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UAE unveils tax residency criteria

#183
backpacker said:
Verify before posting!
Your statement could not be any further from the truth. ban-:;

Did you ever click on it and read it, or did you just "saw a link"?
Sorry, but these kind of postings confuse new users. Not good! ban-:;
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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.

zzzzzz said:
Every DTA has a definition of "resident" which is copied from definition by OECD:

a) he shall be deemed to be a resident of the State in which he has a permanent
home available to him; if he has a permanent home available to him in both States,
he shall be deemed to be a resident of the State with which his personal and
economic relations are closer (centre of vital interests);

b) if the State in which he has his centre of vital interests cannot be determined, or if
he has not a permanent home available to him in either State, he shall be deemed
to be a resident of the State in which he has an habitual abode;

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;

d) if he is a national of both States or of neither of them, the competent authorities of
the Contracting States shall endeavour to settle the question by mutual agreement.

Where by reason of the provisions of paragraph 1 a person other than an individual is a
resident of both Contracting States, the competent authorities of the Contracting States shall
settle the question by mutual agreement and determine the mode of application of the
agreement to such person.

As you can see, perpetual traveler falls in category C.
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@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;
 
#184
karishi said:
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;
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That's a DTT clause. Relevant in cases where two contracting states fight for you being their tax resident, while you claim to have a residency in one contracting state (where -according to the other criteria in the applicable DTT- in fact you have nothing).
Read the entire article in the applicable DTT and you will understand the meaning of this specific subparagraph.
 
#185
backpacker said:
That's a DTT clause. Relevant in cases where two contracting states fight for you being their tax resident, while you claim to have a residency in one contracting state (where -according to the other criteria in the applicable DTT- in fact you have nothing).
Read the entire article in the applicable DTT and you will understand the meaning of this specific subparagraph.
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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 home country and bring back 2 million dollars and no tax residency certificate, you are an idiot and they could file a claim.

And to me this is a Double Taxation Treaty thing: imagine that you go back to your home country from Dubai, which is a tax haven. In those cases, you are almost certain to undergo some form of investigation as the tax authority needs to understand if they can claim your money, something they can do even if you spent the full year in the UAE and have a TRC ( which happened to a soccer player who returned to italy from the UAE, since his wife and childe were in Italy ). You have not triggered residency in your home country and you do not have triggered residency in the UAE. Do you think they will let you go? The current laws in most EU countries are that it's up to you to demonstrate that you were resident somewhere else and paid your taxes and Italy was not the center of your interests. So you have to make a strong case for that, and not having a TRC, meaning that you spent 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 in your home country than in the UAE, to have some hope of winning ( or settle the thing which is usually easier ).
 
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#186
karishi said:
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 home country and bring back 2 million dollars and no tax residency certificate, you are an idiot and they could file a claim.
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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's suggestion for how to determine residency between the two countries. First a) Permanent home or centre of vital interest, then if that cant be determined it's b) habitual abode, and if even that cant be determined, it's c) if the person is citizen in any of the two countries, that will be deemed the country of residency. If the person is a citizen of both or neither country, next step is d) "the competent authorities of the Contracting States shall settle the question by mutual agreement." Basically, f-ck it, we dont know, you sort it out!

But a DTT (or DTA) only comes into play if more than one country claim you as tax resident, which would not happen if you are a true digital nomad (not even one country). And even if two countries claim you as tax resident, the above doesnt say you are a tax payer in your country of citizenship, just that if it goes down to point c) for the purposes of the DTT (if the two countries follow the OECD model convention which they dont have to do) , you count as resident in the one of the two countries where you are a citizen. That is, if you are a citizen of one of the two countries that claim you as tax resident.

Let's say again you are 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)
 
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#187
karishi said:
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 home country and bring back 2 million dollars and no tax residency certificate, you are an idiot and they could file a claim.

