6.2 International double taxation. The principle of residence and the principle of territoriality

The principle of residence and the principle of territoriality are the basic concepts for determining the tax status of a person in most countries of the world.

According to the residence principle, all income of a business entity received in all jurisdictions of business operations is subject to income taxes in the country in which the individual or legal entity is resident. Resident status is established by law.

In accordance with the principle of territoriality, which implements the tax sovereignty of each state, all income received in a given territory is subject to taxation in the jurisdiction of their formation. When distributing such income in favor of recipients located in a foreign country, special taxes are levied on the repatriation of profits.

The operation of an approximate mechanism, when the same income may be subject to taxation several or more times, is as follows. Option One: Income derived from a source in one country and received by a resident in another country may be taxed in both countries simultaneously. Option two: an individual, if the legislation of two countries uses different criteria for determining resident status, may turn out to be a resident of both states for the purpose of paying income tax in the same year and fall under the burden of taxation on the entire volume of his income.

This problem would not arise if all countries used only the residence principle in their tax laws. But practically no state can completely abandon the use of the principle of territoriality, i.e. cannot but tax the source of income constituting the tax base in connection with its location on its territory.

6.3 International agreements for the avoidance of double taxation. Methods for eliminating double taxation

The concept of double taxation can be expressed as follows: this is a situation where the same entity is subject to comparable taxes in relation to the same object of taxation in two or more countries for the same period. Double taxation is caused by the fact that the procedure for determining the taxable base and the rules for determining taxable income (business profits, interest, royalties, dividends, etc.) in different countries differ significantly.

International agreements for the avoidance of double taxation applicable in the territory Russian Federation, are part of the legal system of the Russian Federation and have priority over the provisions of national tax legislation. In this regard, when taxing foreign persons, it is necessary to proceed, first of all, from the provisions of international treaties in the field of taxation.

The purpose of concluding an international treaty is to achieve an agreement between states or other subjects of international law establishing their mutual rights and obligations in tax relations to avoid double taxation.

It is necessary to take into account that the current international tax agreements on the avoidance of double taxation determine only the rules for delimiting the rights of each state regarding the taxation of organizations of one state that have an object of taxation in another state, however, the methods for implementing these provisions: the procedure for calculating, paying taxes, collecting tax amounts, not paid on time, and bringing to responsibility for violations committed by the taxpayer are established by the internal rules of tax law.

6.4 Mechanism for eliminating international double taxation of income in the Russian Federation

The instruments of the mechanism for eliminating international double taxation of income in the Russian Federation are the system of taxation of foreign organizations and the system of offset of foreign tax.

The Russian model of the mechanism for eliminating international double taxation is basically consistent with international principles. At the domestic level, Russia applies the principle of residence in combination with the principle of territoriality when taxing non-resident organizations; a special system of taxation of income of non-residents has been established; elimination of double taxation of Russian organizations is achieved by offsetting foreign taxes; Separate measures to counteract tax avoidance are provided (transfer pricing regulation, thin capitalization rule).

An important element of the mechanism for eliminating international double taxation in the Russian Federation is the foreign tax offset system, which is established by separate provisions of Chapter 25 of the Tax Code of the Russian Federation. The problem of international double taxation of Russian organizations when using the residence principle is solved by providing a foreign tax credit for taxes paid abroad. However, the legislation limits the tax credit to the amount of tax payable on foreign income in the Russian Federation.

Stable economy (production of high-tech products, light industry), lack of private land ownership (agricultural production).

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in the country, because...

42,881 enterprises based on foreign capital and capital from investors from Hong Kong, Macau and Taiwan. Along with their positive contribution to the development of the PRC economy, significant problems are also noted in the economic literature. Very rarely, foreign investors invest their share in joint ventures with real money, preferring to contribute imported equipment, sometimes inflating its price and...

One of the fundamental principles of international tax law is the principle of territoriality. In accordance with this principle, the state has the right to levy tax from a non-resident only in cases where he has an object of taxation in the territory of this state or abroad, but in connection with activities in the territory of this state.

The principle of territoriality is determined by the international legal principle of the territorial supremacy of a state over its territory. Territorial supremacy is an integral part of state sovereignty, its material embodiment, which means, firstly, that the power of the state, including in the field of taxation, is the highest authority in relation to all persons located on its territory, and, secondly, that on the territory of this state the action of the public authority of a foreign state is excluded. Exceptions to the principle of territorial supremacy can only take place with the consent of the state, which can be expressed in international agreements concluded by the state and in other ways.

It is necessary to distinguish territorial supremacy from state jurisdiction. Territorial supremacy expresses the fullness of the state's tax power in all its constitutional forms (legislative, executive and judicial), but only within its territory. The jurisdiction of a state means the ability to establish rights and obligations for persons bound in a certain way by the surrendered state: citizenship (mainly in constitutional legal relations), economic interaction (mainly in tax legal relations) and on the basis of other criteria of various branches of law.

