Tax residency concerns the jurisdictional criteria used by countries to determine if individuals or corporations ought to pay income tax on their worldwide income or solely on income from domestic sources.
Determining Residency:
- Physical presence/time spent in a country (e.g. over 183 days)
- Intention to permanently reside in a country
- Citizenship status or possession of proper documentation
- Maintenance of a primary dwelling or business headquarters
Example:
A digital nomad rented short-term accommodations in multiple countries, requiring analysis of tax residency rules in each jurisdiction.
Takeaways:
Establishing primary tax residency clarifies filing obligations and avoids double taxation. As cross-border living rises, tailored residency rules maintain fiscal sovereignty and fairness when residency appears ambiguous. Proper planning and documentation prevents residency disputes and penalties.
