On April 3, 2020, the OECD issued recommendations on implications of the COVID-19 crisis on cross-border matters based on an analysis of the international tax treaty rules.
The guidance deals with issues affecting the residence of companies for tax purposes, where their management is carried out in another country due to the travel and quarantine restrictions.
The guidance notes that it is unlikely that the COVID-19 situation will create any changes to an entity’s residence status under a tax treaty.
The guidance states: “A temporary change in location of the chief executive officers and other senior executives is an extraordinary and temporary situation due to the COVID-19 crisis and such change of location should not trigger a change in residency, especially once the tie breaker rule contained in tax treaties is applied.”
The guidance also addresses concerns relating to the creation of permanent establishments and change to the residence status of individuals.