How do I lose Tax Residency?

Becoming tax non-resident is not straightforward, and varies very much from country to country.

Sometimes it is sufficient for your “centre of economic and social interests” (your job and/or your home base) to move to another country for you to lose your tax residency in your home country. In other cases you must work outside your home country for one (or more) tax years in order to lose your tax residency.

In simple terms, it is not because you have become tax-resident in a new country that you will automatically lose your tax residency in your home country; it is quite possible to be tax-resident in two countries at the same time!

For example, to lose your UK tax residency you must be out of the UK for one complete tax year and, during that year (and averaged over a 4 year period), you must not have returned to the UK for more than 91 full days.

The 91 day rule changed its ruling in 2008 and is now based on the midnight rule (a day is counted as in the country if you are there at midnight).

US nationals will never lose their US tax residency and will always have to pay US taxes. Although in all cases the double taxation avoidence treaty between the USA and most other countries needs to be applied to ensure that you do not pay full tax twice on the same income.

For more information please contact our tax specialists.