UAE unveils tax residency criteria

[JackAlabama]

still with all that they can challenge your other residency
that's when all those mentioned things come in place as an additional proof

That depends on the country. Not all countries can nor do derive a claim by you not being somewhere enough when you are not there enough.

 

[sergeylim88]

we were talking about spain and generally about countries that do that

 

[JackAlabama]

we were talking about spain and generally about countries that do that

This thread is 8 pages long and a lot is being talked about

 

[Konstanz]

I suggest to rent out property if you have in Spain.
If it's not rented they can still say you have living place in Spain.
Also I would recommend to transfer/sell cars to other person or register them in other country.
Don't leave all those small things to be able for them formally say you still resident because you have car, house, telephone...
Having on of the bank account in Spain should not be problem itself if all card payments are outside Spain. It even works as a proof you dont live

 

[bedouin]

Summoning @Fred regarding this. What happened with the 90 day standalone TRC? Any news on that?

 

[aurum]

I'm going to work as an employee from March to end of the year in Dubai but have 100% remote work.
So, the idea is to spend 90 days in Dubai to get the TRC, and then live in Europe closer to Spain (France and/or Portugal?)
I'll probably visit family during Summer and Christmas.
Always staying less than 183 days total in Spain.
But not sure if this is tightening the rope too much? Although I'll comply with all requirements to not be a fiscal resident in Spain.

So, it's "A", I'll have lived in both countries and I'm currently a freelancer in Spain until next month when making the switch.
Just want to make sure I understand everything before making the move, but as this new change is still to be implemented, then I'm a bit doubtful about how it will be exactly taken into reality.

Hi, I have a similar situation but my home countries (I have two passports) do not have DTAA with the UAE.
I just called the Tax Authority in the UAE (Federal Tax Authority - United Arab Emirates) and they told me the 90 days will only count for days spend in the UAE after March 1 (date on which Decision No. 85 of 2022 takes hold). The lady on the phone told me that in some cases they might also consider days after January 1st 2023, but not days spend in the UAE in 2022.

Based on what I have read in this forum there seems to be a certain level of arbitrariness in these things in the UAE. I am guessing another person might get a slightly different answer on the phone.
I suppose it depends on how much substance one has in the UAE: Ejari and local salary paid from a local company with a UAE business bank account to a local UAE personal bank account.

The lady on the phone told me it is only possible to get a TRC for a country with a DTAA. She told me that the "General" purposes in the process you mentioned (only useful for UAE government and/or airlines) will not work for me.

I am interested in a TRC as further proof that I am a tax resident in the UAE as one of several "evidentiary elements" that I am not a tax resident in the countries where I derive income from or have investments in, i.e: Confirmation of leaving my home country, reduction of substance there, Rental Agreement in dubai, DEWA utility bill payments, local bank account in the UAE, local salary in the UAE paid my own FZCO from local business bank account etc.

It looks like I am going to have to spend 90 days in the UAE this year after March 1st if I want any kind of TRC (I am considering getting one for a country I might move to in the future, like Thailand since I cannot get one for my home country).

If anybody in this forum has gotten a TRC in the UAE recently please share your experience.

Warm regards

 

[bedouin]

It is obviously better than nothing, certainly not only useful for UAE government (why would uae government ever want that in the first place) or airlines (LOL). This IS useful to support your case of proving you're a tax resident elsewhere when DTT is not possible. DTT Certificate is important as an UNTIER. If you spend more than 6 months in Dubai and specially if you do NOT spend time in any of your home countries, you should have no issue proving your case if you really are in that situation.

A DTT Certificate is not going to free you from questions/headaches if you hang around your home country. Stay away.

 

[andrew28fl]

I came across this article: The New Corporate Tax Regime in the United Arab Emirates- Publications - Eversheds Sutherland

A resident person (which is a taxable person) is defined in the CT Law as:

(ii) a legal person incorporated or otherwise established or recognised in a foreign jurisdiction, which is effectively managed and controlled in the UAE;


So, my single member US LLC would become taxable in UAE, correct? According to this article, there seems to be no ambiguity about the Permanent Establishment laws in UAE.

 

[Marzio]

So, my single member US LLC would become taxable in UAE, correct?

100%

 

[karishi]

still with all that they can challenge your other residency
that's when all those mentioned things come in place as an additional proof

My understanding is tha Spain has a "special" handling for three years for people who transfer their residency to the UAE as the UAE is blacklisted for people. This means something like that you will need to demontrate that you have truly left Spain for UAE, which means the usual no wife, no kids, and probably to play it safe also 183 days in the UAE.

 

[drumtraks]

Your country rules for tax residency are usually written, especially if you’re from the EU. I have moved to the UAE and have asked the tax authority before doing so. As a rule of thumb on any EU country, if you’re outside of your country more than half of the year and you don’t have a permanent home available to you in your country, you’re good to go. You also must change your address in your citizen card as you’re required to do so from the moment you move to a different country. The UK has much strict rules.

