To date, Peru has Double Taxation Avoidance Agreements (DTAA) with 7 countries. These agreements allow the elimination of double taxation on transactions carried out by persons resident in the Contracting States of the DTA. In this way, one of the Contracting States totally or partially waives its taxing power.
Due to the fact that the application of the BIT produces several benefits for the residents of the Contracting States, in Peru through Supreme Decree No. 090-2008-EF the “obligation” to require a Certificate of Residence for the application of the BIT was established.
CONSIDERATIONS ABOUT THE RESIDENCE CERTIFICATE
- What is the Certificate of Residence? It is a document that certifies the residence of a subject in a State.
- What is the purpose of the Certificate of Residence? This accreditation allows the application of the benefits contained in the IDC.
- How is the Certificate of Residence issued? The subject not domiciled in Peru who requires the application of the CDI, must request in his country the Certificate of Residence before the competent authority of that State. In Peru, the competent authority for its issuance is SUNAT.
- Who applies for the Certificate of Residence? The tax withholding agent must request the Certificate of Residence in order to apply the benefits provided for in the CDI.
- What happens if the Certificate of Residence is not presented at the time of withholding? The person not domiciled in Peru who requires the application of the CDI may request before SUNAT the refund of the taxes withheld by presenting the Certificate of Residence.
- What is the term of validity of the Certificate of Residence? Those issued by the Contracting State of the CDI will be valid for a maximum of 4 months. On the other hand, the Certificate of Residence issued by Peru will be valid indefinitely.
REGARDING THE OBLIGATION TO HAVE A RESIDENCE CERTIFICATE
Although Supreme Decree No. 090-2008-EF establishes the obligation to have a Certificate of Residence for the application of the benefits of the DTA, the truth is that none of the DTAs subscribed by Peru establishes such requirement for its application.
This discordance was analyzed by the Supreme Court in Cassation Decision No. 8380-2021-LIMA, where it established as a binding precedent that, by application of the principles of normative hierarchy, the provisions of the DTA prevail over the provisions of the Peruvian regulations referring to the Certificate of Residence. In this sense, the Certificate of Residence would be an additional formality and its issuance and delivery does not limit the application of the provisions of the CDI.
CONCLUSIONS
The Certificate of Residence allows the Peruvian State to prove that the application of the DTA is effectively carried out with a person resident in the Contracting State of the DTA entered into. Although the regulation establishes that it is an obligation, the national jurisprudence has established that having this document is an additional formality that does not condition the application of the benefits of the BIT. This implies that the application of the CDI could be made independently of the moment of issuance and delivery of the Certificate of Residence; however, the way in which SUNAT verifies that the party requesting the application of the CDI is a resident in the Contracting State will be by means of the Certificate of Residence.
It is relevant to point out that the indefinite validity of the Certificate of Residence issued by Peru was recently incorporated by Superintendence Resolution No. 000141-2024/SUNAT. This is an advance to simplify the accreditation of residence and to make it effectively a formal requirement; it is still a pending issue to give the same indefinite validity to the Certificates of Residence issued abroad.
The application of the DTAs entered into by Peru requires the observance and detailed analysis of the established requirements; therefore, having the advice of tax lawyers is of vital importance.
At VAG Global we offer comprehensive accounting and tax services that will allow your business to effectively manage its transactions.
Sources: https://www.sunat.gob.pe/legislacion/superin/2024/000141-2024.pdf https://spij.minjus.gob.pe/spij-ext-web/#/detallenorma/H968122 https://spij.minjus.gob.pe/spij-ext-web/#/detallenorma/H977545