UAE unveils tax residency criteria
- Thread starter Martin Everson
- Start date
- Status
Read the local tax code of the jurisdiction(s) that is applicable to your personal situation.
Furthermore, read post #179 of @Cloudbanck -> UAE unveils tax residency criteria
Furthermore, read post #179 of @Cloudbanck -> UAE unveils tax residency criteria
yes I checked it but I can't find it now. it is relevant to my position, since I have been resident nowhere for the past 12 years, and this is an issue that has been discussed a lot. Didn't mean to confuse anyone, will post the link if I find it.
@backpacker @Cloudbanck it was not a link, it was a post on this thread.
And I think the OECD model is this one https://www.oecd.org/ctp/treaties/articles-model-tax-convention-2017.pdf
I guess the part to discuss is:
c) if he has an habitual abode in both States or in neither of them, he shall be deemed
to be a resident of the State of which he is a national;
@backpacker @Cloudbanck it was not a link, it was a post on this thread.
And I think the OECD model is this one https://www.oecd.org/ctp/treaties/articles-model-tax-convention-2017.pdf
I guess the part to discuss is:
c) if he has an habitual abode in both States or in neither of them, he shall be deemed
to be a resident of the State of which he is a national;
That's a DTT clause. Relevant in cases where two contracting states fight for you being their︁ tax resident, while you claim to have a residency in one contracting state (where -according︂ to the other criteria in the applicable DTT- in fact you have nothing).
Read the︃ entire article in the applicable DTT and you will understand the meaning of this specific︄ subparagraph.
Read the︃ entire article in the applicable DTT and you will understand the meaning of this specific︄ subparagraph.
It still says that if you are not tax resident anywhere, you are tax resident in your home state. I don't lose my sleep on it, but I still think that if you come back to your home︀ country and bring back 2 million dollars and no tax residency certificate, you are an︁ idiot and they could file a claim.
And to me this is a Double Taxation︂ Treaty thing: imagine that you go back to your home country from Dubai, which is︃ a tax haven. In those cases, you are almost certain to undergo some form of︄ investigation as the tax authority needs to understand if they can claim your money, something︅ they can do even if you spent the full year in the UAE and have︆ a TRC ( which happened to a soccer player who returned to italy from the︇ UAE, since his wife and childe were in Italy ). You have not triggered residency︈ in your home country and you do not have triggered residency in the UAE. Do︉ you think they will let you go? The current laws in most EU countries are︊ that it's up to you to demonstrate that you were resident somewhere else and paid︋ your taxes and Italy was not the center of your interests. So you have to︌ make a strong case for that, and not having a TRC, meaning that you spent︍ less than 90 days in a year in UAE is probably not a strong case.︎ There could be reasons for that, but make sure to have spent less time in️ your home country than in the UAE, to have some hope of winning ( or settle the thing which is usually easier ).
And to me this is a Double Taxation︂ Treaty thing: imagine that you go back to your home country from Dubai, which is︃ a tax haven. In those cases, you are almost certain to undergo some form of︄ investigation as the tax authority needs to understand if they can claim your money, something︅ they can do even if you spent the full year in the UAE and have︆ a TRC ( which happened to a soccer player who returned to italy from the︇ UAE, since his wife and childe were in Italy ). You have not triggered residency︈ in your home country and you do not have triggered residency in the UAE. Do︉ you think they will let you go? The current laws in most EU countries are︊ that it's up to you to demonstrate that you were resident somewhere else and paid︋ your taxes and Italy was not the center of your interests. So you have to︌ make a strong case for that, and not having a TRC, meaning that you spent︍ less than 90 days in a year in UAE is probably not a strong case.︎ There could be reasons for that, but make sure to have spent less time in️ your home country than in the UAE, to have some hope of winning ( or settle the thing which is usually easier ).
No it doesn't, it's a model DTT between two countries. See the very start of the document:
"Convention between (State A) and (State B) for the elimination of double taxation with respect to taxes on..."
Article 4 is the model's︀ suggestion for how to determine residency between the two countries. First a) Permanent home or︁ centre of vital interest, then if that cant be determined it's b) habitual abode, and︂ if even that cant be determined, it's c) if the person is citizen in any︃ of the two countries, that will be deemed the country of residency. If the person︄ is a citizen of both or neither country, next step is d) "the competent authorities︅ of the Contracting States shall settle the question by mutual agreement." Basically, f-ck it, we︆ dont know, you sort it out!
