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3.5. Potential Acquisition of Tax Residence Status by Foreign Entities

As said above, a legal entity can become tax resident due to its place of incorporation, its domicile or its place of effective management. That being so, legal entities incorporated under a foreign law can only become Guatemalan tax residents if they establish their domicile in the country or have their place of effective management therein.

Thus, while the relocation of domicile would be a conscious decision of the entity, the place of effective management ground more a factual test than a formal act by the company of establishing its place of effective management in the country. That said, if the main decisions or control of the entity are executed within Guatemala, the legal entity will be considered a tax resident, even if its domicile and place of incorporation are abroad.