 

[karishi]

Your country rules for tax residency are usually written, especially if you’re from the EU. I have moved to the UAE and have asked the tax authority before doing so. As a rule of thumb on any EU country, if you’re outside of your country more than half of the year and you don’t have a permanent home available to you in your country, you’re good to go. You also must change your address in your citizen card as you’re required to do so from the moment you move to a different country. The UK has much strict rules.

Yeah the basic rules are:
- tell your country you have expatried in the correct way
- no wife or kids in the country
- not more than 183 days in the country

Som UE countries, including Spain, if you move to Dubai basically requires you to demonstrate you have moved, so having a permanent residence in the UAE, and being out of the country for more than 183 days.
What I have never been able to clear is what happens if you do not trigger tax residency anywhere, I thought for a while you had to pay taxes in the country of citizenship, but not 100% sure about this, people on the forums said no.
In any case there are two important moments usually, when you leave ( especially if you were a high taxpayer, maybe around 150/200k in inconme ) and when you re enter the country, especially if you bring in money. And in general your country of birth is the place where you risk more.

 

[backpacker]

What I have never been able to clear is what happens if you do not trigger tax residency anywhere, I thought for a while you had to pay taxes in the country of citizenship, but not 100% sure about this, people on the forums said no.

It depends on legislation/tax code of the country of citizenship.
In most cases there is no requirement to be a tax resident anywhere as long as you can demonstrate that you have left your country of citizenship in a correct way, without leaving any personal or economical ties.

However, in practice you will have a hard time to demonstrate the aforementioned without having a residency in another country.
So, if you want to become a "perpetual traveler" the prudent way would be to first move and settle as a resident in a foreign country of your choice where you get all the necessary papers. Stay in this "foreign country of choice" for a few years and only thereafter start your life as a perpetual traveler.

 

[lavel]

So, if you want to become a "perpetual traveler" the prudent way would be to first move and settle as a resident in a foreign country of your choice where you get all the necessary papers. Stay in this "foreign country of choice" for a few years and only thereafter start your life as a perpetual traveler.

why would you need to stay there for a few years? I mean what makes the difference?

 

[backpacker]

why would you need to stay there for a few years? I mean what makes the difference?

"where you get all the necessary papers" = to properly deregister from your country of citizenship, to get "end taxed", to prove where you live in what foreign country and that you moved for a significant reason.
Certainly not that important when you're a retiree who enjoys his last year's on Planet Earth; however for a youngster or somebody with active business it is paramount to do it that way if he/she doesn't want to have a bad awakening.

 

[zzzzzz]

Yeah the basic rules are:
- tell your country you have expatried in the correct way
- no wife or kids in the country
- not more than 183 days in the country

Som UE countries, including Spain, if you move to Dubai basically requires you to demonstrate you have moved, so having a permanent residence in the UAE, and being out of the country for more than 183 days.
What I have never been able to clear is what happens if you do not trigger tax residency anywhere, I thought for a while you had to pay taxes in the country of citizenship, but not 100% sure about this, people on the forums said no.
In any case there are two important moments usually, when you leave ( especially if you were a high taxpayer, maybe around 150/200k in inconme ) and when you re enter the country, especially if you bring in money. And in general your country of birth is the place where you risk more.

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.

 

[khinkali]

Subparagraphs a to d above are part of paragraph 2, below:

1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

As you can see, perpetual traveler falls in category C.

If someone is a "resident" of two states, then they're not much of a perpetual traveler in the first place.

An actual PT would presumably be resident in no country, so there's no need to choose which of the non-existing residences trumps the other.

There might be issues with citizenship, former residence, doing business, etc. but I don't believe that the the above quotes apply to a PT.

 

[zzzzzz]

Subparagraphs a to d above are part of paragraph 2, below:




If someone is a "resident" of two states, then they're not much of a perpetual traveler in the first place.

An actual PT would presumably be resident in no country, so there's no need to choose which of the non-existing residences trumps the other.

It says both states or neither states. Perpetual traveler wants to be resident in neither states (i.e. changing countries every 3 months...etc.) and saying "Hey, I'm tax resident of nowhere!".

 

[khinkali]

It says both states or neither states.

Yes it is saying that if the person is resident in both states (the parent part that was missing), then the residence will follow permanent home (a), else habitual abode (b), else nationality (c).

a, b and c are within the first part of para 2, so they apply where an individual is "a resident of both Contracting States". A perpetual traveler, by definition would not be in that situation (assuming that the definition of PT is not having residence).

 

[zzzzzz]

A perpetual traveler, by definition would not be in that situation (assuming that the definition of PT is not having residence).

That is only possible if you don't use any FI accounts and don't have any taxable income. But for that, you don't have to be perpetual, nor traveler. Otherwise you are always in a position of: country of citizenship A vs country B/C/D/E... and using OECD model described above.