IN tax law the economic connection of a person with the territory of a particular state is determined through the principle of permanent residence (residence). The tax jurisdiction of the state in relation to non-residents is valid only on its territory; in relation to residents, it can also operate outside of it. For example, resident individuals are required to pay income tax on income received both in Russia and abroad1.

The definition of the territory of a state has a dual meaning:

firstly, to qualify persons as residents or non-residents, and secondly, to qualify objects of taxation as arising or not arising in the territory of the relevant state.

In this regard, the most important issue is to determine the territory that is used to qualify taxpayers as residents and non-residents, and which is subject to the tax jurisdiction of the state in relation to non-residents.

There is no single solution on this issue either in international law or in Russian legislation. Nevertheless, based on the analysis of regulations and international agreements, two approaches to determining the territory of a state for tax purposes can be assumed (Figure VI-7).

The first approach may be that only so-called state territory belongs to such territory. The state territory of Russia includes the territory of the constituent entities of the Federation, internal waters, territorial sea and airspace above them.

In accordance with this approach, state legislation cannot use the continental shelf and exclusive economic zone to determine the status of taxpayers, as well as extend its tax jurisdiction over non-residents. This approach is explained by the fact that the continental shelf and the exclusive economic zone are not part of state territory. In accordance with the rules of international law established by the 1982 UN Convention on the Law of the Sea, states have only certain sovereign rights over these territories, which mainly boil down to the rights to explore, develop and conserve the natural resources of these territories. These sovereign rights are not subject to broad interpretation.

The provisions of double taxation agreements can serve as arguments in favor of this point of view. Thus, some of them extend the tax jurisdiction of the contracting states not only to their state territory, but also to the continental shelf and to the exclusive economic zone1. In a number of agreements, contracting states extend their tax jurisdiction only to the continental shelf2. These rules can be interpreted as expanding the tax jurisdiction of states.

In accordance with the second approach, it is considered that the national legislation of a state can use the continental shelf and exclusive economic zone to determine the status of a taxpayer, and also extend its tax jurisdiction in relation to non-residents to these territories. This approach can be justified by the fact that the 1982 Convention does not regulate the status of the continental shelf and the exclusive economic zone for tax purposes, therefore the general rules of international economic law can be applied. Thus, the Charter of Economic Rights and Duties of States of 1974 (clause 1, article 2) established the principle of the inalienable sovereignty of states over their wealth and natural resources. In accordance with this principle, each state has the right to regulate and control foreign investment, as well as the activities of transnational corporations within its national jurisdiction. The state has sovereign rights to the exploration, development and conservation of natural resources in the exclusive economic zone and on the continental shelf, therefore it has the right to use these territories to determine the tax status of persons located in them and extend its tax jurisdiction over non-residents who have taxable objects in these territories . Extending jurisdiction only to the continental shelf, as provided in some double tax treaties, should be interpreted as limiting the taxing jurisdiction of a state.

It seems that the most correct would be a compromise approach. The main meaning of the listed sovereign rights is the ability of the state to extract material benefits from the exploration, development and conservation of the natural resources of these territories. Consequently, the state has the right to provide these natural resources for use to foreign states, legal entities and individuals for a fee and otherwise benefit from the use of these territories.

Therefore, in the absence of a special international agreement, the state does not have the right to use these territories to determine the tax status of persons located on them, but has the right to collect from users of natural resources those taxes that, in essence, are in the nature of consideration for the use of natural resources (rent for the use of state property). In the Russian Federation, such taxes are deductions for the reproduction of the mineral resource base and payments for the use of natural resources1.

The question of whether the state has the right to levy a profit tax (income tax) from non-residents operating in these territories is also debatable.

It should be noted that the legislation of the Russian Federation does not clearly define the territory for tax purposes. Thus, according to the Constitution (Part 2 of Article 67), the Russian Federation has sovereign rights and exercises jurisdiction on the continental shelf and in the exclusive economic zone in the manner determined by federal laws and international law.

Only one federal tax law directly extended the jurisdiction of the Russian Federation in relation to non-residents to these territories - Law of the Russian Federation of December 13, 1991 No. 2030-1 “On Enterprise Property Tax”. Article 1 of this Law establishes that payers of the corporate property tax are also foreign legal entities that have property on the territory of the Russian Federation, its continental shelf and in the exclusive economic zone. Regarding taxes on profits/income of foreign legal entities, the jurisdiction of the Russian Federation is extended to the continental shelf and the exclusive economic zone by by-law - Instruction of the State Tax Service of Russia dated June 16, 1995 No. 34 “On taxation of profits and income of foreign legal entities.” It seems that this provision of the Instruction does not comply with the Constitution of the Russian Federation and the norms of international law and cannot be applied when considering disputes in court2.

