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'Tax residency' or 'residency for tax purposes' simply means that a person or corporate entity operates within and is subject to the fiscal system of a particular country. 

The vast majority of individuals are by default tax residents of the country of origin. However, millions of individuals around the world have more than one tax residency - sometimes accidentally or without their knowledge. 

Assuming you want to pay the smallest amount of tax required by law, it's very important that offshore and international individuals are aware of their tax residency status rather than leaving it to chance. That is what this important section of the International Wealth portal is all about!

Tax residency is a totally different concept from residency for immigration purposes. Many countries set up a high bar for issuing residence permits, but they are keen to have as many tax residents as possible. For example, the United States' Internal Revenue Service (IRS) uses 183 days as a threshold in the "substantial presence test," which determines whether people who are not permanent residents should still be considered residents for taxation. Just because you are a tourist or even an illegal immigrant, doesn't mean you are not a resident for tax purposes.

Can you have multiple tax residencies?  Absolutely. There is no limit to the number of tax residencies you can have. As you can imagine, though, with competing reporting and filing requirements you can quickly create a huge international mess if you are not careful!

This is where double tax treaties (DTTs) kick in, supposedly to avoid the need for you to pay tax on the same income in two or more countries at the same time.

The good news is that changing tax residency status is quite feasible, 100% legal and, quite often, very profitable. It is extremely important to make the right choice of tax residency for an individual, since this allows you to solve two important problems:

  • First, it becomes possible to minimize taxes on income from various sources (interest charges, salaries, dividends, royalties ...), as well as taxes on gifts, inheritance, capital gains, wealth.
  • Secondly, an individual is often able to achieve an increase in financial privacy by becoming a resident for tax purposes in certain countries.

When choosing a tax residency for an individual, there are many factors to consider, including, but not limited to, the following:

  • Rules for determining tax status by the country of current residence / country of destination;
  • Tax rates in the country of destination;
  • The presence / absence of special fiscal incentives (non-dom, non-habitual residence, territorial tax systems, benefits for new residents) and investment immigration programs in the country of interest;
  • Family composition of the candidate, sources of income and the presence / absence of ownership of residential real estate.

Once you are tax resident in a country, you might need a certificate of tax residency. In most cases, you can apply for this from the  tax authorities in the country in question.

Arranging your tax residency is not an easy task. Advice from experts is essential.

You can start by studying this section, which includes practical materials and guides for applicants for tax residence and a tax resident certificate from different countries.

It's important to note that Offshore Pro Group does not offer tax advice, but we can refer you to suitably qualified experts that we have known and trusted for years. Our consultants can however help you with formalities for obtaining permanent residence permits in many tax-friendly countries from Andorra to Zambia, with many countries in between!

Set up a free online consultation with Offshore Pro trusted experts, saving time and money, as well as saving your nerves and getting what you want!

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All articles on the topic – Tax Residency

Search results: 17
Tax Dilemmas: Paying at Home or Abroad?

All about tax residency, citizenship, and place of residence. Establishing fiscal residency: centre of vital interests, time criterion, citizenship-based taxation, and zero taxes. Avoiding double taxation: strategies and solutions.What to do to determine the tax rules applicable to you. Expert recommendations: how to pay taxes with no worries in the world.

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Is It Possible Not to Be a Tax Resident of Any Country?

In most cases, you are not considered a tax resident of the country where you spend less than 183 days per year. This means that you can be a tax resident of no country if you keep moving from one place to another without staying for too long in any of the countries. This does not mean that you will be paying nothing in taxes, however, because you will have to pay the taxes in the country where your income comes from anyway. Besides, the tax resident status is required for obtaining banking services and engaging in business operations.

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10 Crypto Tax-Free Countries in 2022

If you are a crypto investor and you want to pay zero taxes on your crypto assets and/or you want to relocate, look at the list of 10 countries that are considered crypto tax havens in 2022. These are Germany, Singapore, Malaysia, Malta, Belarus, Switzerland, El Salvador, Cayman Islands, Puerto Rico, and Portugal. The article will give you an overview of crypto taxation in each country, provide conditions for obtaining tax residence, and set out reasons to move to each of these places that will help you make an informed choice. Enjoy!

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Tax Residence in Serbia: How and Why

Interested in tax residence opportunities in Serbia? Read and find out the benefits of choosing Serbia, the standard requirements, the application documents, the required period of stay, the Serbian taxation benefits, the fiscal aspects, and the specifics of tax agreements. Book a free professional consultation on more specific issues.

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How to Avoid Breaking the Law When Acquiring EU residence

If you are thinking of relocating to Europe and becoming a legal and tax resident of an EU country, you should find out what taxes you will have to pay and what fiscal regulations you will have to follow before you make the final decision. Acquiring professional consultations on fiscal matters would be especially valuable as the European tax system is complicated and many nuances have to be taken into account.

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Best Tax Residence: Choose the Optimal Option

People change their tax residence when they have to do it or when they want to do it. It is legal to become a tax resident of a national state that is different from the state of your birth. However, certain conditions need to be met. In particular, you always have to acquire a legal residence permit in a foreign country before you can apply for tax residence there. Besides, in most cases, you have to physically reside in the country for more than half a year to become eligible for tax residence there.

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Low Tax Residence in Europe: 11 countries with low taxes

Taxes are high in Europe - but not always. Some Eastern European states, for example, have developing economies that need investment capital from abroad. Thus, they try to attract foreign investors by offering low taxes. Some Western European countries, in turn, offer special fiscal opportunities to HNWIs because everybody welcome foreign investments. Therefore, the possibility to acquire tax residence in Europe should not be written off.

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Tax incentives: Non-habitual tax residence in Portugal

If a foreign national obtains a legal residence permit in Portugal, they can qualify for the Residente Não Habitual (Non-Habitual Residence) fiscal program. This program makes foreign residents in Portugal exempt from taxes on their incomes derived from abroad. The article discusses the qualification requirements for the program, the application documents and procedures, and other relevant issues.

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Citizenship by investment and taxes

Acquiring a foreign passport or citizenship by investment can bring many benefits. However, every country has its own requirements for new citizens. Learn more!

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