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The tax affairs of people currently stranded in New Zealand may also be affected by double tax agreements (DTAs). When there is double taxation, a DTA will generally apply. The residence tests in DTAs are interpreted in a holistic and integrated manner and it is not expected that persons will be treated as resident under DTAs just because of the current emergency conditions.

Recently, the OECD has published guidance concerning international tax treaty rules and the response to the COVID-19 emergency. The OECD considers that a company’s place of effective management will not change because of the displacement of senior executives. The OECD does not consider that the current emergency will change how a PE is determined. This is because temporary changes of location under emergency conditions should not create new PEs for the employer. Also, if contracts are concluded temporarily at employees’ or agents’ homes under the current emergency then there is no PE created for the businesses involved. The OECD considers that the COVID-19 emergency is unlikely to change residency status under a tax treaty.

In Australia, the ATO has also published their position on these matters which is very much in line with the above guidance.

Competent authority assistance is available if treaty partners are taking different positions to those taken by Inland Revenue and we would encourage early engagement if any difficulties are experienced

OECD Secretariat Analysis of Tax Treaties and the Impact of the COVID-19 Crisis