Tax residency
Tax residency
The country where you pay taxes — usually where you live 183+ days a year. Key point: citizenship does not equal tax residency. A Grenada passport does not make you a tax resident of Grenada.
- What it is
- The country to which you pay tax on your income
- How it is determined
- Usually 183 days a year + centre of vital interests (home, family, business)
- Link with the passport
- None directly: citizenship and residence are different things
- How to change it
- Physically move your centre of life, not just leave for a few weeks
- Can you prepare
- Yes: work out exit tax, CFC rules and new ties in advance
In plain words
Tax residence is the country to which you must pay tax on your income. Usually it is the country where you physically spend most of the year: almost everywhere the threshold is 183 days in 12 months. But other ties are taken into account too: where your home, family and main business are — your centre of vital interests.
The thing most often confused: citizenship and tax residence are different things. A Grenadian or St Kitts passport does not make you a Caribbean tax resident and does not by itself change where you pay tax. You remain a tax resident of the country where you actually live until you physically move your centre of life.
That is why a second passport and a change of tax status are planned separately. For a country to let you go as a resident, leaving for a couple of weeks is not enough: you need to spend more than half the year outside it, and sometimes also obtain residence in the new country and sever old ties. Some states have an exit tax on departure — a tax on unrealised gains on assets, calculated before the move.
Where it matters
What determines tax residence
- 183 days a year
- Permanent home
- Where you spend your time
- Family
- Main business
- Personal and economic ties
- More than half the year outside the country
- Residence in the new country
- Severing old ties
- Exit tax (in some countries)
- CFC rules
- Double tax treaties
How to change tax residence
- 01Assessing your current status
- 02Calculating exit tax and consequences
- 03Moving your centre of life
- 04Residence in the new country
- 05New tax status
What you need to know
- Citizenship and tax residence are different things
- A Grenadian passport does not make you a Caribbean tax resident
- The typical threshold is 183 days in the country in 12 months
- Some countries levy an exit tax on departure
- In a dispute between two countries, a double tax treaty determines the status
Common mistakes
- Assuming a second passport automatically changes your taxes
- Leaving “on paper” without physically moving your centre of life
- Forgetting exit tax when leaving a residence
- Not taking account of CFC rules on foreign companies
- Ending up a tax resident of two countries at once without a plan
What this means for a BRIDGES client
We review your situation before you apply: where you are a tax resident now, what a new status will and will not do for your taxes, and whether exit tax and CFC rules apply on departure. You get a straight picture in advance and do not build plans on the mistaken assumption that a passport automatically changes your taxes.
Frequently asked questions
01 /Will a Grenadian passport free me from taxes at home?
Not by itself. As long as you live in your previous country for more than 183 days a year, you remain its tax resident. Taxes change when you physically move your centre of life; obtaining a second passport has no effect on that.
02 /Can you be a tax resident of two countries at once?
Yes, it happens if both countries regard you as theirs under their own rules. The dispute is then settled by the double tax treaty between those countries — a chain of tie-breaker criteria determines a single one.
03 /What is the 183-day rule?
If you have spent 183 days or more in a country in 12 months, it usually regards you as a tax resident. But it is not the only criterion: a permanent home, family and centre of interests are also taken into account.
04 /What is exit tax?
It is a tax some countries levy when you leave their tax residence — on unrealised gains in the value of assets, as if you had sold them at the moment of departure. It is calculated in advance.
05 /How are residence and CRS connected?
Under CRS, the bank reports your account data specifically to your country of tax residence. That is why it matters to determine it clearly — otherwise the data will go somewhere other than you expect.
06 /Is it enough simply to leave in order to change residence?
No. You need to spend most of the year outside the country, sever ties (home, family, business) and, as a rule, become a resident of another country. Otherwise your previous country will continue to regard you as its own.
See also
Read next
This material has undergone editorial review by BRIDGES.
Plan a change of tax residence?
We will review your current status, exit tax and CFC rules — and show you a straight picture before any decisions.