Introduction to Domicile

Oct 20, 2023

Residence versus domicile

A key consideration for any individual moving abroad, or living outside of the UK relates to the difference between the terms ‘residence’ and ‘domicile’,

 and the impact this has on a person’s potential tax liability. It is extremely important to know how the two terms differ in order to fully understand any financial obligations, as making an incorrect assumption regarding your tax status can ultimately result in severe financial consequences. However, in practice doing so is not a particularly straightforward exercise.


What is residency?

For tax purposes, this might have a very different definition to what you might otherwise assume. In the UK, for example, you can be considered resident for tax purposes even if you have spent as little as 16 days in the country. Fortunately, a Statutory Residence Test has been introduced in the UK, in order to provide greater clarity for individuals when determining their residence status.


What is domicile?

Domicile is a legal concept that refers to the country in which an individual has, or is presumed to have their permanent home. It is not the same as nationality, citizenship or residence, and will not necessarily be the country in which someone was born, or the country where they are currently living. An individual can change their domicile when they become an adult, but it is only possible to have one country of domicile at any one point in time. For some, ascertaining their domicile may be a straightforward process, but for those with connections to more than one country, it may be more complex and require specific advice.