Citizenship is one of the closest connections between a person and a country. In the past, citizenship and residency tended to coincide across the population.The bilateral nature of this bond is the origin of the duty to pay taxes. However, globalisation has accelerated international mobility and currently, these two concepts are now more separated.
Many personal income tax regimes will seek to tax a tax resident on all of their income sources, irrespective of its source country. For instance, a person can have more than one citizenship and still be a tax resident of a third country. the concept of tax residence has developed, often built around the degree of personal socio-economic links with a country.
How to determine tax residency?
Countries use a number of approaches for tax residence tests such as
- Having physical presence for a minimum amount of time; for example, at least half (183) the days in a year
- Having a permanent home available, as opposed to staying at a particular place under such conditions that it is evident that the stay is intended to be of short duration
- Having a close centre of vital interests. This would involve an assessment of where the personal and economic relations of the individual are, including his/her family and social relations, his/her occupations, his/her political, cultural or other activities, his/her place of business, the place from which he/she administers his property, etc. All the circumstances must be examined as a whole, but considerations based on the personal acts of the individual must also receive special attention.
- Having a habitual abode in the sense of being customarily or usually present; this notion refers to the frequency, duration and regularity of stays that are part of the settled routine of an individual’s life and are therefore more than transient.
Citizenship does not determine tax residency in many cases. nationality or citizenship will only play a role if none of the previous residence tests
are enough to determine the country of tax residence. Many countries will accept that a citizen who is a tax resident elsewhere and is not a tax
resident in the country of their citizenship by the tests above will not have an income tax liability in their country of citizenship.
Citizenship by investment (CBI) schemes allow individuals to obtain citizenship rights through local investment for global mobility, political stability and lifestyle benefits. In the Caribbean, Dominica, Saint Kitts and Nevis, and Saint Lucia are all Commonwealth jurisdictions. Consequently, they each follow established common law jurisprudence, particularly that established by the United Kingdom.
We look at list of tax regimes levying individual income taxes
Antigua and Barbuda
Antigua does not levy taxes on individuals
Grenada considers individual to be tax resident if physically resident for at least 183 days a year. Resident individuals taxed based on income derived in Grenada. Non-resident invidivuals are taxed based on income derived/sourced in Grenada.
Individuals are considered ordinarily resident if their permanent place of abode is in St. Lucia and physically present in St. Lucia for some period of time in the income year. Individuals whose permanent home is not in St. Lucia but who are physically present in St. Lucia for more than 183 days in the income year are considered resident but not ordinarily resident.
Resident and nonresident individuals are taxed on income derived in or sourced in St. Lucia. Taxable income includes income from employment and business income, interest, royalties, rent, etc., less allowable deductions and allowances.
The individual income tax rates are progressive up to 30%: 10% on the first XCD 833.33, 15% on the second XCD 833.33, 20% on the third XCD 833.33, and 30% thereafter.
St Kitts and Nevis
There is no individual income tax in St. Kitts & Nevis.
St Kitts has Double taxation treaties with the following countries
Income Tax (Double Taxation Relief) (Canada) Order
Income Tax (Double Taxation Relief) (Denmark) Order
Income Tax (Double Taxation Relief) (Monaco) Order
Income Tax (Double Taxation Relief) (New Zealand) Order
Income Tax (Double Taxation Relief) (Norway) Order
Income Tax (Double Taxation Relief) (San Marino) Order
Income Tax (Double Taxation Relief) (Sweden) Order
Income Tax (Double Taxation Relief) (Switzerland) Order
Income Tax (Double Taxation Relief) (United Kingdom) Order
Income Tax (Double Taxation Relief) (USA) Order
Dominica considers individual to be tax resident if physically resident for at least 183 days a year.
Companies and individuals residing in Dominica are subject to taxes on their income. Persons who retire in Dominica are exempted from taxes on income earned from a source outside of Dominica. However, the person should not have been resident in Dominica prior to the retirement. Dominica has a tax treaty with CARICOM countries to prevent double taxation of income earned in Dominica.
