If you manage a subsidiary from another country, it can end up resident in two places. A Jersey company whose board makes all decisions in London can be resident in Jersey and the UK at once. HMRC and the Jersey tax authority may each treat it as their own taxpayer.
Incorporation and management tests
A company can pass the incorporation test in one country and the management test in another. Only a tax treaty can settle a double claim, because each test comes from national law.
| Country | A company is resident if it is |
| UK | Incorporated in the UK, or controlled by its board from the UK |
| United States | Created or organized under US federal or state law, wherever its board meets |
| Ireland | Incorporated in Ireland, unless a treaty points elsewhere, or centrally managed and controlled in Ireland |
| Netherlands | Incorporated under Dutch law, or effectively managed in the Netherlands |
| Germany | Registered in Germany or managed from there |
| UAE | Incorporated or otherwise set up in the UAE, or effectively managed and controlled there |
| Singapore | Controlled and managed from Singapore |
| Cyprus | Managed and controlled in Cyprus. Since a 2026 reform, also incorporated in Cyprus, unless a treaty provides otherwise |
Central management and control in the UK
If your subsidiary’s directors take its top-level decisions in the UK, HMRC’s International Manual treats it as UK resident wherever it was incorporated. The rule goes back to the 1906 De Beers case. Board meetings abroad carry weight only if the board uses its controlling power mainly at them.
| Court or tribunal decision | Who took the decisions, in the court’s view |
| Wood v Holden, Court of Appeal, 2006 | The Dutch company’s directors, although advisers proposed the decisions. Ill-informed or ill-advised decisions still counted as theirs, so the company was resident in the Netherlands |
| Development Securities v HMRC, Court of Appeal, 2020 | The UK parent, because the Jersey directors carried out its instruction without engaging with it. The three Jersey subsidiaries were UK resident |
| Cogefin (Bermuda) v HMRC, tax tribunal, July 2026 | The beneficiary in the UK, whose proposals the directors only “sense checked”. The Bermuda company was UK resident for 1999-2017 |
When two countries claim the same company
Suppose your UK company’s board meets in Ireland. The UK and Ireland can each treat it as resident under their own law. A tax treaty settles the conflict through a tie-breaker rule.
Older treaties used the place of effective management as an automatic tie-breaker. The 2017 OECD Model replaced it with a case-by-case agreement between the competent authorities, the tax authorities that resolve treaty cases. HMRC notes that many UK treaties keep the older test.
Where the treaty partner accepted it, the UK applied the new rule through Article 4 of the multilateral instrument. The instrument amends many treaties at once. Until the authorities agree, your company has only the treaty relief they allow. HMRC still charges it UK corporation tax in the meantime.
Leaving UK residence
A company incorporated abroad leaves UK residence once its board controls it from outside the UK. A UK-incorporated company leaves only when a treaty makes it resident elsewhere. In that case, section 18 of the Corporation Tax Act 2009 makes it non-UK resident for all corporation tax purposes.
On the day your company leaves, it’s treated as selling every asset at market value. Section 185 of the Taxation of Chargeable Gains Act 1992 (TCGA) also treats the assets as bought back at once. Assets kept in a UK permanent establishment, or taxable business presence, are excluded.
Before departure, your company must notify HMRC and send a statement of the tax it owes. HMRC must approve its arrangements for paying that tax. HMRC can recover any unpaid amount from other group companies and from a controlling director.
Paying the exit charge
Your company owes the exit charge on the day it leaves. Yet the company has sold nothing. Some destinations allow it to spread the payment and ease that cash cost.
| Company and destination | Tax charged | Payment terms |
| UK company to an EEA state | Deemed disposal of all assets at market value | Six equal annual installments, on application within nine months |
| UK company to any other country | The same deemed disposal | Due under the normal payment rules |
| EU company to another EU or EEA state | Exit tax under Article 5 of the Anti-Tax Avoidance Directive | Installments over five years |
A 75% subsidiary of a UK parent could once postpone the charge under section 187 of TCGA. The relief ended for departures from January 1, 2020. A departing subsidiary now pays at exit, as any other company must.
Residence on bank and treaty forms
Banks ask every new corporate client to self-certify its tax residence. They report the answers to tax authorities under the OECD’s Common Reporting Standard (CRS). If your company is dual resident, it must list every jurisdiction of residence from January 1, 2026, whatever a tie-breaker says.
Your lender will ask about residence too, because it decides the withholding tax on cross-border interest. Most loan agreements make you, as the borrower, bear that tax. Under US treaties, a company must also pass a limitation-on-benefits test before it can claim treaty rates.
If you claim treaty relief abroad, you’ll need proof of residence from your home tax authority. Singapore’s tax authority, IRAS, issues a certificate of residence only if your board exercised control and management in Singapore in the previous calendar year.
Board practice and the risk of a challenge
UK law doesn’t require a set share of your directors to live in the country of residence. Singapore is stricter about virtual board meetings. IRAS expects at least half the directors, or the chair, to attend from Singapore.
When the COVID-19 restrictions applied, HMRC said that a few board meetings held in the UK would not necessarily make a company UK resident. The OECD took the same view on treaty residence in its January 2021 guidance.
If HMRC finds your overseas company UK resident and the company never notified its chargeability, HMRC can assess up to 20 years back. In Cogefin, the tribunal upheld assessments that began in 1999.
FAQ
Can a company choose its residence in its articles of association?
No, a clause naming Jersey as the place of residence won’t protect the company if your directors take their decisions in London. HMRC follows De Beers and looks at where the board decides in practice, whatever the articles say.
What happens to dividends from a company that two countries treat as resident?
Each country may withhold tax on them until the competent authorities agree on one residence. The OECD Commentary treats such a company as resident of each state for the dividend article.
Can a foreign company transfer its registered seat to the UK?
Not yet, although the government consulted on an inward re-domiciliation regime from March 25 to June 19, 2026. Under the proposal, a foreign company could transfer its incorporation to the UK and remain the same legal person. As of mid-October 2026, no government response had appeared.