Tax residence conflicts: when two countries consider you a resident at the same time

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🏁 When two jurisdictions claim the same taxpayer

In an increasingly global world, it is common to live, work or invest across different countries. But what happens when two jurisdictions consider the same person a tax resident at the same time?

This situation, known as a tax residence conflict, can lead to double taxation on income and, as a result, serious administrative and financial complications.
To resolve it, Double Taxation Agreements (DTAs) set precise criteria to determine which country has the right to treat a person as tax resident.

🏠 How each country determines tax residence

Each State defines its own concept of tax residence in its income tax law. When the criteria of more than one country apply, a conflict arises.

🇦🇩 Andorra

According to Article 8 of Law 5/2014 on Personal Income Tax (IRPF), a person is considered tax resident if they:

• Stay more than 183 days during the calendar year in the Principality, or
• Have in Andorra the centre or base of their economic activities or vital interests.

These criteria match those explained in Tax residency in Andorra: requirements and implications.

🇪🇸 Spain

Article 9 of Law 35/2006 on Spanish Personal Income Tax establishes that residence applies:

• When a person stays more than 183 days a year in Spanish territory, or
• When their main centre or base of economic activities or interests is located there.

In addition, residence is presumed if the taxpayer’s spouse or minor children habitually live in Spain.

🇫🇷 France

Article 4 B of the Code général des impôts sets out four alternative criteria:

• Domicile or main residence in France.
• Main professional activity carried out in France.
• Centre of economic interests located in France.
• Residence of the spouse or dependent family in the country.

In practice, these similar criteria explain why many cross-border taxpayers — especially between Andorra, Spain and France — may find themselves in situations of apparent double residence.

🌍 The importance of Double Taxation Agreements (DTAs)

As mentioned, DTAs are essential instruments to avoid double taxation and provide legal certainty to investors.
Below is the situation of the countries most relevant to Andorra:

• Spain has more than 150 agreements in force.
• France maintains a similar network with most EU and OECD countries.
• Andorra, despite its size, already has around twenty, including those with Spain (2016) and France (2015), which are particularly important due to their geographic and economic proximity.

➤ The complete list of treaties is detailed in Double Taxation Agreements in Andorra.

In addition to preventing double taxation, these treaties:

• Facilitate international mobility.
• Protect foreign investments.
• Reduce withholding taxes on dividends, interest and royalties, enhancing mutual economic interest.

➤ To learn more about how these treaties work between the three countries, see The France-Andorra Tax Treaty and The Spain-Andorra Tax Treaty.

🎾 The “tie-break rules”: a fiscal tennis match

When two jurisdictions, applying their internal laws, both consider a person as tax resident, the international tie-break mechanism established in bilateral DTAs is applied.

In most cases, it appears in Article 4 of the treaty and follows a sequence of tests (OECD Model, Art. 4.2):

• Permanent home: the person is deemed resident of the country where they have a permanent home available.
• Centre of vital interests: if a permanent home exists in both, the decision depends on where family, business and economic relations are closer.
• Habitual abode: if the previous cannot be determined, residence is attributed to the country where the person spends most time.
• Nationality: if habitual residence exists in both, nationality prevails.
• Mutual agreement: if doubt remains, the competent authorities settle the matter by mutual agreement through administrative or diplomatic channels.

This system ensures that, when a DTA exists, a person can have only one tax residence for international purposes.

⚠️ What if there is no Double Taxation Agreement?

Without a DTA, the risk of double taxation is real: each State may claim tax on the same taxpayer’s worldwide income.

In such cases:

• Each country may apply full taxation or withholdings on income earned within its territory as if the person were resident.
• The taxpayer may still deduct foreign taxes paid, insofar as domestic law allows.
  In practice, this often means being taxed under the less favourable regime of both countries, without mutual procedure or administrative cooperation.

🧭 Can double taxation be avoided without a DTA?

The only solution is to avoid being considered tax resident in both countries simultaneously. If possible, you should:

• Check whether one of the countries can treat you as non-resident and apply its domestic rules accordingly.
• Verify whether domestic law allows deduction of taxes paid abroad (this is usually the case).
• Review if there are Tax Information Exchange Agreements (TIEA) that can help avoid penalties and regularise your situation.

💡 Practical advice to prevent conflicts

Since tax systems are not symmetrical — despite harmonisation efforts from the OECD — proper planning, both before departure and upon arrival, is essential.

Having an experienced adviser is crucial, though some of the key points to consider are:

• Where your centre of vital interests is located before changing tax residence.
• Keeping documentation on days of stay and maintaining clear information about housing and economic ties.
• Analysing both countries’ tax rules (on personal income and non-resident income) and checking if a DTA applies.
• In complex situations, requesting a binding ruling or initiating a Mutual Agreement Procedure (MAP) to determine residence.

You can also read Taxation in Andorra: structure, rates and real advantages to know how income is taxed according to its type and source.

📞 Need help determining your tax residence?

At ELYSIUM Consulting, we analyse your personal situation and help you avoid double taxation between Andorra, Spain and France.Contact us and make your decisions with legal certainty.

Contact us and make your decisions with legal certainty., we analyse your personal situation and help you avoid double taxation between Andorra, Spain and France.

Last reviewed: November 2025