For income tax from individuals the jurisdiction of the Russian Federation was extended to the continental shelf and the exclusive economic zone by by-law - Instruction of the State Tax Service of Russia dated June 29, 1995 No. 35 “On the application of the Law of the Russian Federation “On Personal Income Tax” (as amended on July 11, 1996 ). But later this provision was excluded from the Instructions. Perhaps the State Tax Service of Russia proceeded from the fact that these territories can be used for tax purposes only on the basis of an international agreement.

IN Lately When the Russian Federation concludes international agreements on tax issues, the prevailing trend is to expand tax jurisdiction for profit tax and income tax both on the continental shelf and on the exclusive economic zone. In particular, this trend is reflected in some program documents: the Protocol of the CIS countries of May 15, 1992 “On the unification of the approach and the conclusion of agreements on the avoidance of double taxation of income and property” (Article 3) and the Decree of the Government of the Russian Federation of May 28, 1992. No. 352 “On the conclusion of intergovernmental agreements on the avoidance of double taxation of income and property”

The term "tax residence" refers to the affiliation of a company or individual to the tax system of a particular country. The resident himself bears tax liability to the state, which is manifested in his obligation to make payments for all income received. Moreover, even those earned in other countries are taken into account. Any individual can obtain the status, regardless of his citizenship and nationality.

A person can be a resident in two states at the same time if they have different criteria for defining this term at the national level. In addition, there are situations where a person is not a resident of any country. But the lack of appropriate status does not exempt him from paying mandatory payments. It’s just that in this case there is no , due to which global income is subject to taxation.

The essence of tax residency

The main essence of this concept is that not only its citizens, but also persons who live or carry out commercial activities in it are subject to the tax legislation of a certain country. Thus, domestic laws become international in nature as they affect citizens and companies of other countries.

This principle is very clearly manifested in Western European countries. On the territory of these states, millions of people who are not their citizens live permanently or temporarily. Most of them, having another citizenship, are fully subject to the tax rules of a certain European country. It should be noted that in Western Europe The system of international agreements regulating the tax sphere is well developed. Thanks to this, a mutually beneficial decision is quickly made on any controversial or ambiguous issue.

Grounds for assigning tax residency

In most cases, a citizen of a certain state is also a tax resident. But if he spends a significant part of his time abroad, he can obtain status if the following conditions are met:

• Residence in the country for at least one hundred eighty-three days a year. This factor is decisive in most countries of the world. But there are also exceptions to the rule. Thus, in the USA, status is obtained by persons who have fulfilled this condition for three recent years. In England, you are required to visit the country annually for at least four years. In this case, the total duration of all visits must be at least ninety-one days.
• Availability of rented or own housing. Countries such as Switzerland, Germany and the Netherlands assign status to a person who buys or rents an apartment for a long time. If a person has real estate in several states, then he becomes a resident of the country in which his personal interests are located.
• Localization of personal and economic interests in the country (meaning family and work). This condition is a priority for France, Italy and Belgium. A person is considered a resident of the relevant country if his child, spouse or other family members are located or live in it. Moreover, the duration of his stay in the country is not taken into account. In some cases, it is difficult to determine personal or economic interests. Then the person is assigned status in the country in which he permanently lives. If permanent residence is issued in several states at once, the status is issued in the country of his citizenship.
• Having citizen status. The Philippines, USA and Bulgaria give status to a person holding a local passport, even if his work is in another country. In case of dual citizenship or its absence, the resolution of the issue is left to the discretion of local authorities.

As for legal entities, their activities fall under the tax jurisdiction of a certain state if two conditions are met. First, the organization must engage in commercial activities in that country. And secondly, it must have a registered representative office or branch there.

What obligations does tax residency entail?

Individuals who receive this status must pay taxes on any income they receive. These include salaries, income from business, bank deposits, other assets, benefits, etc. All income is subject to taxation, regardless of where it is received. Sometimes this leads to double payments.

To avoid such a situation, many countries enter into agreements with each other. Thus, Russia has them with most European countries, due to which income received on its territory is not taken into account abroad. But at the same time, the Russian must submit a declaration at home.

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Its status is determined by the principle of residence (permanent residence), according to which all taxpayers are divided into persons who are residents and non-residents of the country. The assignment of a payer to one of these categories determines his tax status and corresponding responsibilities (full or partial liability), as well as other differences in taxation (the procedure for depositing funds, declaring income, etc.)

Rules for determining residence differ for

A tax resident is an individual who permanently resides in the Russian Federation. This applies equally to foreigners who actually stay on its territory for no less than 183 days during the year (this can be one or several periods).

Residence status in the Russian Federation is established annually. There are cases when the criterion of temporary stay in the country alone is not enough to determine it. Then some additional characteristics are used, such as location of permanent home, personal and economic connections, citizenship, etc. As a result of the application of these criteria, which are established by the legislation of the Russian Federation and international agreements, the state where the person lives most is determined. Then the tax and financial authorities register him as a resident of their country.

Entity How a tax resident is determined based on tests such as the incorporation test (depending on the country in which it is based), registered office, place of central control and management, place of day-to-day management of the company, business purpose.

