Domicyl status is a term that is still not fully known and understood, even by people living abroad. Is it the same as residency status? What are the types of Domicyl status? How to apply for his change? In the article we answer these questions.
The term “Domicyl” comes from the Latin language (Latin “domicilium”) and means “place of residence”. This term is used to designate the permanent place of residence of a private person, the registered office of a legal entity or the place of fulfillment of financial obligations. In general, it is about the state in which a person decides to live, work and build social relations.
We live in times that are characterized by great ease in traveling and changing places of residence. Great Britain, Maldives, Thailand — it may happen that we will live in several countries all our lives, work and build a family in them, even though we will not have citizenship there. What legal regulations are we subject to then? This is what explains the status of Domicyl, which is why it is so important to know it.
Not quite. In some cases the status of “domicile” and “residence” are equivalent, while in others they are treated quite separately. An example is income tax accounting. It is the individual status (residency, ordinary residency, domicile and deemed domicile) that determines how high the tax will have to be paid.
The law distinguishes three types of Domicyl status:
Below we will discuss the details of each of the types of Domicyl status.
Domicyl status from origin is acquired at birth. It is a status that is inherited from the father or, if the parents are not married, from the mother. Most often it is a country that is at the same time the place of our birth, but this is not always the case. Here it is worth noting the difference between a resident of the United Kingdom and domicile of origin. A large number of people living and working in the UK acquire resident status, but if they plan to return to their homeland, they cannot acquire the status of domicile of origin. It doesn't matter how far off the plans are.
If you live in the UK and are over the age of 16, you can apply for Domicyl status. If we live in Scotland we can even apply for it earlier. This refers specifically to the status of domicile of choice, which is granted to people who decide to live in the UK. However, before we proceed to fill out the application, it is worth making sure that we meet the requirements necessary to obtain the status of domicile of choice. HMRC, when considering applications, takes into account the following factors:
In addition, we must prove that we really intend to stay permanently in the country in which we are applying for the status of domicile of choice. It is also good to demonstrate a lack of emotional connection with your country of origin. For HMRC, it will be a sign that we will most likely not feel the need to leave the UK to return to our country of origin.
Until the age of 16, the child's domicile status coincides with that of a parent or legal guardian. If the guardian decides to obtain domicile of choice in another country and it is granted, the child's status will also change. We can therefore say that children do not have the possibility to choose the country in which they want to obtain Domicyl status, since this is decided by their parents or legal guardians.
Many people want to change their Domicyl status. This is mainly dictated by tax benefits. For example, UK residents who are not domiciled have the option of using the Remittance Basis. This is an option to avoid taxing money transferred or brought from your home country to the UK.
Let's imagine that Mr. Rafał from Poland has lived in the UK for 10 years. He took a job there, started a family, adopted a dog and bought a house with his wife. He recently made the decision that he was sure that he would not return to Poland. The result of this decision was the sale of an apartment in Poland and the closure of all bank accounts in the homeland. So what does Mr Rafał have to do to obtain Domicile status in the UK?
In cases such as the one above, a balance of probabilities is used, and its task is to estimate how high the chances are that Mr. Rafał will definitely not return to his homeland. Various factors are taken into account for the balance sheet, which may indicate that a person actually intends to stay in a particular country until the end of his days. What, then, can testify to this?
In the case of Mr Rafał, there are therefore grounds for granting him the status of domicile of choice in the United Kingdom.
Applying for the assignment or change of Domicyl status should be preceded by a thorough analysis. If you are not sure which status will be more beneficial for you from a tax point of view, it is worth asking the tax offices in the UK for advice.
Magda Mikulska
Wisetax grunnlegger
