The Federal Tax Authority (FTA) has issued a Cabinet decision (the Decision), which clarifies and provides details on the tax residency rules for individual taxpayers.
State of usual or primary residence
The state of usual or primary residence of a natural person is the country in which the natural person habitually or normally resides. It is the country in which the individual spends most of his or her time, as compared with any other country, as part of the individual's settled routine.
Centre of financial and personal interests in the state
The centre of financial and personal interests of a natural person in the country is the jurisdiction where the personal and economic interests of the natural person are closest or most significant. Factors to be considered in determining the country of the centre of financial and personal interests include:
- the place of employment of the natural person;
- the family and social relationships;
- cultural or other activities;
- the place of business; and
- the place from which the property of the natural person is managed.
According to article 5 of the Decision, a permanent residence is a furnished house, apartment, room, or any other form of accommodation that is permanently available to the individual. The permanent residence shall be considered as available to the natural person if the natural person has the continuous right to always occupy it and on a regular basis with a certain degree of permanence and stability and not only occasionally or for the purpose of a short stay. Ownership of the property is not a necessary condition. It may be rented or otherwise occupied by the individual as a dwelling.
A natural person shall be deemed to be gainfully employed in the country in either of the following two cases:
- if he is party to a contract with an employer, incorporated or otherwise established or recognized in the country, under which the natural person undertakes to render a service to the employer under his management or supervision for a promised remuneration paid by the employer in the country; and
- if he is in a continuing relationship in which all or substantially all his income for his work is derived from one party, whereby the income received by him constitutes remuneration for his work performed in the country.
The nature of the employment may be temporary or permanent, and the work may be performed on a full-time or part-time basis.
Calculation of period spent in the state
The Decision provides that the period spent in the country corresponds to all the days or parts of a day on which a natural person is physically present in the country in relation to the total number of days in which he is present in the country during a relevant consecutive 12-month period. The days in which the natural person has been physically present in the country need not be consecutive for the purpose of determining whether the 183-day or 90-day period has been met during the relevant consecutive 12-month period.
The number of days during which the individual was present in the country would not be considered in determining whether the 183-day or 90-day period has been met. An exceptional circumstance is an event or situation beyond the individual's control, which occurs while the individual is already in the country, which the individual could not reasonably have foreseen or prevented, and which prevents the individual from leaving the country as originally planned.