Tax residents must make payments to the budget of the country to which they belong according to the status determined for them by legislation (TC). For each person (individual) this issue is fundamental, because it depends on him what tax should be paid - 13% (for a resident) or 30% (for a non-resident), since the difference in the amount is quite significant.

Citizenship does not matter in determining status. For this purpose, a 12-month period is taken into account, which may begin in one calendar year and end in another. The 183-day period is calculated by adding calendar days (including the day of arrival in and departure from the Russian Federation) for 12 consecutive months. The final one can only be determined at the end of the calendar year.

The status of an individual “tax resident” has its own characteristics. Persons who do not have it pay personal income tax only on income that they received only from Russian sources. Their status is determined anew on each payment date. Refunds of overpaid personal income tax (if this has happened) can be made only at the end of the period (calendar year) and only through the tax authorities (inspectorate). This category of payers is not subject to the rules on standard, property and

The concept of a “tax resident” has changed somewhat since 2007. If previously persons were recognized as being on its territory for at least 183 days in a calendar year, now they are recognized only as persons who were present for this amount of time for 12 consecutive months. Such changes were made to close the “hole” in the legislation, because virtually all individuals lost their resident status on January 1 of each subsequent year

You can confirm your resident status using any document certifying your stay in the Russian Federation for more than 183 days. These can be documents (passport) with a stamp indicating entry into the territory of the Russian Federation, tickets, visas with stamps, documents confirming registration at the place of temporary residence.

S.G. Pepelyaev,
Director of the Tax and Legal Department of the auditing and consulting firm "FBK"

1. Determination of tax status

Economic relations between a person and the state are determined by the principle of permanent residence (residence), according to which payers are divided into persons who have a permanent residence in a particular state (residents) and persons who do not have a permanent residence in it (non-residents).

The concept of “resident” is used not only by tax law, but also by other branches of legislation, for example, currency and immigration. Each industry applies its own criteria to determine the legal status of individuals. Therefore, a person recognized as a resident for the purposes of e.g. currency regulation, may not be a tax resident and vice versa.

Tax residents bear full tax liability to their state of residence. They are required to pay tax on income received anywhere: from sources in the territory of their state of residence, and in any other territory.

Non-residents have limited tax liability. They pay tax to the state only if they received income from sources in that state.

This main difference is complemented by a number of others. The specifics of providing certain benefits, declaring income, calculating and paying taxes may be established.

The Tax Code of the Russian Federation establishes that non-residents are subject to income tax only on income that is received from sources in the Russian Federation, and for residents - income received from any source (Article 209 of Part Two of the Tax Code of the Russian Federation). Residents' income is generally taxed at a rate of 13%, and some income at a rate of 30 or 35%. In all cases, the tax on the income of non-residents is calculated at a rate of 30% (Article 224 of Part Two of the Tax Code of the Russian Federation). Non-residents are not entitled to use certain benefits when calculating tax. For example, a special procedure for taxation of dividends applies only to Russian tax residents (Article 214 of Part Two of the Tax Code of the Russian Federation). Income received by non-residents from sources in the Russian Federation is not reduced by the amounts of standard, social and property tax deductions(part 4 of article 210 of part two of the Tax Code of the Russian Federation).

Such a difference cannot be regarded as discriminatory. Assessing whether tax conditions are discriminatory or not involves comparing individuals in identical conditions. This approach is also accepted in international law.

Thus, the Model Convention on Taxes on Income and on Capital, prepared by the Fiscal Affairs Committee of the Organization for Economic Co-operation and Development (OECD), in Art. 24 “Non-discrimination” assumes that in assessing whether tax treatment is discriminatory or not, it is necessary to consider whether taxpayers are “in the same circumstances.” To do this, it is established whether the legal and actual conditions of the activities of taxpayers are the same. The residence of a taxpayer is one of the factors taken into account in determining whether taxpayers are in the same circumstances or not.

Thus, the OECD Model Convention proceeds from the fact that the establishment by states of different taxation regimes for residents and non-residents does not in itself violate any legal or other principles, and this circumstance must be taken into account in international relations.

R. Dernberg notes that in the United States, “a 30 percent withholding tax is not considered discriminatory, since non-residents are not subject to “similar conditions” compared to American residents: US residents are taxed on world income, while Nonresidents are generally taxed only on U.S.-related income under the withholding rules. The above motivation allows for the application of various rules to non-residents for tax exemption, determining the civil status of the person filling out the tax return (filing status), on which income tax rates depend, etc.” *1.
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*1 Dernberg R.L. International taxation. Translation from English. - M.: UNITY, 1997. P. 115.

