Countries like the UAE or Panama consider you tax resident when you are a permanent resident, even if you hardly spend any time in the country.
However, to be issued a tax residency certificate, you must spend 183 days per year there (more or less). I’m assuming they are stricter with the certificates because they don’t want to be accused by other countries of supporting tax evasion.
But who would actually need such a certificate?
As far as I have understood, some countries require a tax certificate to “let go” of you. They want to see that you’ve properly established tax residency somewhere else. Fair enough.
Let’s call them category A countries.
But many countries don’t have such rules. You just leave, cut all your ties with that country and they don’t care where you live, not even if you’re a citizen. Sometimes they still tax you for some years, just because, but that’s it.
Let’s call them category B countries.
On the other hand, a tax residency certificate doesn’t necessarily offer protection against other countries ALSO claiming you as a tax resident. For example, if you spend 61 days per year in Cyprus (60 days is the minimum to be considered tax resident), but you also spend 124 days in France, where your wife and kids live, then you can bet that France will demand that you pay your taxes there, and you can bet that the tie-breaker rules in the tax treaty will give France the right to tax your worldwide income, except your Cyprus-sourced income maybe, or with credit for taxes already paid elsewhere.
So who actually needs the certificate? Only former tax residents of category A countries? Which countries would that be?
However, to be issued a tax residency certificate, you must spend 183 days per year there (more or less). I’m assuming they are stricter with the certificates because they don’t want to be accused by other countries of supporting tax evasion.
But who would actually need such a certificate?
As far as I have understood, some countries require a tax certificate to “let go” of you. They want to see that you’ve properly established tax residency somewhere else. Fair enough.
Let’s call them category A countries.
But many countries don’t have such rules. You just leave, cut all your ties with that country and they don’t care where you live, not even if you’re a citizen. Sometimes they still tax you for some years, just because, but that’s it.
Let’s call them category B countries.
On the other hand, a tax residency certificate doesn’t necessarily offer protection against other countries ALSO claiming you as a tax resident. For example, if you spend 61 days per year in Cyprus (60 days is the minimum to be considered tax resident), but you also spend 124 days in France, where your wife and kids live, then you can bet that France will demand that you pay your taxes there, and you can bet that the tie-breaker rules in the tax treaty will give France the right to tax your worldwide income, except your Cyprus-sourced income maybe, or with credit for taxes already paid elsewhere.
So who actually needs the certificate? Only former tax residents of category A countries? Which countries would that be?
. If you have dual one to get inside Switzerland I guess you can always come through EU border but then again your EU card might flag you. That is why we are seeing all this blackmailing going on.
