What is the country of residence? According to the dictionary, it is “the country in which a person lives.” But what does that really mean?
A country of residence means different things for different entities. The OECD defines the country of residence as follows:
The country of usual residence is the country in which a person lives, that is to say, the country in which he or she has a place to live where he or she normally spends the daily period of rest.
Temporary travel abroad for purposes of recreation, holidays, visits to friends or relatives, business, medical treatment or religious pilgrimage does not change a person’s country of usual residence.
Personal preference for country of residence
For some people, the country of residence is the place they were born and raised. It’s the place they have the deepest roots, the place they are most attached to.
For others, the country of residence is simply the place they happen to currently live. It may not be their favorite place in the world, but it’s home for now.
And for still others, the country of residence may be a country that is not their own, but one they have chosen to make their home. In any case, the country of residence is an important part of a person’s identity.
Government’s view of what the country of residence is
Governments differ in what they view as a resident, but usually the term “country of residence” refers to the place where you have been awarded citizenship or permanent residence by government authorities, or where you spend more than 90 days in any one year.
For most insurance companies, the country of residence is the country in which you are residing at the time you submit your insurance application. You do not need to be a citizen of your country of residence, nor do you need to have lived there for a specific period of time; simply, your country of residence will be the country where you use a residential postal address.
Same goes for most exchanges and banks. Your country of residence also implies that you intend to stay in this country for the foreseeable future. Your nationality, on the other hand, is the country of citizenship and will be listed in your passport.
What is Expatriation?
When a person expatriates, they renounce their citizenship of their home country and become a citizen of another country. This process can be voluntary or involuntary, but either way, it results in the person no longer being a citizen of their former country.
There are many reasons why someone might expatriate, including wanting to live in a country with more liberal laws or to avoid paying taxes. Regardless of the reason, expatriation is a permanent process that cannot be undone.
Once a person expatriates, they are no longer considered a citizen of their former country and are not entitled to the same rights and privileges as other citizens.
In some cases, countries may even ban expatriates from returning. As a result, expatriation is a serious decision that should not be made lightly.
Fiscal residency, on the other hand, is based on economic ties rather than simply physical presence in a country.
For example, someone who owns a business in the United States but lives in another country may be considered a fiscal resident of the United States and be responsible for paying taxes on their income from the business.
As you can see, fiscal residency can have a significant impact on your tax liability. Whether you are a fiscal resident or not, it is important to understand the tax laws of your country of residence so that you can comply with them and avoid any penalties.