36
UGLOBAL IMMIGRATION MAGAZINE
“ For many countries,
the rules that define
residency for 'immigration'
purposes are very different
from the rules that define
'residency' for tax purposes. ”
options for emigration, migration or immigration,
depending on your perspective, people often consider
only the “immigration” aspects of a move. This is a
mistake. Taxation is critical. The rules of taxation and tax
residency need to be part of any decision.
For many countries, the rules that define residency for
“immigration” purposes are very different from the rules
that define “residency” for tax purposes. Incredibly, one
can have no residential connection to a country but still
be subject to worldwide taxation by that country. For
example, the United States imposes worldwide taxation
based on citizenship alone. U.S. citizens living outside
the United States are subject to worldwide taxation. Put
another way: There is a difference between residency for
immigration purposes and residency for tax purposes.
In fact, fortunes have been made and lost by simply a
change in tax residency. All U.S. citizens are tax residents
of the United States. U.S. citizens who relinquish U.S.
citizenship cease to be U.S. tax residents.
So, with all that said, here are ten tax residency points that
should be taken into consideration when it comes to all
global mobility decisions.
POINT 1:
UNDERSTAND TAXATION,
RESIDENCE AND TAX RESIDENCE
What is tax residency and why does it matter? If you are a tax
resident of a country, it means you are subject to a country’s
complete tax code. Most countries impose worldwide
taxation as opposed to “territorial” taxation on their tax
residents. Generally, this means that as a tax resident of a
country, you are subject to taxation by that country on all of
your worldwide income.
POINT 2:
INVESTIGATE & UNDERSTAND
THE RULES OF DIFFERENT COUNTRIES
Most countries deem individuals to be tax residents based
on one or more of the following factors: deemed residence
(often 183 days or more of physical presence for any reason);
ordinary residence (it’s where the family lives and where the
club memberships are); domicile (a subjective test based on