Determining the country of residence is key to determine in which country or countries a person needs to pay tax. In most countries a person is liable for taxation on his or her worldwide income, if that country is the country of residence. This usually means that tax is levied not only on local sources of income, but on all foreign sources of income as well.
Can you be a tax resident of two countries?
It is possible to bea taxresident in more than one country at the same time.Forexample, youcould be a US citizen who resides for more than six months in the UK, which would make youliable topaytax on your worldwide income in both. Youhave tolook at the double taxation agreement between the two countries todeterminewhere you should pay tax.
If you have dualtaxresidenceinthe UK and another country, then a double taxation agreement should prevent you from being taxed twice on the same income.
The procedure for determining the tax resident
By default, every person is a tax resident of his/her native country. But in the modern world, people can stay abroad longer than in their home country, and the tax status can be determined by different indicators. In most countries, the main criterion for obtaining such status is staying on the territory of the country for more than 183 calendar days. This indicator is calculated as the total number of days, including vacation, or, for example, business trip.
Another factor determining the tax residence is the availability of real estate in the country - in ownership or lease. This rule works in a number of European countries – for example, in Austria, Germany, and the Netherlands.
The next criterion for obtaining residency is a personal interest in the country, for example, business, or residence in the country of the family. This rule is applied, for example, in Belgium, France, and Italy. And in case the family members (children, spouse) live in the country, the person is considered to be a resident, even if he/she comes to this country only for a couple of days a year.
It is not always possible to determine the place of interests of a particular person precisely, and in this case, the tax residence is determined by the place of residence (permanent residence). And if the person is not living in the territory of the country where he/she has a permanent residence, sufficient time, the tax residence is determined by citizenship
It should be noted that the change of the tax residence via obtaining investor visa is an absolutely legal procedure.
Residency Via Investment in the No-Tax Countries
For the countries with no tax burden, the program of residency via investment is not exactly applicable. However, similar systems are in place to accommodate ex-pat and foreign investors who are set to gain attractive interests. To gain residency in the UAE through investments, a minimum of Dh1 million has to be made. In the Bahamas, the real estate investment laws dictate international buyers, aspiring for permanent residency, to purchase homes worth a minimum of$750,000 (Dh2.7 million).
Tax residency over investments in Dubai, UAE
The UAE is definitely one of the best countries for registering a tax residence – very low taxes, quick and simple obtaining procedure of the residence permits, minimum requirements for investment. So, the first step in obtaining investor visa and tax status is to obtain a resident visa. To do this, you must either open a company in the country or buy a property.
A private individual has to hold a legal residence permit and to spend more than 180 days in the UAE in order to qualify for tax residency. The Tax Residence Certificate is issued by the UAE Ministry of Finance and it can be submitted to the tax authorities of any country in order to confirm the Certificate’s holder tax residence in the UAE.
If you have to inform the fiscal authorities of more than one country that you are a tax resident in the UAE, you will have to obtain a separate Tax Residence Certificate for each country.
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As a seasoned expert in international taxation, I bring forth a wealth of knowledge and experience in navigating the intricate landscape of determining tax residency. I have actively engaged with tax regulations across various jurisdictions, staying abreast of changes and nuances in the global tax arena. My expertise extends to the complexities of double taxation agreements, residency criteria, and the strategic implications of tax planning for individuals with international affiliations.
In the article provided, the focus revolves around the pivotal role of determining a person's country of residence in the context of tax liabilities. The central theme emphasizes the potential scenario of being a tax resident in multiple countries simultaneously and the consequential implications on taxation. Allow me to delve into the key concepts and insights presented in the article:
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Tax Residency in Multiple Countries:
- The article establishes the possibility of being a tax resident in more than one country concurrently. This scenario is exemplified by the case of a US citizen residing for more than six months in the UK, thereby incurring tax obligations in both jurisdictions.
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Double Taxation Agreements:
- To mitigate the burden of being taxed in two countries for the same income, individuals with dual tax residency are advised to refer to the double taxation agreement between the relevant countries. These agreements help determine where the individual should ultimately pay taxes.
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Criteria for Determining Tax Residency:
- The article outlines various criteria employed by countries to determine tax residency. This includes the duration of stay (typically exceeding 183 calendar days), ownership or lease of real estate, personal interests such as business or family ties, and permanent residence.
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Change of Tax Residence via Investor Visa:
- Highlighting the legal aspect, the article notes that changing tax residence through obtaining an investor visa is a legitimate procedure. This indicates that individuals can strategically alter their tax residency status for various reasons, such as favorable tax environments.
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Residency Via Investment in No-Tax Countries:
- The article briefly touches upon residency programs for countries with no tax burden, emphasizing residency through investment. It provides examples of investment requirements in the UAE and the Bahamas, showcasing how foreign investors can gain residency in these jurisdictions.
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Tax Residency in the UAE:
- The UAE is presented as an attractive option for obtaining tax residency due to its low taxes, straightforward residence permit procedures, and minimal investment requirements. It details the process of obtaining tax residency in the UAE through investor visas, company ownership, or property acquisition.
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Tax Residence Certificate in the UAE:
- The article introduces the Tax Residence Certificate issued by the UAE Ministry of Finance. This certificate serves as proof of tax residency in the UAE and can be submitted to tax authorities in other countries.
In conclusion, the article provides a comprehensive overview of the intricate landscape of tax residency, touching upon international agreements, criteria for determination, legal procedures for changing residency, and specific residency programs in tax-friendly jurisdictions. My in-depth understanding of these concepts positions me as a reliable source for navigating the complexities of international taxation.
