Tax residency: how to choose a country for your life, your capital and your international business

Concepts

Citizenship, residence, tax residency and domicile — four different statuses

When planning a structure for international assets it is critical not to confuse public-law, immigration and fiscal statuses. Holding a residence permit or the passport of a particular state does not automatically determine to which treasury, and in what amount, an individual has to pay tax.

• Citizenship (Nationality)An open-ended political and legal bond between an individual and a state, defining mutual rights and obligations (a passport, the right to vote, diplomatic protection). In the vast majority of states citizenship is not a direct ground for tax liability on worldwide income (with rare specific exceptions such as the United States).
• Residence permit and permanent residenceAn administrative immigration status granting the right to enter, stay and live lawfully in a state for a defined period (a residence permit) or indefinitely (permanent residence). Obtaining a Golden Visa or buying property and receiving a residence card creates the right to live in the country, but does not in itself make the investor a tax resident unless the conditions of the local tax code are met.
• Tax residenceThe fiscal status of an individual, established by the domestic tax law of a particular country for a given tax period (usually the calendar year). It is tax residence that determines whether the person is taxed on worldwide income or only on income from local sources; whether the person must declare foreign accounts, companies (CFCs) and trust structures; and whether the person may rely on double taxation treaties (DTTs).
• DomicileA specific legal concept found in common-law jurisdictions (including the historical system of the United Kingdom). In common-law countries domicile is the country a person regards as their permanent or ancestral home (domicile of origin), or the jurisdiction with which the person has established the most enduring connection with the intention of remaining there permanently (domicile of choice). Domicile may not coincide with current tax residence and is critical for inheritance and estate tax, gift tax and the availability of special tax regimes.

To build a stable structure you have to distinguish clearly between four independent statuses.

Tests

How tax resident status arises — and why 183 days do not settle the question

International law has no single automatic “switch” for tax residency. Jurisdictions formulate their own tests and conditions for recognising an individual as their taxpayer (domestic residence tests). Tax resident status arises when one or more of the conditions set out in the national code are met.

• Physical presence testThe most common quantitative criterion. In many countries the basic threshold is physical presence in the country for 183 days or more within a calendar year, a tax year or any consecutive 12-month (rolling) period. The rules for counting days of arrival and departure (the midnight rule, for example) vary considerably.
• Permanent home availableA person is recognised as a tax resident if a permanent dwelling (owned or on a long lease) suitable for permanent occupation is at their disposal and in their continuous use.
• Centre of vital interests (CVI)A qualitative, substantive criterion. If an individual is in the country for fewer than 183 days, they may still be recognised as a tax resident if the authorities show that the centre of their close personal, family or economic ties is on its territory (the family lives there, the children study there, the main place of work or asset management is there).
• Habitual abode and special testsThe use of formalised connection tests (statutory residence tests, for example) analysing the frequency of visits, work activity and family ties over a number of years.

1. 01No new confirmed residencyIf a taxpayer left the country, spent fewer than 183 days there but did not establish confirmed tax residency in any other jurisdiction, the original country may try to keep fiscal oversight of the person under the CVI test or the registered place of residence test.
2. 02Statutory residence tests (SRT)In jurisdictions with complex statutory tests residency can arise after as few as 16 or 45 days of presence if the person retains ties to the territory (available housing, work, family, visits in previous years).
3. 03Keeping the centre of vital interestsIf a person spends 150 days in country A, 100 days in country B and 115 days in country C, country A will treat them as its tax resident because the family and the main assets are concentrated there, even though the 183-day threshold was not crossed anywhere.

Exit tax

Leaving the old country: the checklist, exit tax and selling a business

Relocating without a pre-relocation tax audit leads to financial losses. In the practice of BRIDGES GLOBAL the analysis of a client’s capital structure before the physical move includes mandatory checks in the following areas.

