BUSINESS NEWS - The United Kingdom’s First-Tier Tribunal Tax Chamber had to determine whether Jonathan Oppenheimer was a resident of the UK or South Africa for five particular tax years (spanning 2010 to 2017), and handed down its judgment in the matter on 24 March 2022.
Most countries tax individuals on their worldwide income on a residence basis, according to their specific residence criteria.
A non-resident would pay tax only on their foreign income. The outlier is the United States, which taxes US citizens on their worldwide income, no matter where resident.
In today’s globalised environment, it is possible to follow employment opportunities around the world, earn income from different sources in different countries, and move residence.
The competition between countries for taxing rights over that income is becoming more complex, and fierce.
What determines residence?
But what determines residence? Passport? Place of abode? Habitual place of abode? Where your children go to school? Where your home is? The place you intend to go back to one day?
Where there is a double taxation treaty between two possible countries of residence, the rules regarding the residence test will be followed, termed the tie-breaker rule.
This rule suggests the factors that should be considered in determining residence, such as centre of vital interests, place of habitual abode, and the country of which the individual is a national.
Her Majesty’s Revenue and Customs (HMRC) argued that Oppenheimer “lived in the UK as a family and throughout the relevant period”.
“Although he retained property and interests in [South Africa] he spent more time in the UK where he lived and his centre of vital interests was in the UK.”
