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Definitions of residence for tax purposes vary considerably from state to state. For individuals, physical presence in a state is an important factor. Some states also determine residency of an individual by reference to a variety of other factors, such as the ownership of a home or availability of accommodation, family, and financial interests. For companies, some states determine the residence of a corporation based on its place of incorporation. Other states determine the residence of a corporation by reference to its place of management. Some states use both a place-of-incorporation test and a place-of-management test.
Domicile is, in common law jurisdictions, a different legal concept to residence.
Residence as defined in double taxation treaties is different from residence as defined for domestic tax purposes. Tax treaties generally follow the OECD Model Convention which provides:
A company is generally treated as resident in the United Kingdom for tax purposes if it is incorporated in the United Kingdom or, if the company is not incorporated in the United Kingdom, if its central management and control are exercised in the United Kingdom. "Central management and control" refers to the highest level of oversight, usually as exercised by the board, rather than day-to-day management.
An individual who spends more than 183 days in the UK in a tax year is UK resident. Apart from that, there are no clear statutory guidelines. The question of whether someone is UK resident is a question of fact and degree, to be determined "on all the circumstances of the case." The vagueness of this test has often been criticised. Viscount Sumner said in Levene v IRC:
Similarly, the Codification Committee concluded:
More recently, the Chartered Institute of Taxation concluded:
It is not possible in the scope of a Wikipedia article to provide a useful and accurate statement of the substantial case law relating to residence of individuals for tax purposes in the UK and any short summary would be inaccurate and misleading. The number of days present in the UK is not a decisive factor (unless the number of days exceeds 183 in a tax year). In one case a foreigner who spent 5 months in the UK was held not UK resident. In the view of HMRC someone who exceeds 90 days on a four year average is UK resident, but considerable emphasis is given to the fact that someone who averages less than 90 days may also be UK resident.
Before 2009/10, the vagueness of the law did not seem to matter because HMRC published relatively clear guidelines in document IR20. That document has been withdrawn from 2009/10 and replaced with the much vaguer guidance in HMRC 6.
HMRC currently argue that they are not bound by the terms of IR20 for years prior to 2009/10. Whether that is correct is currently the subject of litigation. It is clear that HMRC are not in any way bound by the terms of HMRC 6, which contains a very full disclaimer.
All tax resident individuals are taxed on their worldwide income, regardless of the source. This would include salary, dividends, etc. earned from one's limited company. Generally, individuals are deemed to be tax resident if they are physically present in Germany for more than six months in any one calendar year or for a consecutive period of six months over a calendar year-end. This ruling is applied retrospectively so presence in Germany from 1 March to 30 November, for example, would make one a German tax resident and therefore subject to German tax on the worldwide income for the entire period rather than just from the beginning of the seventh month.
An individual can also be deemed tax resident if they acquire an abode in Germany. This can include renting, as opposed to purchasing, a property but only if the duration of the lease is deemed to be more than temporary. For this reason, to avoid German tax residency, short-term (such as three months) should be taken out wherever possible.
Non-resident individuals are taxed on German-source income only. In the case of salary and benefits from your limited company, the source is German since the duties of the employment are being performed in Germany. However, dividends from your limited company (assuming this is not deemed to have a permanent establishment in Germany: see below) would be from a non-German source regardless of where the dividends are received. There is, therefore, scope for tax mitigation here if one does not become a German tax resident (although non-German taxes may also need to be considered).
In Russian Federation all tax resident individuals are taxed on their worldwide income, regardless of the source. Individuals are deemed to be tax residents if they are physically present in Russian Federation for more than 183 days during consecutive period of 12 months. The period of presence in Russian Federation is not interrupted in case individual is out of the country for less than six months for educational purposes or for medical treatment. Foreign servants and civil servants that were sent abroad for work purposes are deemed tax residents no matter how long they really are present in Russian Federation.