Panama - Residence

Article 4. Resident

Tax residence

1.   For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to income tax therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State situated therein.

2. A person, other than an individual, which has its place of incorporation or its place of management in a Contracting State, shall be deemed to be liable to tax in that State provided that income derived by that person is treated under the tax laws of that State as the income of that person and not as the income of its beneficiaries, members or participants.

Tie breaker

3.   Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

a)   he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident only of the Contracting State with which his personal and economic relations are closer (centre of vital interests);

b)  if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident only of the State in which he has an habitual abode.

c)   if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

d)  if the residence status of an individual cannot be determined in accordance with the provisions of subparagraphs a), b) and c) above, then, the competent authorities of the Contracting States shall settle the question by mutual agreement.

Dual residence

4.   Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.

Individuals

Co-operations