Tax residence: how to protect yourself from a dispute
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Tax residence is a fundamental requirement in order to determine the place of taxation.
In fact, when a person decides to move abroad it is important that they know what is meant by tax residence, in order to avoid being classified as a tax evader.
In fact, it is important to follow a correct and safe procedure. In fact, the financial administration carries out checks and audits to contain the phenomena of tax evasion related to cases of fictitious emigration abroad of resident individuals and thus determine the taxation of income.
Therefore it is right to follow the correct procedure regarding tax residency as you may be notified of a tax residency assessment. In this article, in fact, we will try to provide useful information on how to protect yourself in the event of a dispute regarding the transfer abroad.
First of all, we will explain the importance of tax residence in terms of taxation and then we will move on to analyze the defensive lines that a taxpayer can adopt in many countries, especially in the phase preceding the real dispute.
Tax residency is of fundamental importance because it allows the taxpayer to be able to understand which country he must pay taxes to.
Often, regulations and laws refer to domicile or residence in the territory of the country for most of the period of tax (that is, for at least 183 days a year or 184 in the case of leap months).
Therefore, it is precisely the place where the tax residence is established that highlights the various consequences in the tax field. In fact, the taxpayer can find himself in two different situations depending on whether he resides in a country or not.
Principle of World Wide Taxation. In line with the aforementioned principle, income, even those that are produced abroad, must also be declared in the country, unless otherwise provided by the provisions contained in the international conventions against double taxation.
Furthermore, the citizen must remember that often, in addition to transferring his residence abroad, he must also do the formalities necessary in the previous country.
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Each year, in order to combat the phenomenon of tax evasion, the financial administration carries out checks and audits, initially considering all the information it has on the taxpayer.
In summary, with the investigative activity all the concrete evidence must be found, for example, in some regulations: - family or in any case emotional ties and attachment in a country; - economic interests in a country; - the interest in keeping or returning to the country; - the intention to live in the country in the future.
So what to do if your residence is contested? Is it possible to protect yourself? First of all, it is necessary to analyze one's position in order to be able to adopt the correct defensive strategy.
First of all, in many countries regulations, it is important through documents to be able to demonstrate that there is no longer any economic connection with the country.
For example, depending on the regulation, can be useful: - the existence of the habitual residence in the fiscally privileged country, both personal and any family unit; - the enrollment and actual attendance of children in schools or training institutions in the foreign country; - the carrying out of an employment relationship of a continuous nature, stipulated in the same foreign country, or the exercise of any economic activity with a stable nature; - the stipulation of contracts for the purchase or lease of residential properties, suitable for housing needs in the country of immigration; - invoices and receipts for the supply of gas, electricity, telephone and other tariff rates, paid in the foreign country; - the movement of sums of money or other financial assets in the foreign country; - the absence of real estate units held available in the first country or deeds of donation, sale, incorporation of companies and previous assets; - the lack in the previous country of significant and lasting relationships of any economic, family, political, social, cultural and recreational nature.
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In light of the foregoing, it is important to keep all documents, all documents that may be useful in the event of a dispute to prove the veracity of one's residence abroad. Of course, when you intend to move abroad, never forget to ask an international tax lawyer about the tax legislation.
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