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UGLOBAL IMMIGRATION MAGAZINE
“ If a person is a tax resident
of two countries that have
a tax treaty with each other,
then the tax treaty may
allow an individual to sever
tax residency with one of the
two countries. ”
with additional requirements that may be associated with
severing tax residency. Different countries have different
rules for defining who is a tax resident and different rules for
severing tax residency.
Considering only domestic legislation, here are some
examples. For a permanent resident of the United States
to sever tax residency with the United States, he must
complete specific actions (for example, file an I-407). He
cannot simply move from the United States, become a
tax resident of another country and automatically sever
tax residency with the United States. For a U.S. citizen
to sever tax residency with the United States, he or she
must relinquish his U.S. citizenship. Also, for a resident
of Canada to sever tax residency with Canada he or she
must cease to be an “ordinarily resident” and cannot
spend more than 182 days a year in Canada. The key point
is that one must cease to meet the prescribed conditions
for tax residency.
POINT 5:
CONSIDER HOW YOU MAY BE ABLE
TO SEVER TAX RESIDENCY BY USING
EXISTING TAX TREATIES
It is possible to meet the requirements for tax
residency in two or more countries. If a person is a tax
resident of two countries that have a tax treaty with
each other, then the tax treaty may allow an individual
to sever tax residency with one of the two countries.
This provision — called a “tax treaty tiebreaker” — is
found in many tax treaties.
For example, let’s consider the Canada-Portugal tax
treaty. It says that someone is considered a resident
of both contracting states only when the individual
has a permanent home available. If he has one in both
countries, he’s deemed a tax resident in the one where
his personal and economic relations are closer. If vital
interests can’t be determined or if no permanent home in
either country, tax residency goes to the country in which
the individual “has a habitual abode.” The law may also
determine tax residency based on where the individual
is a national. The key point here is that the treaty can be
used to assign tax residency to only one country.
“ 若这两国间有税务条约关系
那么
这个税务条约可能允许您切断同两
国其中之一的税务关系 ”