Residence, Wealth and Governance: The Single-Family Office, Place of Effective Management and the High-Net-Worth Individual

Abstract

Abstract

The conventional tests for corporate tax residence, namely central management and control under domestic law and place of effective management (POEM) under treaty law, were designed for operating companies with ascertainable centres of decision-making. Applied to the single-family office (SFO), an entity whose sole function is to manage the private wealth of one individual or family, those tests produce a structural indeterminacy that the existing literature has not adequately addressed. This article examines the problem through two representative jurisdictions, Monaco and Luxembourg, and argues that the individual/entity residence distinction, which treaty law treats as settled, is placed under severe strain in the SFO context. It proposes a taxonomy of SFO governance types, analyses the evidentiary and administrative challenges POEM indeterminacy generates and concludes with reform options, recommending, as most feasible, a coordinated OECD and Forum on Harmful Tax Practices (FHTP) project to provide guidance on SFOs and POEM.