What is Tax residence?

Tax residence

Tax residence is the country entitled to tax your worldwide income. You do not choose it by declaring it: each jurisdiction determines it through objective tests such as days of presence, where your centre of economic interests lies and where your family lives. You can be tax resident somewhere you barely spend time.

It causes more trouble than any other concept in international remote work, because it gets confused with nationality or administrative address. Two countries can consider you resident at once, in which case the tie-breaker rules of the double tax treaty apply: permanent home, centre of vital interests, habitual abode and, last, nationality.

Also called: tax residency, fiscal residence

Related terms

Double taxation treatyA double taxation treaty is an agreement between two countries that allocates the right to tax the same income so it is not taxed twice. It determines which country taxes first, which must grant relief or exemption, and provides tie-breaker rules when both consider you tax resident.
183-day ruleThe 183-day rule holds that staying more than half a calendar year in a country usually makes you tax resident there. It is the best-known test, but neither the only one nor always the decisive one: many countries also treat you as resident if your centre of economic interests sits in their territory.
Digital nomadA digital nomad is someone who works remotely while changing country of residence fairly often. The label describes a lifestyle, not a legal status: what counts legally and fiscally is where their tax residence sits and under which permit they are staying in each country.