According to paragraph 2 of Art. 11 of the Tax Code of the Russian Federation, persons with permanent residence in the Russian Federation are persons, including foreigners and stateless persons, who are actually present on its territory for at least 183 days in a calendar year (during one or more periods); persons who do not have a permanent residence in the Russian Federation are persons living on its territory for less than 183 days in a calendar year (physical presence test). The term “in a calendar year” means that the concept of “resident” characterizes a person’s residence in the Russian Federation strictly within one calendar year and cannot be extended to longer periods. In other words, residency in Russia is established annually.

In some countries, the period for determining residence is not the calendar year, but the tax year, which may not coincide with the calendar year.

A person who has lived in the Russian Federation for the specified period is recognized as a resident from the beginning of the calendar year in which he acquired resident status. Consequently, income from foreign sources received by a resident before arrival in the Russian Federation is subject to inclusion in income subject to taxation in the Russian Federation. The same procedure is established, for example, in Canada *1. In some countries, such as Austria, the consequences of recognizing a person as a resident cannot extend to the period preceding his arrival in the country *2. Consequently, income received by such a person from foreign sources before arriving in Austria is not included in income subject to Austrian income tax.
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*1 Taxation of International Executives. 1993 Klynveld Peat, Marwick Goerdeler. Amsterdam. P. 35.

*2 Ibid. P. 9.

The 183 days provision is very vulnerable. It’s easy to get around it, especially in conditions of open borders within the CIS. In addition, the “calendar year” rule allows for a situation where a subject lives on the territory of the Russian Federation for a total of one year, but is not a resident, since this year cannot be distributed among calendar years in such a way that in each of them the person lives no more than 183 days.

The laws of other countries use a more complex physical presence test to recognize residence. According to Chilean law, for example, tax residency arises if a person stays in the country for six consecutive months during one tax year or six months (consecutively or in stages) during two consecutive tax years.

In the US, the residency test includes two conditions. First, a person must be in the United States for at least 31 days in a calendar year. Secondly, the person’s residence in the United States in the two calendar years preceding is taken into account. given year. In the first previous year, one third of the days lived in the United States is taken into account, in the second - one sixth. If the sum from the addition of indicators for three years is equal to or exceeds 183 days, the person is recognized as a resident of the United States. For example, a foreigner working in the United States lived 130 days in 2000, 120 days in 1999, and 120 days in 1998. The calculation is carried out as follows.

Since the total number of days exceeds 183, the person is considered a US resident in 2000. In order for this person to not be recognized as a resident next year, 2001, he must have lived in the United States for less than 119 days.

An exception to this rule is made for persons who are in the United States for treatment (the time required for treatment is not taken into account when determining a person’s status) or who arrived in the United States for special purposes (training, official travel, etc.).

Another important exception concerns persons who have close contacts with another country. If the alien resides in the United States for less than 183 days in a calendar year, has taxable home ownership in another country, and has stronger ties outside the United States than in the United States (as determined, for example, by comparing contracts entered into by entities in the United States and those in other countries), then this person is not recognized as a US resident, even if the second of the two conditions described above fully complies with this.

The physical presence test is the most common, but not the only, way to determine residency.

In other words, the taxpayer’s personal connections with the state are characterized not only by his actual stay on the territory of that state, but also by other criteria. These criteria take into account various forms of connection between a person and the state.

In a number of countries, a person is recognized as a resident if he has domicile in that country. The content of this term is determined, as a rule, by civil law. In Anglo-Saxon countries, domicile is characterized mainly by the presence of a person's permanent residence. Everyone must have a domicile, and only one. A person can be a resident of two or more countries, but always has only one domicile. Initially, domicile arises at the place of birth, and then can change at the will of the person. A new place of residence can be called a domicile only if the person considers it as a permanent residence *1.
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*1 Revenue Law. Principles and Practice. James Kirkbride and Abimbola A.Olowofoyeku. Published in GB by Tudor Business Publishing Ltd., 1998. P.47.

For example, Norwegian law recognizes a person as domiciled for tax purposes in that country if the person has settled in Norway with intentions that cannot be considered temporary. If the taxpayer's family lives in Norway, he is considered to have residence even if he spends most of the year abroad.

In some countries, domicile serves as an additional criterion for determining taxation features. For example, in the UK it is taken into account whether a foreigner who is a UK tax resident is domiciled in this country or not. If not, then such a resident receives some tax benefits.

In Russian legislation, the concept of “domicile” (or similar concepts) is not used and does not have an impact on taxation.

The tax legislation of France and Luxembourg also uses the concept of “domicile”, but not in the meaning described above. In these countries it is similar to the concept of residency.

The criterion of permanent residence should be distinguished from the criterion of domicile. A person can be recognized as a tax resident of the country in which he has a permanent home, that is, he owns or owns this home.

Permanency means that the person created and maintains the dwelling for permanent use and not for a short, temporary stay. In this case, housing means a house, an apartment, and a room owned or rented by a person. It is only important that the person intends to use it for permanent needs, and not for temporary purposes, such as accommodation during vacations, business trips, education, etc. For example, if a person owns a home in a resort location and uses it year after year, but only for vacations, then such a home cannot be considered as a permanent home for tax purposes.