• The family’s current residence: where the spouse and minor children are, schools and kindergartens
• The structure of income: dividends, interest, royalties, foreign employment contracts, capital gains
• Corporate structures: shares in operating companies and holding SPVs
• Controlled foreign companies (CFCs): the status of the companies and undistributed profit
• Trusts and private foundations: asset-holding structures and the rules on distributions
• Investment portfolios: securities, funds, options, carried interest
• Real estate: where the properties are, in personal and corporate ownership
• Crypto assets: the ownership structure and lawful fiat off-ramp mechanisms
• Upcoming liquidity events: planned business sales, an IPO or large dividend payments
• Exit tax risks: potential fiscal liabilities on leaving the current country

Exit tax: the matrix of legal risks and deemed disposal

• Germany (Wegzugsbesteuerung)Applies to individuals who were tax residents of Germany for at least 7 of the last 12 years and hold a stake of 1% or more in German or foreign companies. A change of residence is treated as a deemed sale of the shares at market value.
• Spain (exit tax, Art. 95 bis LIRPF)Triggered where shares with a market value above €4,000,000 are held (or a stake of 25% or more where the package is worth €1,000,000 or more), if the person was resident in Spain for at least 10 of the last 15 years.
• France (exit tax)Applies to residents (at least 6 of the last 10 years) holding a portfolio of securities and shares worth €800,000 or more, or a stake of 50% or more in a company’s capital.
• The United States (expatriation tax)Applies on renouncing US citizenship or surrendering a green card (held for at least 8 of the last 15 years) for persons who fall under the covered expatriate test.

When a business sale (M&A, IPO) is planned, the founder’s change of tax residency has to begin well before the deal. In analysing a business sale the authorities assess a combination of factors: the former and the new tax residence; the applicability of exit tax and temporary non-residence rules; source taxation and the rules for property-rich entities; the timing of the SPA, the earn-out terms, options and rollover; and general anti-avoidance rules (GAAR). Even a complete change of residency does not automatically exclude the risk of exit tax, source taxation or the application of temporary non-residence rules if key stages of the deal were arranged during the period of the former residency.

Jurisdictions

Five groups of jurisdictions: where tax residency is moved to

Grouped by fiscal model. All parameters are based on the official data of the tax authorities for 2026; the links lead to the immigration programmes of these countries.

• Group I: jurisdictions with no general personal income tax

  The United Arab Emirates: there is a regulatory framework for determining the tax residency of individuals (Cabinet Decision No. 85 of 2022 and Ministerial Decision No. 27 of 2023) — the 183-day test; the 90-day test (90 days or more over 12 months + an Emirates ID + a permanent place of residence or employment / business in the UAE); and the habitual residence and centre of interests test. The fiscal regime: personal income tax (PIT) 0%; tax on capital gains, dividends, interest and inheritance 0%. The 9% corporate tax applies to legal entities: individuals are taxed only if they directly carry on a business activity in the UAE with an annual turnover above AED 1,000,000.

  The Principality of Monaco: income tax 0% (except for French citizens covered by the 1963 agreement); capital gains tax 0%; inheritance and gift tax from 0% (direct line) to 16% depending on the degree of kinship and the situs of the property; the conditions are confirmed through the certificat de résidence process where the tests are met: residence of 183+ days, the centre of the main professional or economic activity, or the place of greatest presence (foyer).

  The Bahamas, Bermuda, the Cayman Islands, Bahrain and Qatar: jurisdictions with a zero rate of income tax — residency is arranged through investment in property, business, or special commercial permits.

  • The UAE — Golden Visa →
  • The UAE — Retirement →
• Group II: special tax regimes for HNWIs and new residents

  Italy (Regime Neo-Residenti / Imposta Sostitutiva): according to the Agenzia delle Entrate for 2026 — a headline flat tax of €300,000 a year replacing the standard tax on foreign income; €50,000 a year for each qualifying family member; the condition is not having been tax resident in Italy for at least 9 of the last 10 tax years; the regime lasts up to 15 years; foreign assets are exempt from declaration and from the IVIE/IVAFE taxes.

  Greece (non-dom, Article 5A of the Income Tax Code): a fixed tax of €100,000 a year on all foreign income (plus €20,000 per family member) for up to 15 years; the requirements are not having been resident in Greece for 7 of the last 8 years plus confirmed investment in the Greek economy of €500,000 or more; property is subject to separate local taxation (ENFIA).

  Switzerland (lump-sum / expenditure-based taxation): the tax is calculated not on worldwide income but on the investor’s declared living expenses (usually from seven times the annual rent of the home, or statutory minimums); working or running a business inside Switzerland is completely prohibited; the regime has been abolished in the cantons of Zurich, Basel and Schaffhausen.

