Technical article

Legal Residency and Tax Residency Are Not the Same Thing

The card and the tax status are decided by two different offices, using two different sets of tests.

By Neil Solomon · 5 min read

Picture a couple named Greg and Susan. Both are 61. They hold a residence card for a new country. They assume that means they now pay tax there. Or they assume they do not, because they have not moved yet. Both guesses could be wrong. The card and the tax status are decided by two different offices, using two different sets of tests.

This article is about the tax side. I read the tax pages for six countries. Permits are decided by the immigration offices and are outside this piece.

The tests, country by country

What each page says

Spain. The tax agency says a person is habitually resident if they stay "más de 183 días" in the calendar year, or if the "núcleo principal o la base de sus actividades o intereses económicos" is in Spain. Short trips out of Spain still count as days in Spain unless tax residence in another country is proved. If a spouse who is not legally separated, and dependent minor children, live in Spain, the page says the person is presumed resident "salvo prueba en contrario" (unless shown otherwise).

Portugal. The tax authority says you are resident with "more than 183 days (consecutive or interrupted) in any 12-month period, beginning or ending in the tax year". You are also resident if you have a home that shows you mean to keep it as your habitual residence, even for fewer days. Residents generally pay tax on income from anywhere. Non-residents pay only on Portuguese-source income. The page says you have 60 days to update your address with the authority when your status changes.

France. The tax site says you are domiciled in France if one of three things is true: you have your home there, or if no home, your main place of stay; you work there, unless the work is minor; or you have "le centre de vos intérêts économiques" there. Someone whose French income is larger than their foreign income is treated as having that centre in France. If another country also claims you, the tax treaty between the two decides.

Mexico. Article 9 of the federal tax code says a person who has set up a "casa habitación" in Mexico is resident. If they also have a home abroad, they are resident if their "centro de intereses vitales" is in Mexico. Two signs are given: more than half of yearly income from Mexican sources, or main professional activity based in Mexico. The article has no day count. It also says someone who leaves and cannot prove a new tax residence, or who moves to a low-tax place, can stay Mexican resident for the year they give notice plus five more years.

Thailand. The Revenue Department says a resident is anyone in Thailand "for a period or periods aggregating more than 180 days" in a year. Residents pay tax on Thai income, and on foreign income once it is brought into Thailand.

Malaysia. The Inland Revenue Board quotes the law: resident if "in Malaysia in that basis year for a period or periods amounting in all to one hundred and eighty-two days or more". Shorter stays can still qualify under three other tests, described on the page.

Two things the tables show

First, "183 days" is not one rule. Spain counts a calendar year. Portugal counts any 12 months touching the tax year. Thailand says 180. Malaysia says 182. France and Mexico give no day count on the pages I read.

Second, the same person could meet the tests of two countries in the same year. France's page says a treaty then decides. The treaties themselves are not covered here.

What this article leaves for another day

• Immigration rules for any of the six. They are a different office and a different test.
• How each country taxes foreign pensions or Social Security, which is a question of its own.
• Treaty terms between any of these countries and your home country.

An accountant or lawyer who works with people moving from your home country to these places could confirm which tests apply to you.