But a DTT (or DTA) only comes into play︇ if more than one country claim you as tax resident, which would not happen if︈ you are a true digital nomad (not even one country). And even if two countries︉ claim you as tax resident, the above doesnt say you are a tax payer in︊ your country of citizenship, just that if it goes down to point c) for the︋ purposes of the DTT (if the two countries follow the OECD model convention which they︌ dont have to do) , you count as resident in the one of the two︍ countries where you are a citizen. That is, if you are a citizen of one︎ of the two countries that claim you as tax resident.
Let's say again you are️ a Danish citizen, and you have spent like half the year in Norway and half in Spain, and been doing business in both countries. Both countries claim you as tax resident, and permanent / habitual abode is hard to determine so it goes to point c) and nope, point c) cant be used because you are not a citizen of either country, so it goes to point d)
"Convention between (State A) and (State B) for the elimination of double taxation with respect to taxes on..."
Article 4 is the model's︀ suggestion for how to determine residency between the two countries. First a) Permanent home or︁ centre of vital interest, then if that cant be determined it's b) habitual abode, and︂ if even that cant be determined, it's c) if the person is citizen in any︃ of the two countries, that will be deemed the country of residency. If the person︄ is a citizen of both or neither country, next step is d) "the competent authorities︅ of the Contracting States shall settle the question by mutual agreement." Basically, f-ck it, we︆ dont know, you sort it out!
But a DTT (or DTA) only comes into play︇ if more than one country claim you as tax resident, which would not happen if︈ you are a true digital nomad (not even one country). And even if two countries︉ claim you as tax resident, the above doesnt say you are a tax payer in︊ your country of citizenship, just that if it goes down to point c) for the︋ purposes of the DTT (if the two countries follow the OECD model convention which they︌ dont have to do) , you count as resident in the one of the two︍ countries where you are a citizen. That is, if you are a citizen of one︎ of the two countries that claim you as tax resident.
Let's say again you are️ a Danish citizen, and you have spent like half the year in Norway and half in Spain, and been doing business in both countries. Both countries claim you as tax resident, and permanent / habitual abode is hard to determine so it goes to point c) and nope, point c) cant be used because you are not a citizen of either country, so it goes to point d)
It is not the first time that you bring︍ up this matter. It is not the first time that people tried their best to︎ explain TO YOU how things work.
Please do yourself AND OTHERS a favour and read️ up things in full, think about it and dig deeper by studying appropriate literature.
If then you are still unsure, hire a tax advisor to understand how a DTT works and how such a bilateral treaty applies to your personal situation.
Please do yourself AND OTHERS a favour and read️ up things in full, think about it and dig deeper by studying appropriate literature.
If then you are still unsure, hire a tax advisor to understand how a DTT works and how such a bilateral treaty applies to your personal situation.
All the tax advisors I spoke to, told me that being a perpetual traveller does not legally work in theory,︀ for most EU countries, as you have to be tax resident somewhere. It's doable, I︁ have done it for a long time, but the problem is always when ( and︂ if ) you re enter your home country and from what country you re enter︃ from, as you are obliged to demonstrate your case to the tax authority if you︄ come back from a tax haven and they decide to investigate ( and not the︅ opposite, it's not the tax authority that has to prove that you are guilty, you︆ have to prove you are innocent ).
Well, most tax advisors are useless. In the majority of EU countries you just register that you live abroad by giving an address abroad. There is no requirement that it is your tax residency (tax residency is anyway determined in hindsight and is not obvious to determine). A small minority of EU countries like Italy requires you to prove that you live abroad in order to register as︀ a citizen living abroad - but again that is not the same as tax residency.︁
Yes, if you re-enter from a tax heaven, some countries can try to investigate you.︈ And it should be fine as long as you really havent been a tax resident︉ in the country you re-enter to. But well, cant totally exclude that some southern european︊ country's tax agency would use the fact that you havent been a tax resident anywhere︋ against you, they can come up with all kind of stuff.
So if you plan︌ on re-entering a country with a difficult tax agency doing their own lose interpretation of︍ the laws, best to read up on actual cases of re-entering to that country, and︎ maybe register yourself in a non-tax heaven country before re entering if that helps.
But in most EU countries, you just register that you live in the country again, that's️ it, you dont have to demonstrate anything, just start paying tax from the tax year you re-entered.
