Tax Residency of Individuals: Rules and Planning

Rules for Determining Tax Residency

Russia: A resident of the Russian Federation is an individual who has stayed on the territory of the Russian Federation for ≥ 183 days during 12 consecutive months. Regardless of citizenship. Personal income tax rate for residents — 13%/15%, for non-residents — 30% (exceptions: labor income of highly qualified specialists).

UAE: UAE tax residency since 2023: (1) physical presence ≥ 183 days in the UAE, or (2) Emirates ID + permanent place of residence + center of vital interests in the UAE. UAE — no personal income tax; therefore, the status of "UAE resident" is important for exclusion from residency in other countries.

United Kingdom: Statutory Residence Test — a complex system taking into account days of presence, "connections" to the United Kingdom (home, work, family).

"Center of Vital Interests" and Tie-Breaker

In dual residency cases (meets the 183-day requirement in both countries), the "tie-breaker" in DTA is used — sequence of criteria: permanent home → center of vital interests → habitual abode → citizenship → agreement of competent authorities.

Residency Planning

Goal: become a resident of a low-tax jurisdiction before realizing a major asset.

UAE requirements for Emirates ID: resident visa (investment, work, golden visa), renting/purchasing housing, actual presence.

Mistakes: maintaining significant presence in Russia (family, business, assets) while attempting to become a non-resident. The Federal Tax Service disputes "fictional residency changes."

Practical Assignment

An entrepreneur wishes to change tax residency from Russia to UAE before selling a business (in 18 months). Develop a plan: (1) When and how to obtain UAE residency? (2) How to confirm non-residency in Russia? (3) What are the risks of contestation? (4) What must be done with Russian connections (property, accounts)?