Tax Residency

Tax residency is not the same as citizenship or immigration status. Each country sets its own rules for who counts as a tax resident. Common tests include spending a certain number of days in the country in a year, having a permanent home there or having the main centre of your life and economic interests there.

Residency matters because residents are often taxed on their worldwide income, while non-residents are usually taxed only on income from sources within the country. For example, someone who moves abroad mid-year and works in two countries may need to work out where they are resident and which country can tax which income.

It is possible to be considered resident in two countries at the same time. Tax treaties between countries usually contain tie-breaker rules to decide which country has the main right to tax and to prevent the same income being taxed twice.

Companies also have a tax residence, usually based on where they are incorporated or managed. Because the rules are detailed and vary widely, people moving between countries or earning income abroad often seek professional advice.