A person can be recognized as a tax resident of the country in which he has a permanent home, regardless of whether he actually resides there or not. For example, French law establishes that if a person maintains a permanent home in France and his family lives in France, then the person is considered to have a home in France even if he was abroad for most of the year.

In the UK, a person who has a home there is recognized as a resident if he has visited the country at least once during the year.

Russian legislation does not take into account the presence of a permanent home for tax purposes.

A person can be recognized as a resident in the country where the center of his vital interests is located, that is, the place where the taxpayer has the strongest personal and economic ties. To establish and evaluate such connections, it is necessary to study the various circumstances of a person’s life together. In this case, his family and social relationships, occupation, political, cultural and other activities, place of business activity, center from which he manages his property, etc. are of significant importance.

For example, according to the laws of Luxembourg, a person is recognized as a tax resident of this country if he has a center of economic interests in it. This means that the person has made a major investment in Luxembourg, or the person's business is operated from Luxembourg, or the person receives the majority of his or her income in Luxembourg.

In France, a person can be recognized as a resident if he carries on his business there professional activity, which cannot be characterized as auxiliary or additional (center of business interests). A person is considered to have his main activity in France if he spends the majority of his time there or receives more than 50% of his income from his professional activities.

A unique variant of this approach is the rule established by Portuguese legislation. A person can be considered a Portuguese tax resident if, as at 31 December of the relevant year, he was a member of the crew of a vessel or aircraft used by a person located in Portugal, having its headquarters or place of management of its day-to-day activities there.

In rare cases, a person's tax laws depend directly on his citizenship. Unique in this regard is the United States, which levies income taxes on all income of its citizens regardless of their place of residence. This approach is justified by the fact that “the benefits of citizenship extend beyond territorial boundaries. For example, the United States strives to protect its citizens in any country in the world. Citizens also have the right to return to the United States whenever they wish and participate in the economic life of the country. In fact, a US citizen has an insurance policy (contract), and taxes are its cost” *1.
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*1 Dernberg R.L. Decree. op. P. 33.

Since the political and legal connection of a person with the state can be determined not only by citizenship, residency can also be determined on the basis of other circumstances characterizing this connection. In the USA, for example, in addition to citizens, tax residents are persons who have received a residence permit (the so-called “green card”). A similar rule applies in Brazil: a foreigner who enters the country with a permanent visa is considered a resident from the day of arrival.

Finally, a person can become a resident of a country as a result of free will. For example, a foreign national new to the United States may acquire tax residency “by application,” but there are certain rules for doing so *1.
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*1 See about this: Dernberg R.L. Decree. op. P. 35.

The emergence of tax residency “by application” should not be confused with cases where tax residency arises due to the expressed intentions of a person to become a resident of the country where he arrived. In the first case, residence arises at the will of the taxpayer, and in the second - by force of law.

For example, if a person arrived in the UK as an employee and the period of stay in the country is at least two years, then he is recognized by law as a resident from the moment of arrival.

The legislation of some countries complicates the division of taxpayers into residents and non-residents, identifying separate groups. In the UK, for example, residents are divided into two categories: permanent residents *1 (ordinarily resident) and non-permanent residents (non-ordinarily resident). For example, persons who have stayed in the UK for more than three years are recognized as permanent residents. Their tax status is distinguished by a more complex period of loss of resident status and the peculiarities of taxation of certain types of income received abroad.
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*1 This concept is sometimes translated as “ordinary residents.”

In Japan, non-permanent residents are taxpayers who have had resident status or domicile in Japan for a period of up to five years, unless they have expressed an intention to become permanent residents of Japan. Persons who have expressed such an intention or have been residents (have had domicile) for more than five years are recognized as permanent residents. While permanent residents of Japan are required to pay tax on income earned elsewhere, non-permanent residents are exempt from tax on foreign-source income provided that the income is not actually paid in Japan or remitted to Japan.

The legislation of the Russian Federation does not distinguish any categories of residents or non-residents.

2. Avoidance of double taxation due to dual residence

The above approaches to determining residency are applied differently in different states. As a result, it may be that a person is simultaneously recognized as a resident of two or more countries. This will result in multiple taxation as each state will claim to tax that individual's total income.

For example, a US citizen who has a home in France, where his family lives, works in Russia and spends more than six months in a calendar year there. He will be recognized as a resident of all three states, each of which will claim to collect tax on everything that person earns for the year.

This problem can be resolved by establishing special rules, preferring certain forms of relations with the state over other forms. Since these rules resolve contradictions that arise between states, they can be established by international agreements for the avoidance of double taxation of income.

Most agreements concluded with the participation of the Russian Federation are based on the OECD Model Convention.

When resolving the problem of dual residence, the convention gives preference to the criterion of permanent residence. If a person, by virtue of the legislation of one state, is recognized as a resident of it because he has a permanent home there, and of another - because he stays there for more than a specified period, then, in accordance with the international treaty for the avoidance of double taxation of income and property, adopted on the basis of the OECD Model Convention, he will be recognized a resident of only the first state.

