A founder registers a company in Hong Kong, Singapore, the UK or the BVI, then runs it from a laptop in Lisbon, Dubai or Seoul. Which country taxes it? Not only the one on the certificate. Tax authorities look at where the company is really managed, whether it has a taxable presence where its people work, and, in some places, whether it has real activity where it claims to be. This guide explains the three ideas in plain terms, from official sources checked in October 2026. It describes the rules; whether they bite in your case depends on facts only an adviser can weigh.
1. Residence: registered there, or managed there?
Countries decide whether a company is resident in one of two ways, and many use both.
- By incorporation. A company incorporated in the UK is UK resident for corporation tax by law; one incorporated in Canada after April 1965 is deemed resident in Canada; Hong Kong treats a company incorporated there as resident for its tax treaties.
- By management. The same countries, and others, also treat a foreign company as resident if it is run from there:
- UK: a company “resides … where its real business is carried on”, which is “where the central management and control actually abides”. In the leading case, a company incorporated and trading in South Africa was UK resident because its board exercised its powers in the UK. HMRC stresses it is “the highest level of control” that counts, which can be a parent company or an individual shareholder, not only the board.
- Singapore: “Your company is a tax resident of Singapore when its control and management is exercised in Singapore,” meaning where strategic decisions are made, usually where the board meets. IRAS adds that board meetings in Singapore may not be enough on their own.
- Canada: “a company is resident in the country in which its central management and control is exercised,” usually where the directors meet, so a company can be Canadian resident without being Canadian.
- Hong Kong: a company incorporated elsewhere is treated as resident if it is normally managed or controlled in Hong Kong.
Put those together and a company registered in one country but run by a founder who lives in another can be resident in both.
Sources: CTA 2009 s.14 · HMRC INTM120060 · IRAS: tax residency of a company · CRA: residency of a corporation · ITA s.250(4) · IRD: certificate of resident status · IRD DIPN 44 (Mainland arrangement)
2. When two countries both claim it
If the two countries have a tax treaty, its tie-breaker decides. Older treaties based on the OECD model give residence to the state where the company’s “place of effective management” is. Since 2017 the OECD model instead asks the two tax authorities to “endeavour to determine by mutual agreement” where the company is resident, “having regard to its place of effective management, the place where it is incorporated … and any other relevant factors”. If they don’t agree, the company can lose the treaty’s relief altogether. Which version applies depends on the treaty between your two countries, and some pairs have no treaty at all.
Sources: OECD Model Tax Convention, 2017 Update
3. Permanent establishment: taxed where you work
Even if the company stays resident only where it is registered, it can have a taxable presence where its people work. Under the OECD model a permanent establishment is “a fixed place of business through which the business of an enterprise is wholly or partly carried on”.
For founders working from home, the OECD added guidance in its 2025 update: a home “would generally not be considered a place of business of the enterprise” if the person works there less than 50% of their working time for the company over any twelve months. At 50% or more it depends on the facts and circumstances. A founder who runs the company full time from home is in that second group. Estonia’s tax board puts it bluntly for e-residents managing an Estonian company from abroad: the company “will probably have a permanent establishment abroad”.
Sources: OECD Model Tax Convention, 2017 Update (Art. 5) · OECD 2025 Update (home working) · Estonian Tax and Customs Board
4. Economic substance: real activity where you say you are
Economic substance laws are a separate thing. Since 2018 the OECD’s standard for no or only nominal tax jurisdictions aims “to ensure that mobile business income cannot be parked in a zero tax jurisdiction without the core business functions having been undertaken” there. Jurisdictions such as the BVI enacted laws to meet it.
The BVI’s law applies to companies carrying on any of nine “relevant activities”: banking, insurance, fund management, finance and leasing, headquarters, shipping, holding, intellectual property, and distribution and service centre business. Such a company must have the activity directed and managed in the BVI, adequate qualified employees physically there, adequate expenditure and premises, and its core income-generating activity in the BVI. A pure equity holding company has a lighter test. See our BVI company formation guide.
Hong Kong and Singapore have no economic substance law of this kind, but the residence rules above still apply, and Hong Kong’s foreign-sourced income rules ask multinational group members for substance; see where to put a holding company.
Sources: OECD: BEPS progress report 2021 · BVI Economic Substance Act (ITA consolidation)
Questions to ask about your own setup
Not a test, but the facts an adviser will want:
- Where are the strategic decisions made: contracts, pricing, hiring, borrowing? By whom, and where are they physically when they make them?
- Who are the directors, where do they live, and where do board meetings actually happen? Are there minutes?
- Where do you and any staff work, and for what share of the time?
- Does the company have an office, people or spending where it is registered?
- Is there a tax treaty between the countries involved, and which tie-breaker does it use?
If the honest answer to the first question is “wherever I am”, the country you live in has a claim, and the structure should be planned with that in mind. See company in one country, you in another and dual tax residency when you relocate.
An example
Invented for illustration. Sara lives in Lisbon and is the sole director of a Hong Kong company that sells design services to clients in Asia. She takes every decision from her home office, full time. Hong Kong treats the company as resident because it is incorporated there. Portugal may treat it as managed in Portugal, and her home office is where the business is carried on for more than half her working time. Her adviser looks at three things: whether a treaty between the two applies and what its tie-breaker says, whether the company has a permanent establishment in Portugal, and what Portugal’s own rules say about a company its resident controls. The answer might be to move real management to Hong Kong, to restructure, or to accept Portuguese tax on part of the profit. What it can’t be is to ignore it.
Not sure where your company really sits?
Tell us where your company is registered, where you live and how decisions are made. We’ll map the questions for your adviser and help put the structure on a footing that matches how you actually run it.
Talk to usFrequently asked questions
Where is my company tax resident if I run it from another country?
Possibly in both. Many countries treat companies incorporated there as resident, and many also treat foreign companies as resident if they are managed or controlled there, usually where the board meets or strategic decisions are made. A tax treaty between the two countries, if there is one, may decide which wins.
What is the place of effective management?
Broadly, the place where the company’s most important decisions are really made, whatever its paperwork says. Older tax treaties use it to settle which country a dual-resident company belongs to; since 2017 the OECD model asks the two tax authorities to agree, taking it into account along with other factors.
Can working from home create a permanent establishment for my company?
It can. Under the OECD’s 2025 guidance, a home is generally not a place of business of the company if you work there less than 50% of your working time for it over twelve months. At 50% or more it depends on the facts and circumstances.
What are economic substance requirements?
Laws in low or no tax jurisdictions such as the BVI that require companies carrying on certain activities, like holding, finance, headquarters or intellectual property business, to have real management, people, spending and premises there. They follow an OECD standard adopted in 2018.
Do Hong Kong and Singapore have economic substance rules?
Not a general substance law like the BVI’s. But both decide residence partly by where a company is managed, and Hong Kong’s foreign-sourced income rules require substance from members of multinational groups.
General information on how residence, permanent establishment and substance rules work, not tax or legal advice for your situation. The answer depends on the facts and on the laws and treaties of every country involved. Ask a qualified adviser in each before acting.