And my experience here is that Ive lived in 6 EU/EES countries and moved back to a country I was previously a resident in 4 times in total I think. Never had any issues at all, and never had to demonstrate anything.
Yes, if you re-enter from a tax heaven, some countries can try to investigate you.︈ And it should be fine as long as you really havent been a tax resident︉ in the country you re-enter to. But well, cant totally exclude that some southern european︊ country's tax agency would use the fact that you havent been a tax resident anywhere︋ against you, they can come up with all kind of stuff.
So if you plan︌ on re-entering a country with a difficult tax agency doing their own lose interpretation of︍ the laws, best to read up on actual cases of re-entering to that country, and︎ maybe register yourself in a non-tax heaven country before re entering if that helps.
But in most EU countries, you just register that you live in the country again, that's️ it, you dont have to demonstrate anything, just start paying tax from the tax year you re-entered.
And my experience here is that Ive lived in 6 EU/EES countries and moved back to a country I was previously a resident in 4 times in total I think. Never had any issues at all, and never had to demonstrate anything.
Totally agree with︌ what you have written, which is more or less what I meant. I obviously come︍ from one of those countries and that's why I didn't register in the UAE 😉
The thing is that most expats from my country I know that live in the UAE︎ ignore these things and there are lots of people who will have a bad experience️ when they go back to their home country...
The thing is that most expats from my country I know that live in the UAE︎ ignore these things and there are lots of people who will have a bad experience️ when they go back to their home country...
controls are happening, real sanctions, we only know the big cases like Vucinic. As usual it depends on how much money you make and how likely ythe tax authority is to discover that you are "rich", which if you are not an idiot is "not likely". I am not losing my sleep on this, as I said, but I know perfectly well that in the unlikely case I end up in the crosshair of the tax authority, being a perpetual traveller will not matter and will not be enough to save me from a fine, while a TRC would definitely save me. As︀ in all things in life, it's a purely risk/reward decision.
well matter︁ of fact is if you are only having one passport which happens to be from︂ such an aggressive place, you must take extra care.
Played for a UAE team and had all he needed to demonstrate that he was tax resident in the UAE. Wife was in Italy and Tax Agency didn't care about anything else. Got 2 years of prison at first grade of justice. He will never go to prison, it's a scare tactic, I bet they will settle at this point...
https://www.ilpost.it/2023/10/20/mirko-vucinic-condanna-evasione-fiscale/
https://www.ilpost.it/2023/10/20/mirko-vucinic-condanna-evasione-fiscale/
For whom would you need a TRC?
I have mentioned this before but I will mention it again. A TRC is meaningless to a foreign tax office. The foreign tax office decides if your a tax resident or not as defined by their laws i.e center of life, ties etc etc. A TRC is nice document for a bank or broker and that is about it. The foreign government can even deem you a dual tax resident in︀ some cases. If you are concerned about a challenge one needs to do a complete︁ disconnect from their old country, show a strong connection with expenses and lifestyle in new︂ adopted country alongside a TRC. TRC is not a magic wand sadly.
I have mentioned this before but I will mention it again. A TRC is meaningless to a foreign tax office. The foreign tax office decides if your a tax resident or not as defined by their laws i.e center of life, ties etc etc. A TRC is nice document for a bank or broker and that is about it. The foreign government can even deem you a dual tax resident in︀ some cases. If you are concerned about a challenge one needs to do a complete︁ disconnect from their old country, show a strong connection with expenses and lifestyle in new︂ adopted country alongside a TRC. TRC is not a magic wand sadly.
Short answer - no. You can rent a cheap studio for Ejari and stay 91 days in hotels/airbnb to be eligible for a TRC.
As many have mentioned above - the TRC is just a paper that UAE recognise you as a tax resident, not that you only have a single tax residence. It's up to you to make it your only tax residence.
As many have mentioned above - the TRC is just a paper that UAE recognise you as a tax resident, not that you only have a single tax residence. It's up to you to make it your only tax residence.
Yes they can. I have been asked for tax return and/or TRC where one does not exist by a private bank.
CRS, reporting requirement, prevent tax evasion etc. Especially if your country of residence is considered a tax haven etc like mine is.
CRS, reporting requirement, prevent tax evasion etc. Especially if your country of residence is considered a tax haven etc like mine is.
- Status