Beneficiaries of Malta’s Citizenship Investor Programme and the Malta Residence and Visa Programme (Malta’s citizenship by investment and residence by investment programmes) are not automatically considered as tax resident in Malta by virtue of them being beneficiaries of any of these Programmes, but they should nonetheless satisfy the physical presence test and/or the facts and circumstances test to be considered as tax residents of Malta for the purposes of the
Income Tax Act.
The extent of an individual’s tax liability will depend on the individual’s domicile and tax residence status in Malta, and a factual determination must be made to determine whether the person is ordinarily resident and domiciled in Malta, resident but not domiciled in Malta, not ordinarily resident but domiciled in Malta, etc.
An individual is resident in Malta if the individual resides in Malta, except for such temporary absences as may seem to the Commissioner for Revenue to be reasonable and not inconsistent with the claim of residence. An individual typically is considered resident in Malta if the individual is present in Malta for a period equal to six months in a given calendar year, with the intention to establish residence in Malta.
Individuals ordinarily resident and domiciled in Malta are subject to income tax in Malta on their worldwide income and chargeable gains. Individuals who are ordinarily resident and not domiciled in Malta are taxable in Malta on a source and remittance basis, that is, on income and chargeable gains arising in Malta and on income arising outside Malta that is received in Malta (i.e., such individuals are not taxable in Malta on income arising outside Malta and not received in Malta and on capital gains arising outside Malta, regardless of whether they are received in Malta).
the following factors are usually taken into account to determine residency of individuals:
– Place of abode
– Physical presence (i.e., spending more than 183 days in Malta)
– Regularity and frequency of visits
– Intention to reside in Malta
– Ties of birth
– Ties of family
– Business ties
Taxable income includes gains or profits derived, inter alia, from a trade or business; profession or vocation; employment or office; dividends, interest, or discounts; pensions, annuities, or annual payments; rents, royalties, premiums, and any other profits arising from property; and certain chargeable capital gains.
Rates are progressive, ranging from 0% to 35%. The amount of taxable income is multiplied by the applicable rate, and a deduction (depending on the rate) is subtracted from the result. The progressive rates and deductions for a single taxpayer are listed in the table above.
Resident individuals are taxed on worldwide income; nonresidents are taxed only on Montenegro-source income.
Individuals are resident if they are in Montenegro for 183 days or more in a calendar year or if their center of vital interests is in Montenegro.
Taxable income: Taxable income comprises income from employment, business and professional income, investment
income (dividends, interest, and royalties), and income from immovable property.
Montenegro does not have a double taxation treaty with the United States. On March 1, 2018, Montenegro’s Parliament approved the Foreign Account Tax Compliance Act (FATCA) agreement between the governments of Montenegro and the United States. Implementation of FATCA will help the countries better track and report tax evasion.
The country has signed 46 taxation treaties with various countries on income and property, which regulate double taxation. Presently, 44 of those treaties are in force, specifically with Albania, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, Italy, Ireland, India, Korea, Kuwait, Latvia, Macedonia, Malaysia, Moldova, Malta, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Sri Lanka, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, and the United Arab Emirates. Treaties with Spain and Qatar are pending.
Residents are taxed on worldwide income; nonresidents are taxed only on Turkish-source income.
Individuals who are in Turkey for a continuous period (including temporary absences) of more than six months in any calendar year are deemed to be resident for tax purposes. However, foreign individuals who are on assignment in Turkey for a specific business project or mission, or those in Turkey for holiday, health care, or educational purposes are not regarded as resident, even if they stay for more than six months.
Taxable income is comprised of employment income, professional income, business income, income from agricultural activities, income derived from shares, income from immovable property, and other income (capital gains and nonrecurring income).
Individual income tax rates for income earned in the 2020 calendar year are progressive ranging from 15% to 40%. The income tax brackets are adjusted annually. An income tax return must be filed by all individuals that derive business or professional income. For other types of income (e.g., salary, income from securities, income from immovable property, capital gains, etc.),
Individuals who have a permanent dwelling available in North Macedonia or who have been present in North Macedonia for more than 183 days within any 12-month period are considered resident for tax purposes. Resident individuals are subject to tax on their worldwide income; nonresident taxpayers are subject to tax only on North Macedonia-source income.
Taxable income includes income from employment, income from professional activities, income from property and property rights, income from royalties, income from capital, income from games of chance, and other income. The standard individual income tax rate is 10%.