First, let us clarify who is a tax resident. Tax residency refers to an individual or legal entity's affiliation with a country's tax system and determines where income must be declared and taxes paid. As a rule, a person is considered a tax resident of the country of their permanent residence or citizenship by default.
There are many reasons why entrepreneurs and investors decide to change their tax residency. In most cases, this decision is driven by differences in tax regimes, tax burdens, and the opportunities offered by international investment attraction programs and residency visa schemes.
It is important to clearly distinguish between citizenship and tax residency. Obtaining a second citizenship does not automatically confer tax residency in a new country and, by itself, does not create an obligation to pay taxes in two jurisdictions simultaneously.
When transferring tax residency from one country to another, the key role is played by the criteria established by national legislation. Different countries apply different approaches to determining an individual’s tax status. The most common criteria include:
- physical presence in the country for 183 days or more during a calendar year;
- the center of vital and economic interests (family, business, primary sources of income);
- ownership or long-term lease of permanent housing (for example, in Germany and Austria);
- citizenship as an independent criterion (notably in the United States).
As a rule, a tax resident is required to declare and pay taxes on all income, regardless of whether it is earned domestically or abroad. Such income includes dividends, rental income, salaries, fees, and other sources.
At the same time, the tax burden varies significantly across jurisdictions. In some countries, personal income tax rates may reach 40-45%, while in certain jurisdictions, including the UAE, personal income tax does not exist at all, making these countries particularly attractive from a tax-planning perspective.
Procedure for determining tax residency
Typically, an individual is initially considered a tax resident of the country of their permanent residence. However, in today’s highly mobile environment, individuals increasingly spend substantial time outside their home country, and tax status may be determined based on a combination of factors.
In most countries, the primary criterion for recognizing tax residency is physical presence in the country for more than 183 calendar days per year. When calculating this period, all days of presence are usually counted, including holidays, business trips, and short-term visits.
An additional factor influencing tax residency determination is the availability of housing in the country, whether owned or rented on a long-term basis. This approach is applied in several European countries, including Austria, Germany, and the Netherlands.
The center of personal and economic interests may also play a decisive role. This includes conducting business, primary professional activity, and the residence of close family members. In some countries, such as Belgium, France, and Italy, the presence of family members in the country may be sufficient to establish tax residency, even if actual physical presence is limited.
In situations where it is not possible to clearly determine the center of interests, tax residency may be established based on the permanent place of residence. If this criterion is also inconclusive, citizenship may be taken into account in certain jurisdictions.
Special attention should be paid to the United States' approach, which bases taxation on citizenship. Holding US citizenship creates an obligation to declare income and comply with tax requirements imposed by US tax authorities, regardless of actual place of residence or business activity.
In addition, conducting business within a country may be a relevant factor. For example, in the United Kingdom, tax residency may be determined by the place of company registration, the location of its central office, or the place of effective management.
It should be emphasized that changing tax residency by obtaining a residency visa or an investor visa is a lawful procedure, provided the legal requirements of the relevant country are met. Specific options and available tools for individuals may be considered further.
Reasons for changing tax residency
One of the key factors influencing the decision to change tax residency is the level of tax burden. Tax rates and the composition of mandatory taxes vary significantly from country to country: in some jurisdictions, personal income tax rates are very high, while in others, certain taxes may not exist at all. For example, the UAE has no personal income tax and no federal inheritance or gift taxes, which makes the country attractive to entrepreneurs and investors.
Beyond tax levels, changes in the global regulatory environment also play an important role. In recent years, financial institutions and government authorities have significantly strengthened requirements for tax transparency and compliance. This is linked to the implementation of international mechanisms for the exchange of tax and financial information to prevent tax evasion and ensure proper tax compliance.
Automatic exchange of financial information between participating countries means that tax authorities in the country of tax residency may receive information about foreign bank accounts and financial assets held by their residents. Under these conditions, the correct and well-documented determination of tax residency becomes particularly important.
Changing tax residency enables lawful tax optimization by leveraging differences across national tax regimes. However, such decisions require a comprehensive approach and consideration of many factors, including tax rates, physical presence requirements, residency confirmation rules, and potential obligations in the former country of tax residency.
A balanced analysis of the advantages and limitations of each jurisdiction enables not only reducing tax costs but also ensuring legal stability and long-term predictability of tax status.
The process of changing tax residency: simplicity of procedure as a key factor
When choosing a tax jurisdiction, not only does the level of tax burden matter, but also the practical feasibility of changing tax residency – namely, how easily and quickly an individual can obtain residency status through investment or immigration programs, as well as the procedural and time barriers involved.
In many cases, the decisive factor is the ability to obtain an official tax residency certificate, rather than merely favorable tax rates or formal incentives. To change tax residency, it is generally necessary to first obtain a residency visa (residence permit) in the selected country. Therefore, when evaluating a tax jurisdiction, it is essential to consider the residency visa process itself: the simpler, faster, and more transparent it is, the greater the practical value of that solution.
A number of countries offer legal residency-by-investment programs that allow foreign investors to obtain residence permits by meeting established conditions. These programs differ in terms of investment thresholds, processing timelines, physical presence requirements, and ongoing obligations.
