Residency and ordinary residency. Tax residency change

Terms, benefits, procedure
“Liberty has restraints but no frontiers”

David Lloyd George

Why you should wonder about residency and ordinary residency programs
Program benefits:
— Freedom of movement all across the globe is obtained via new passports providinge visa-free regimes with countries that previously were beyond the reach under effective citizenship
— The right to choose a place of ordinary residencye
— The availability of life quality improvement in a highly developed and secure state
— “ Backup plan” — for ensuring future safety essential in case of arising circumstances that may force you to leave your home country. Thus, if you havea second citizenship or passport, you can quickly and legally change your ordinary residence
— Registration for tax planning purposes

There are various programs that allow you to legally live in one or multiple countries other than your home country or country of effective citizenship. They include residency ordinary residency, first or second citizenship, citizenship by investment , golden visas and second passport purchase.

Tax residency

Tax residence determines how individual or legal entity is treated with regard to taxation in a particular country. Therefore, a person recognized as a tax resident of a particular country is required to pay taxes in that country. Tax residency change is the person’s right to choose the desired state for taxation purposes.
Tax residency change comes as an effective instrument of international tax planning applied to reduce the tax burden. Obtaining tax residency in countries with favourable or zero tax treatment is ideal for capital
formation, preservation and enhancement for protection and transfer of assets to heirs. For example, personal income tax in Ukraine constitutes 18% + 1.5% military duty, in Germany, it can reach up to 45%, and in the UAE — it is 0%.
In practice, clients often confuse the concepts of residency, ordinary residency, citizenship and tax esidency, but conceptsthey all differ. In order to obtain tax residency, you should meet certain requirements, as follows: to have a centre of vital interests, to stay in the country of the planned tax residency for a certain number of days. Having a passport of another state or getting citizenship by investment of another country does not automatically make you a tax resident of another country. Each country has its own criteria for
treating citizens as tax residents, and besides, this status shall be formally documented.
The most effective way to reduce tax costs is to apply mix of corporate and individual tax planning when
an ultimate beneficiary resorts to tax residency change for the purpose of achievinge maximum tax optimization.