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Chapter DT19861A

Document Cited authorities 1 Cited in Related
Vincent
Published date20 May 2016
Record NumberDT19861A

For periods on or after 6 April 2003, Article 4(2) of the new Agreement contains an exception to the general rule of Article 4(1) that residence under internal law also determines residence under the Agreement. The exception applies with respect to a US citizen or alien lawfully admitted for permanent residence (i.e., a “green card” holder). Under Article 4(1), a person is considered a resident of either the UK or the US for purposes of the Agreement if he is liable to tax in either country by reason of citizenship. Although this rule applies to both countries, only the US taxes its non-resident citizens in the same manner as its residents. In addition, aliens admitted to the US for permanent residence (“green card” holders) qualify as US residents under Article 4(1) because they are taxed by the United States as residents, regardless of where they physically reside.

Under the exception of paragraph 2, a US citizen or green card holder will be treated as a resident of the US for purposes of the Agreement, and, thereby entitled to treaty benefits, only if he meets two conditions.

First, he must have a substantial presence (IRC 7701(b)(3); see DT19860), permanent home or habitual abode in the United States. The rule requires that...

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