In some jurisdictions, residency status can be obtained within a few months through investments in the national economy. For example, in certain Caribbean countries, investment thresholds are several hundred thousand US dollars, while in European Union countries, minimum investment requirements for residency-by-investment programs may reach several hundred thousand euros or more, depending on the country and the chosen instrument.
At the same time, there are jurisdictions where investment requirements and processing timelines are more flexible, and procedures are less bureaucratic. The combination of moderate requirements, transparent rules, and the ability to formally confirm tax residency makes such countries particularly attractive to entrepreneurs and investors.
Approaches to choosing tax residency
Let us move on to approaches for selecting an optimal tax jurisdiction for obtaining residency through investment. In this process, it is important to consider not only tax burden levels but also the conditions for obtaining and maintaining residency, overall costs, and the practical feasibility of the entire procedure.
When selecting a country for tax residency, the following key parameters are typically assessed:
- Availability of investment or immigration programs and the complexity of requirements for obtaining a residency visa;
- Total costs associated with residency, including investments, government fees, and ancillary expenses, which may vary significantly by country;
- Processing timelines from document submission to obtaining residency status;
- Physical presence requirements, including the need to stay in the country for more than 180 days per year.
Taking these factors into account, the UAE is often considered one of the most convenient jurisdictions for obtaining tax residency. Compared to many European countries, residency procedures in the Emirates generally involve lower bureaucratic burdens and more flexible requirements.
In many EU countries, residency-by-investment programs involve multi-stage checks, lengthy application processing times, and strict physical presence requirements. In such jurisdictions, confirmation of tax residency typically requires staying in the country for at least 183 days per year.
In the UAE, by contrast, there is no strict requirement to reside in the country for more than 180 days per year in order to obtain and confirm tax residency. This factor, combined with transparent procedures and predictable rules, makes the Emirates particularly attractive to entrepreneurs and investors seeking flexible management of their tax status.
Tax residency through investment in Dubai, UAE
The UAE is rightly considered one of the most attractive jurisdictions for obtaining tax residency due to its combination of no personal income tax, transparent procedures, and relatively straightforward residency requirements. Overall economic and political stability also plays a significant role.
The first and mandatory step in obtaining tax residency in the UAE is securing a residency visa. In practice, this may be achieved through:
- company registration in the UAE and obtaining an investor or partner visa;
- acquisition of real estate that meets the established criteria for residency visa eligibility.
After obtaining a residency visa, an individual may apply for a Tax Residency Certificate. This certificate is issued by the UAE Ministry of Finance for a one-year period and may be renewed annually, subject to compliance with established conditions. The certificate may be issued to both individuals and companies.
Taxation of individuals in the UAE
As of 2026, in the UAE:
- there is no personal income tax;
- there are no federal taxes on dividends, interest, inheritance, or gifts;
- personal income of individuals is not subject to corporate tax.
At the same time, certain types of transactions may be subject to VAT. In particular, income from the lease of commercial real estate is subject to VAT at 5%, while income from residential property rentals is exempt from VAT.
Thus, UAE tax residency provides individuals with the opportunity to lawfully structure their tax model in a jurisdiction with minimal tax burden, subject to compliance with immigration and regulatory requirements.
Specific aspects of obtaining tax residency
There is a common misconception that holding dual citizenship automatically creates tax obligations in multiple countries. In practice, the situation is far more complex: citizenship alone does not necessarily determine tax residency. In most countries, including EU member states, tax status is determined by a combination of factual circumstances rather than the number of passports held.
Even with dual citizenship, an individual may be recognized as a tax resident of only one country, provided that established criteria are met. This is why rules for determining residency and provisions of double taxation treaties are of critical importance in international practice.
Despite many countries adopting the Organisation for Economic Co-operation and Development (OECD) standards and participating in international tax cooperation, approaches to determining tax residency still vary significantly. In most countries, physical presence and the existence of stable personal and economic ties remain decisive. In EU countries, the rule of staying more than 183 days per year often automatically results in tax residency.
In this context, obtaining tax residency through investment is primarily linked not to citizenship, but to acquiring lawful residency status and establishing a factual connection with the country. From a tax planning perspective, the optimal solution is to choose a jurisdiction with minimal tax consequences and flexible physical presence requirements.
The UAE stands out precisely due to this approach. Obtaining a residency visa in Dubai allows an individual to establish tax residency without the need for permanent residence in the country and to benefit from the absence of personal income tax. This makes the UAE particularly attractive to entrepreneurs and investors engaged in international activities.
An additional advantage is the simplicity and speed of administrative procedures. Obtaining a residency visa and related documentation in the UAE generally takes significantly less time compared to similar processes in most European countries. As a result, interest in investment programs and residency in the UAE continues to grow steadily, with the country attracting thousands of entrepreneurs from around the world each year.
Freedom to do business, a high level of security, economic stability, and a minimal tax burden create a favorable environment for long-term growth and capital preservation. These factors make Dubai and the UAE as a whole one of the most attractive jurisdictions for obtaining tax residency in 2026.
