement.
- AHabitual abode, centre of vital interests, permanent home, nationality
- BPermanent home available, centre of vital interests, habitual abode, nationality, then mutual agreementCorrect
- CNationality, permanent home, centre of vital interests, habitual abode
- DCentre of vital interests, nationality, permanent home, then place of effective management
Explanation
Article 4(2) applies the tests sequentially: permanent home, then centre of vital interests, then habitual abode, then nationality, and if still unresolved the competent authorities settle it by mutual agreement. Place of effective management is a tie-breaker for non-individuals, not individuals, which is why the last option is wrong.
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