What is the HMRCs Certificate of Residence (CoR)
A Certificate of Residence(CoR) is an official document issued by HMRC confirming that you or your company are a UK tax resident under the terms of a Double Taxation Agreement (DTA). It is generally required when receiving income from a country with which the UK has a tax treaty.
CoRs are often needed for foreign pensions, dividends, overseas rental income, payments to UK businesses from foreign clients, or royalties, interest, and dividends from overseas subsidiaries. Pension schemes and trusts may also request a CoR to reclaim foreign taxes on investments held within a fund.
Unlike a standard residency letter, a CoR certifies that the individual or entity is a UK taxpayer under a specific treaty article, signaling to foreign tax authorities that the income should not be taxed again in their jurisdiction.
What Does the Certificate of Residence Include?
A Certificate of Residence (CoR) is more detailed than a standard residency letter, meeting the formal requirements of a foreign tax authority. It explicitly identifies the relevant Double Taxation Agreement (e.g., the UK–USA Double Taxation Convention) and references the specific treaty article applicable to the income, such as Article 10 for dividends. The certificate also specifies the tax year or certification period and confirms that the individual or entity is subject to UK tax on that income—a critical legal distinction for foreign authorities when determining tax treatment.
Why Is the Certificate of Residence Useful?
A CoR establishes eligibility for treaty-based tax relief on international income. It can be provided to a foreign payer to ensure payments are made gross, without withholding local tax. If tax has already been withheld, a CoR is typically required to support a refund claim. The document also helps prevent dual residency disputes by clarifying which country has primary taxing rights over your worldwide income.
When a Certificate of Residence Is Required
A Certificate of Residence (CoR) is needed when UK residents receive income from overseas and wish to rely on a Double Taxation Agreement (DTA) to reduce or eliminate foreign tax. The requirement generally arises before payment or when reclaiming foreign withholding tax.
Common Situations for Individuals
- Foreign pensions: Demonstrate UK treaty residence to claim relief under the relevant treaty article.
- Overseas dividends or investment income: Enable payers or foreign authorities to apply reduced treaty rates.
- Rental income from foreign property: Confirm treaty entitlement and correct allocation of taxing rights.
- Freelancers or cross-border consultants: Show that income is taxable in the UK, avoiding withholding abroad unless there is a permanent establishment.
Common Situations for Companies
- Royalties: Supports treaty relief under the relevant royalties article.
- Cross-border interest: Reduces withholding rate on loans between connected or third parties.
- Intercompany dividends: Confirms treaty residence, potentially reducing or eliminating withholding tax.
- Intragroup service payments: Establishes treaty entitlement and prevents unnecessary deductions.
Foreign Withholding Tax
Many countries impose withholding tax on payments to non-residents, typically 20–30%. Double Taxation Agreements may lower this to 0%, but relief is not automatic. Foreign payers or tax authorities usually require an HMRC-issued CoR. Without a CoR, payments may be made net of tax, requiring a time-consuming reclaim. Obtaining the certificate in advance prevents cash flow issues and administrative delays.
What HMRC Needs from You
When applying for a Certificate of Residence, HM Revenue and Customs requires specific information to ensure the certificate satisfies the relevant treaty conditions. The application must clearly link the request to a particular Double Taxation Agreement and type of income.
Core Information Required
Explain why the certificate is required, the relevant treaty, the type of income with treaty article, the period covered, and confirmation of beneficial ownership and UK tax status.
Additional Information for Individuals
If no Self Assessment return has been filed, provide evidence of UK residence including days spent in the UK (SRT), arrival/departure dates, and any split-year treatment details.
Additional Information for Newly Incorporated Companies
Include names and addresses of directors and shareholders, and explain why the company considers itself UK resident based on incorporation or central management and control.
Providing complete and accurate information from the outset reduces delays and helps ensure the Certificate of Residence is issued correctly for the foreign tax authority.
How to Apply for a Certificate of Residence
The way you apply depends on who you are and what type of Certificate you are applying for.
Individuals and Sole Traders
As an individual or sole trader, you are recommended to either use HMRC’s online service or their email form, which does not require an online account.
Companies
As a company or business, you will need to use the RES1 online service. HMRC notes that the Large Business Service accepts requests for Certificates of Residence earlier than the end of the accounting period and takes roughly one month to complete at peak times. Physical documents should be mailed directly to the Corporation Tax Services office if necessary.
Other
Various other types of applicants may need to apply for a CoR. It is recommended to consult HMRC’s page on the topic directly to ensure the correct procedure.
Need More Help?
Deciding between the arising and remittance basis is a complex exercise requiring detailed calculation and planning. For US citizens or other foreign taxpayers, it is critical to consider both UK and foreign tax obligations to prevent double taxation.
Professional advice is strongly recommended to determine the most tax-efficient approach and ensure compliance with all reporting requirements.