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What is the Difference between Domicile and Residence?

Determining your Domicile Vs Residence is relevant for tax purposes. Learn the difference between the two to understand your obligations. Learn more.

Domicile vs Residence

The terms “Domicile” and “Residence” are terms often interchanged and mistaken as the same. However, the two have different legal definitions and implications. “Domicile” is your “permanent home,” while “Residence” is your “temporary home.”

Understanding Domicile

Fundamentally, you may have several residences, but you can only have one domicile. Your domicile is where you maintain your “forever” home. When you intend to stay in a specific location indefinitely, you become that location’s “domiciliary.”    

Moreover, your country of domicile is the country where you will forever reside in. Even if you move abroad, your domicile remains the same.    

Your domicile of origin at birth is where you live with your parents, which goes on until you reach the age of majority and acquire the domicile of choice. If your parents were not married at birth, your domicile status would be the same as your mother’s. However, this depends on your parents’ circumstances and the laws of the country where you were born. 

Understanding Residence  

Generally, your domicile can be your residence, but your residence may or may not be your domicile. Any place you live in or own is considered your residence. It is where you intend to live temporarily.  

When you are a resident of a country or state, taxing authorities have limited reach to tax your income within the borders. In some jurisdictions, remaining for at least 183 days per tax year means you are a resident for tax purposes. Your residence also gives you the legal right to live, work, set up a business, travel, or study in the country. 

What does Domicile mean?

The Legal Implications of Your Domicile 

Domicile is essential to establish several legal constructs such as voting privileges, claiming government benefits, filing lawsuits, and cooperating with regulatory bodies. Among other things, determining your domicile becomes crucial for tax purposes. The three main tax areas affected by your domicile are the following:    

  • Income Tax    
  • Capital Gains Tax    
  • Inheritance Tax    

Your domicile also becomes essential when you need to govern your estate in the event of your death. It also plays a vital role if you own financial or property assets overseas.

Acquiring Maltese Residency through the Malta Permanent Residency Programme  (MPRP) 

Malta allows non-EU/EEA/Swiss nationals to acquire Permanent Residency through the Malta Permanent Residency Programme (MPRP). You and your family can join under one application and move to one of Europe’s most dynamic economies.

Download our guide to get a deeper understanding of the MPRP 

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