If a person has a permanent home in both countries, then preference is given to the one in which the person has the closest personal and economic relations.

However, a situation is possible when a person has homes in several states at the same time and it is impossible to determine which state is the center of his vital interests. It is also possible that a person recognized as a resident in both states does not have a permanent home in either of them. In these cases, the OECD Model Convention recommends that a person be recognized as a resident of the contracting state in which he or she ordinarily resides. In this case, it is necessary to take into account residence in the country at any address, and not just at the place of permanent residence. The reasons why a person was forced to stay on any territory are not important.

The OECD Model Convention did not establish any specific time frame for resolving the problem of dual residence based on habitual residence. However, within the meaning of this document, rather long periods should be considered, allowing the taxpayer’s place of usual residence to be determined as accurately as possible.

In some cases, the problem of dual residence cannot be resolved on the basis of the criterion of usual residence, for example, when a person does not reside in one of the countries that recognize him as a resident, or is recognized as habitually resident in both of these countries. In such a situation, the sign of citizenship comes into play: the person will be recognized as a resident of the contracting state of which he is a citizen.

Finally, if a person who is recognized as a resident under the laws of both contracting states is not a citizen of either of them or has dual citizenship, then the OECD Model Convention recommends that the question of the tax status of the individual be referred to the financial or tax authorities of the contracting states for an agreed decision .

3. Termination of residence

A person ceases to be a tax resident in the country due to the fact that the circumstances leading to the emergence of residency no longer exist. For example, if a tax resident of the Russian Federation next year does not actually stay on Russian territory for more than 183 days, then he is “automatically” recognized as a non-resident from the beginning of the corresponding calendar year.

In some countries, such as the UK, the tax year may be divided into two parts. In one of them, a person may be recognized as a tax resident, and in the other, a non-resident. In other words, the taxpayer loses his resident status not from the beginning of the relevant tax year, but from the day of departure from the country.

The laws of some countries establish a special “buffer” period during which a person who ceases to qualify as a resident continues to pay tax as a resident. For example, in the United States, where citizens are tax residents, a taxpayer who renounces citizenship in order to optimize taxation is required to continue paying taxes for the next 10 years, just like a citizen (resident). Swedish law states that a person who has had a permanent home in Sweden or has lived in the country for at least ten years before leaving the country is potentially considered a resident for the next five years. However, a person has the right to rebut this presumption by proving that he no longer has significant ties to Sweden.

Legislation may establish special procedures that must be followed by tax residents leaving the country and losing their resident status. For example, when leaving Cyprus, a person must obtain a special certificate from the tax authority regarding the fulfillment of tax obligations. A similar requirement is established in Brazil: the taxpayer leaving the country is required to submit to the tax authority a declaration of income received during the past part of the year, pay the calculated tax, and also pay off all tax debt, if any.

Legislation in, for example, Austria requires the taxpayer to notify the tax authority of the termination of residence. In some countries, legislation establishes special guarantees for the fulfillment of their tax obligations by resident foreign citizens. As established in the United States, a resident or nonresident alien may not leave the country without a certificate of compliance with federal income tax laws. This rule does not apply to temporary visitors or persons intending to return to the United States *1.
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*1 Dernberg R.L. Op. op. P. 65.

If residence terminates not at the time of departure from the country, but at the end of the tax year, the resident who left the country, in addition to the declaration submitted before departure, is required to submit a final declaration for the year as a whole. It is submitted in the manner and within the time limits established for all taxpayers. This rule has been established, for example, in France.

The Tax Code of the Russian Federation establishes that a foreign citizen, leaving the Russian Federation, is obliged, no later than a month before the date of departure, to submit to the tax authority a declaration of income received in the current tax period (or in the past period, if the declaration has not yet been submitted). Within 15 days from the date of filing the declaration, the due tax must be paid (Article 229 of Part Two of the Tax Code of the Russian Federation). The Tax Code of the Russian Federation does not directly stipulate the obligation of foreign citizens-tax residents of the Russian Federation to submit a final declaration at the end of the year. However, since the tax residency of the Russian Federation is established in relation to the entire tax period (year) and the Tax Code of the Russian Federation does not make any exceptions in relation to persons planning to lose residency in the future period, such persons, including foreign citizens, are required to submit tax returns at the end of the year in the generally established manner.

The Tax Code of the Russian Federation does not establish any special rules regarding Russian citizens leaving the country and losing tax residency. Most likely, this can be considered as a legislative gap.

