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Glossary · Tax

Tax Residency
Definition

The legal status that makes an individual subject to taxation in a given country, typically determined by physical presence, domicile, or centre of vital interests — not by citizenship.

The legal status that makes an individual subject to taxation in a given country, typically determined by physical presence, domicile, or centre of vital interests — not by citizenship.

Tax residency is the legal connection that subjects an individual to a particular country's tax regime. The most common test is physical presence — 183 days in a tax year in many jurisdictions — but most countries operate composite tests considering domicile, permanent home, centre of vital interests, and habitual abode (the OECD Model Treaty tiebreaker rules).

Critically, tax residency is conceptually distinct from citizenship. Acquiring a second citizenship via CBI does not, by itself, make the holder tax-resident in the issuing state — every Caribbean CBI state operates territorial taxation that only catches physical residents and locally-sourced income.

The United States is the major exception: US citizens are taxed on worldwide income regardless of residency. Eritrea operates a similar citizenship-based tax regime.

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