Tax Residency

## Tax Residency

Tax residency determines which country taxes your worldwide income. It is distinct from citizenship and immigration status, though they are often correlated.

### Common Tests

| Test | Threshold | Countries |
|------|-----------|----------|
| Physical presence | 183+ days | UK, Germany, Japan, most countries |
| Substantial Presence Test | Weighted 3-year formula | US |
| Domicile / permanent home | Habitual abode | Germany, Netherlands |
| Center of vital interests | Economic ties | Treaty tiebreaker |

### Dual Residency

It is possible to be tax resident in two countries simultaneously. Tax treaties include 'tiebreaker' rules that assign primary residency based on: permanent home, center of vital interests, habitual abode, and finally nationality.

### Implications

- Tax residents are typically taxed on worldwide income.
- Non-residents are taxed only on domestic-source income.
- Changing tax residency can have significant implications for capital gains, pensions, and estate taxes.