  Cyprus (non-domiciled): exemption from the SDC levy on dividends and interest for persons with non-dom status (the general tax rules and GHS/GESY contributions apply where relevant); capital gains 0% (except for property in Cyprus); the tests are the 183-day rule or the 60-day rule (60 days in Cyprus + no residency in another country + business / employment / director status + a permanent home); the status lasts up to 17 years.

  Malta (ordinary residence and the remittance basis): persons with resident, non-domiciled status pay tax on foreign income only when it is actually remitted to Malta; foreign capital gains are not taxed even when remitted.

  • Italy — investment →
  • Greece — Golden Visa →
  • Switzerland — lump-sum taxation →
  • Cyprus — permanent residence →
  • Malta — GRP →
• Group III: low-tax European jurisdictions

  Andorra — a sovereign European state outside the European Union: PIT rates of 0% on income up to €24,000, 5% from €24,000 to €40,000 and 10% on income above €40,000; dividends from Andorran companies 0%; residency is passive (investment from €600,000) or active (holding 20% or more of a local company and living there 183 days or more).

  Bulgaria: a flat PIT rate of 10%, dividend tax 5%.

  Hungary: a flat PIT rate of 15%, corporate tax 9%; the Guest Investor Program status is available — an immigration route through investment funds from €250,000, which requires a separate analysis of tax status.

  • Andorra — investment →
  • Hungary — Guest Investor →
• Group IV: the transformation of the Portuguese NHR / IFICI regime

  Under the rules of the Autoridade Tributária e Aduaneira: persons who managed to obtain NHR before the programme closed (grandfathered NHR cases) keep their benefits for the remainder of the 10-year term.

  The IFICI regime is a special tax regime covering a broad range of qualifying activities (scientific research, higher education teaching, R&D, innovative startups and qualifying positions in incentivised companies): it provides a special 20% rate for certain Portuguese income of categories A and B and an exemption for a number of types of foreign income.

  The general rules: investors who do not qualify for IFICI are taxed under the standard progressive PIT scale (up to 48%) plus 28% tax on investment income.

  • Portugal — Golden Visa →
  • Portugal — D7 →
• Group V: territorial and remittance-based systems

  Panama and Costa Rica: a territorial system — foreign income received from foreign business activity or the sale of foreign assets is not subject to local tax, provided the specific source rules are met.

  Singapore: applies a partial territorial system — individuals’ income from foreign sources is generally not taxed, and there is no capital gains tax.

  Hong Kong: a territorial system — only income arising from sources in Hong Kong is taxed.

Thresholds, tests and rates are parameters of the laws of the relevant states; whether they apply to your situation is checked before the move.

The matrix

A comparison matrix of the key tax jurisdictions

Nine jurisdictions at a glance: the basic model, the tests, the taxes and who each one suits.

Model client scenarios

1. 01An IT entrepreneurIncome comes from dividends of an international IT company. Relocation to the UAE (0% on dividends, setting up substance) or to Cyprus: the 60-day rule and exemption from SDC.
2. 02An investor with a portfolioSubstantial capital in listed shares. Neo-Residenti in Italy (€300,000 flat) or Cyprus non-dom — the annual liability on foreign dividends is fixed.
3. 03A founder before an M&A dealA move to the UAE or Monaco 12 to 18 months before the deal plus an exit audit in the old country: exit tax, the SPA terms, GAAR rules.

• PropertyRental income continues to be taxed in the country where the property is — by situs.
• FamilyIf the spouse and children stay in the former country, there is a risk that the CVI is found to be there too.
• InheritanceInheritance and gift taxes are tied to domicile and to the situs of the property.

Methodology

How BRIDGES GLOBAL runs a change of tax residency

Comprehensive legal, immigration and financial work — six stages.

1. 01Tax audit and exit analysisThe structure of income, assets and exit tax risks.
2. 02Choosing the modelAn individual memorandum and the choice of jurisdiction.
3. 03The immigration trackResidence or permanent residence, buying or renting a home.
4. 04The physical movePresence and the transfer of the centre of interests.
5. 05Establishing residencyThe TRC and registration with the tax authorities.
6. 06Post-complianceBanks, CRS, setting up the CFC structures.

Questions

Frequently asked questions