Tax Residency Certificate for a Company in 5 Countries

A tax residency certificate is a letter from a tax authority stating that your company is resident there for tax purposes.

Registering the company does not guarantee one: several authorities look at where it is run, and one refuses a whole class of entities.

The short answer

Three things to hold on to:

• The certificate exists to support a claim under a double taxation agreement.
• Your own tax authority must first accept that the company is resident.
• The other country decides whether the relief is granted.

What the certificate is, and what it does not prove

The usual trigger is a payment from abroad. A foreign payer must withhold tax, a treaty offers a lower rate, and the payer or its tax office wants proof of where your company is resident.

What the certificate does:

• It states that the company is tax resident in the issuing country.
• It covers a given year or period, not the life of the company.
• In the UK and Hong Kong, it is requested for a specific agreement.

What it does not do:

• It does not grant the relief.
• It does not bind the foreign tax office.

Two authorities say so in writing. Hong Kong's Inland Revenue Department states that the issue of a certificate "will not guarantee" a successful claim. HMRC puts it this way: "The relevant overseas authority decides if relief from foreign taxes can be granted."

1A payment from abroadThe foreign payer must withhold tax.

2A treaty offers a lower rateThe payer or its tax office wants proof of residence.

3Your authority certifiesIt states the company is resident, for a given year or period.

4The other country decidesThe certificate does not guarantee the relief.

1. 1
   A payment from abroadThe foreign payer must withhold tax.
2. 2
   A treaty offers a lower rateThe payer or its tax office wants proof of residence.
3. 3
   Your authority certifiesIt states the company is resident, for a given year or period.
4. 4
   The other country decidesThe certificate does not guarantee the relief.

The certificate is evidence, not a decision. Your tax authority confirms where the company is resident. The country where the income arises decides what that is worth.

Five countries, five names

No two authorities use the same name, form or test. This is the table the search results do not give.

Read the third column first. It decides the outcome before any form is filled in.

Why registration is not enough

A certificate of incorporation says where a company was created. A tax residency certificate says where it is resident for tax, and those two answers can differ.

Founders who run a company from another country meet this in four ways:

1. Singapore. Residence follows control and management, not the place of incorporation.
2. Ireland. Revenue certifies only once it is satisfied the company is resident for the year in question.
3. United States. A disregarded LLC with no US owner is not eligible at all.
4. United Kingdom. With no treaty in play, HMRC does not issue the certificate.

Hong Kong is the more open case on paper. A company incorporated there is on the list of applicants, and so is a foreign company managed or controlled there.

Where the company was registered

A fixed answer, given on the day it was created.

• Shown by the certificate of incorporation
• Does not change from year to year

Where the company is tax resident

Assessed for a given year or period.

• Singapore: where control and management are exercised
• Ireland: Revenue must be satisfied for the year in question
• United States: tax classification and who the owners are
• United Kingdom: residence, and a treaty with the other country

Only the second answer gets you the certificate.

United States: Form 6166 and the foreign-owned LLC

The US certificate is Form 6166. You request it with Form 8802, and the fee depends on who applies.

The timing rules in the instructions:

• Send the application, with the fee paid, at least 45 days before you need Form 6166.
• The IRS contacts you after 30 days if there is a delay.
• A request for the current year cannot be postmarked before December 1 of the prior year.
• Questions go to 267-941-1000, not toll-free, option "U.S. residency".

Now the point most provider pages blur. An EIN does not make an LLC eligible. The instructions list who cannot be certified, and one entry reads:

• "a fiscally transparent entity organized in the United States (that is, a domestic partnership, domestic grantor trust, or domestic LLC disregarded as an entity separate from its owner) and you do not have any U.S. partners, beneficiaries, or owners"

That describes the single-member LLC of a founder abroad. Where a transparent entity does apply, the IRS verifies the tax status of each partner or owner who consented to the request.

What follows for a foreign owner:

• A disregarded LLC is not a resident of anywhere for treaty purposes.
• Any treaty claim runs through the owner personally.
• Whether the owner can obtain a certificate in the home country is a question for a local adviser.
• The instructions reason by tax classification, so an LLC taxed differently should be checked against them.

The wider picture, including Form 5472, is in our guide on how a foreign-owned LLC is taxed.

United Kingdom: certificate of residence or letter of confirmation

HMRC issues a certificate of residence so that you can claim tax relief in another country on income taxed in the UK. Two conditions apply together:

• the company is resident in the UK
• a double taxation agreement exists with the country concerned

The guidance is blunt on the second: "If you are not entitled to treaty benefits under the double taxation agreement, HMRC will not issue a certificate."

How a company applies:

1. Use the online service, or let an authorized agent do it.
2. Say whether the certificate supports a treaty claim.
3. Name the agreement and the country.

A newly formed company that has not yet filed a corporation tax return must add, among other things, why it considers itself UK tax resident.

The case founders trip over is the request with no treaty behind it. With no agreement, or for another purpose, HMRC provides a "letter of confirmation of residence", which is a different document. If a bank asks for proof of tax residence, ask which of the two it wants.

Hong Kong: Certificate of Resident Status

The Inland Revenue Department calls it a Certificate of Resident Status. Companies apply on Form IR1313B, and individuals on Form IR1313A.

Who may apply, among others:

• a company incorporated in Hong Kong
• a company incorporated elsewhere but managed or controlled in Hong Kong

The limits the department publishes:

• A certificate is issued only once the agreement with the other jurisdiction is in force.
• As a rule, one certificate is issued per agreement and per year.
• The target is 21 working days from a complete application.
• Within that time the department issues it, asks for information, or refuses.

Mainland China has its own rule. A certificate issued for one calendar year generally serves for that year and the two that follow.

Singapore: the Certificate of Residence

IRAS defines the COR as a letter certifying "that the company is a tax resident of Singapore for the purpose of claiming tax benefits" under Singapore's agreements. The test is where control and management are exercised.

Three groups are generally not treated as resident, unless they meet certain conditions:

• foreign-owned investment holding companies with purely passive or only foreign-sourced income
• companies not incorporated in Singapore
• Singapore branches of foreign companies

"Foreign-owned" has a threshold. It means 50% or more of the shares are held by foreign companies or by individuals who are not Singapore citizens, tested at the ultimate holding level.

A Singapore company run from abroad may not be resident, and only a resident company can get a COR. The application goes to IRAS; this article quotes no portal or processing time for it. The residence conditions are detailed in our guide on treaty relief for a Singapore company.

Ireland: the Letter of Residence

Revenue issues a Letter of Residence, also called a Letter of Tax Residence. It certifies residence for the purposes of Ireland's double taxation agreements.

• Since June 16, 2018, companies, individuals and funds apply through ROS or myAccount.
• The letter is then available to download.
• A handwritten signature is generally not needed.

Revenue must be satisfied that the company is resident for the year in question before it certifies. Its manual states the test in one line: "A company which is centrally managed and controlled in the State is resident in the State irrespective of where it is incorporated."

So Revenue looks at the year in question and at where the company is managed, not only at the register.

Before you apply

Most wasted applications fail on a question nobody asked the recipient. Settle these first:

1. Which country is the certificate for, and under which agreement?
2. Which year or period must it cover?
3. Does the foreign tax office accept your authority's own letter, or does it impose its own form?
4. Does it want an apostille on top?
5. Can the company show where it was managed during that period?

The foreign form is where practice splits.

On the apostille: it authenticates a signature and a seal, not the contents. Revenue notes that some jurisdictions require one from the Department of Foreign Affairs.

The summary