4. Changes in the tax liability of non-residents by international treaties

Agreements (conventions) for the avoidance of double taxation, as a rule, provide for exemption from paying tax in the territory of one of the contracting states for persons who do not have a permanent residence there. For example, Art. 12 of the Convention between the Government of the USSR and the Government of Spain for the avoidance of double taxation of income and property of March 1, 1985 determines that remuneration received by a person with permanent residence in one contracting state for employment in another contracting state may be taxed only in the first state , unless the recipient is present in another state for one or more periods exceeding a total of 183 days in the tax year. For persons engaged in construction and installation work, this period has been extended to 12 months; for persons invited government agency or an institution, official educational or research institution for the purpose of teaching, conducting scientific research, etc. - up to three years, and for pupils, students, graduate students and trainees in relation to scholarships and other amounts intended to ensure their standard of living - up to six years.

Similar rules may be contained in national legislation, for example, the USA.

5. Citizenship criterion

To determine tax obligations, in addition to the residency criterion, the citizenship criterion is applied. A number of fundamental international documents provide for equal rights of citizens and foreigners in obligations to the country's budget. Therefore, the principle of citizenship cannot be used to increase the tax obligations of foreign citizens: the main parameters of the tax - rates, benefits, taxation procedures - must be the same. The OECD Model Convention states that “nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith that is different or more burdensome than the taxation or related requirements to which nationals of that other State are or may be subjected when the same circumstances, in particular in relation to residents” (Article 24). In other words, the Convention prohibits tax discrimination on the basis of national origin, which means that nationals of one state cannot be subject to tax treatment in another state that is less favorable than the treatment that applies to nationals of the taxing state. This principle applies to all nationals of the contracting states, and not just those who are residents of them.

When analyzing different tax rules applied to two taxpayers from the perspective of compliance with non-discrimination rules, it is necessary to determine whether the difference in taxation is the only consequence of different nationality or whether there are other differences that are significant for taxation: residence, marital status, etc.

At the same time, tax laws may establish some differences based solely on the nationality of the taxpayer. Some features of income declaration (filing by foreigners and stateless persons of declarations on expected income within a certain period from the date of arrival in the country, etc.) and tax payment may be different. These differences are due to the need to establish special tax control measures aimed at ensuring the actual fulfillment of tax obligations by foreign citizens. Such differences do not mean a violation of the non-discrimination requirement, since they do not affect the amount of taxation.

The citizenship of the taxpayer is important when deciding on the provision of benefits based on the principle of reciprocity: if one state reduces the amount of taxation or provides any benefits to citizens of another state, then another state, guided by the principle of reciprocity, provides the same benefits to citizens of the first. The principle of reciprocity is applied in Art. 215 of part two of the Tax Code of the Russian Federation, which establishes that the income of the heads and staff of representative offices of foreign states with diplomatic and consular rank, members of their families, and some other persons is not subject to taxation, but provided that the legislation of the relevant foreign state establishes a similar procedure in relation to the corresponding persons, that is, employees of Russian diplomatic and consular organizations in this foreign state enjoy the same benefit.

The previous legislation of our country allowed not only the reduction of tax obligations in accordance with the principle of reciprocity, but also the application of strict conditions for taxation of foreign individuals as a response to tax discrimination against Soviet citizens.

The legislation of post-revolutionary Russia contained other very “interesting” solutions in the field of the tax status of foreigners, for example, the use of a kind of redemption of a foreigner’s tax liability by the state of his origin. The Decree of the Council of People's Commissars of January 25, 1919 on the application of a one-time emergency revolutionary tax of 10 billion to citizens of foreign countries determined that when concluding special agreements of neutral powers with the RSFSR, it is possible to exempt citizens of a certain country from paying an emergency tax, subject to the provision of appropriate compensation on their part .

In accordance with the norms of international agreements, current Russian legislation only allows for easier taxation of foreigners based on the principle of reciprocity, but not heavier taxes.

Article 3 of Part 1 of the Tax Code of the Russian Federation establishes that taxes and fees cannot be discriminatory in nature and applied differently based on social, racial, national, religious and other similar criteria. It is not allowed to establish differentiated rates of taxes and fees, tax benefits depending on the form of ownership, citizenship of individuals or place of origin of capital.

Tax legislation may provide for certain benefits in case of special interest of the state in attracting a foreign specialist. The Law of the Russian Federation dated 07.12.1991 N 1998-1 “On personal income tax” *1 provided that if a Russian enterprise invites a foreign citizen-technical specialist and the contract provides for the payment of travel expenses to him in connection with his stay in Russia, although such expenses and are not related to movement within its territory, these payments are not included in the taxable amount, although in other entities similar payments are considered as supplements to wages and are subject to income tax on a general basis. The Tax Code of the Russian Federation no longer provides for such a benefit.
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*1 Gazette of the Congress people's deputies Russian Federation and the Supreme Council of the Russian Federation. 1992, N 12. P. 591.

In China, which pursues a policy of actively attracting financial, material and technical resources and modern technologies from abroad, taxation of foreigners is characterized by a significant number of benefits and a simplified tax collection procedure. The differences in taxation between citizens and foreigners there are quite significant, which is why a law on income tax on foreign citizens was passed.