And to me this is a Double Taxation Treaty thing: imagine that you go back to your home country from Dubai, which is a tax haven. In those cases, you are almost certain to undergo some form of investigation as the tax authority needs to understand if they can claim your money, something they can do even if you spent the full year in the UAE and have a TRC ( which happened to a soccer player who returned to italy from the UAE, since his wife and childe were in Italy ). You have not triggered residency in your home country and you do not have triggered residency in the UAE. Do you think they will let you go? The current laws in most EU countries are that it's up to you to demonstrate that you were resident somewhere else and paid your taxes and Italy was not the center of your interests. So you have to make a strong case for that, and not having a TRC, meaning that you spent 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 in your home country than in the UAE, to have some hope of winning ( or settle the thing which is usually easier ).
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It is not the first time that you bring up this matter. It is not the first time that people tried their best to explain TO YOU how things work.

Please do yourself AND OTHERS a favour and read 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.
 
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#188
backpacker said:
It is not the first time that you bring up this matter. It is not the first time that people tried their best to explain TO YOU how things work.

Please do yourself AND OTHERS a favour and read 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.
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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, I have done it for a long time, but the problem is always when ( and if ) you re enter your home country and from what country you re enter from, as you are obliged to demonstrate your case to the tax authority if you come back from a tax haven and they decide to investigate ( and not the opposite, it's not the tax authority that has to prove that you are guilty, you have to prove you are innocent ).
 
#189
karishi said:
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.
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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 as a citizen living abroad - but again that is not the same as tax residency.


karishi said:
It's doable, I have done it for a long time, but the problem is always when ( and if ) you re enter your home country and from what country you re enter from, as you are obliged to demonstrate your case to the tax authority if you come back from a tax haven and they decide to investigate ( and not the opposite, it's not the tax authority that has to prove that you are guilty, you have to prove you are innocent ).
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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 resident in the country you re-enter to. But well, cant totally exclude that some southern european country's tax agency would use the fact that you havent been a tax resident anywhere against you, they can come up with all kind of stuff.
So if you plan on re-entering a country with a difficult tax agency doing their own lose interpretation of the laws, best to read up on actual cases of re-entering to that country, and 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's 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.
 
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#190
Cloudbanck said:
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 as 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 resident in the country you re-enter to. But well, cant totally exclude that some southern european country's tax agency would use the fact that you havent been a tax resident anywhere against you, they can come up with all kind of stuff.
So if you plan on re-entering a country with a difficult tax agency doing their own lose interpretation of the laws, best to read up on actual cases of re-entering to that country, and 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's 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.
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Totally agree with what you have written, which is more or less what I meant. I obviously come 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 UAE ignore these things and there are lots of people who will have a bad experience when they go back to their home country...
 
#191
karishi said:
Totally agree with what you have written, which is more or less what I meant. I obviously come 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 UAE ignore these things and there are lots of people who will have a bad experience when they go back to their home country...
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or not. You cannot know this unless its happening left and right.
 
#192
JackAlabama said:
or not. You cannot know this unless its happening left and right.
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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. As in all things in life, it's a purely risk/reward decision.
 
#193
karishi said:
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. As in all things in life, it's a purely risk/reward decision.
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well matter of fact is if you are only having one passport which happens to be from such an aggressive place, you must take extra care.
 
#195
#197
uranium said:
Would a plan of living in a hotel for 3 months while running business in UAE be enough to get Trc ?
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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 in some cases. If you are concerned about a challenge one needs to do a complete disconnect from their old country, show a strong connection with expenses and lifestyle in new adopted country alongside a TRC. TRC is not a magic wand sadly.
 
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#198
Martin Everson said:
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 in some cases. If you are concerned about a challenge one needs to do a complete disconnect from their old country, show a strong connection with expenses and lifestyle in new adopted country alongside a TRC. TRC is not a magic wand sadly.
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I thought it is only government who ask for trc.
Do banks ask for trc ?
First time I hear about this
Why would a bank need it? They already have proof of my address on file
 
#199
uranium said:
Would a plan of living in a hotel for 3 months while running business in UAE be enough to get Trc ?
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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.
 
#200
uranium said:
Do banks ask for trc ?
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Yes they can. I have been asked for tax return and/or TRC where one does not exist by a private bank.

uranium said:
Why would a bank need it?
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CRS, reporting requirement, prevent tax evasion etc. Especially if your country of residence is considered a tax haven etc like mine is.
 
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