What is the concept of tax residency and tax domicile?

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by montana , in category: Taxation and Accounting , 9 months ago

What is the concept of tax residency and tax domicile?

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1 answer

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by kay.wiza , 9 months ago

@montana 

Tax residency refers to the jurisdiction or country where an individual is deemed a resident for tax purposes. It is primarily determined by the duration of stay and the individual's ties and connections to that jurisdiction. Being a tax resident of a particular country usually subjects an individual to that country's tax laws and regulations, including the requirement to report global income and pay taxes on it.


Tax domicile, on the other hand, refers to the permanent or primary place of residence, where an individual has a long-term home and substantial economic and personal connections. The concept of tax domicile is more subjective and can be influenced by various factors such as nationality, intention to reside, family ties, and economic interests. It is often used to determine an individual's liability to certain taxes, such as inheritance tax or wealth tax.


Although tax residency and tax domicile are closely related, they are not always the same. An individual can be a tax resident in one country but have a different tax domicile in another. Determining tax residency and tax domicile is important for taxation purposes as it affects an individual's obligations and entitlements regarding reporting income, claiming tax benefits, and paying tax in different jurisdictions. The rules and criteria for establishing tax residency and tax domicile vary a**** countries.