UAE tax residency: how to leave your current tax residence the right way

Holding a residence visa in the Emirates does not by itself change your tax residence. It is the idea most worth being clear about before taking the step, because almost all the problems I see later depend on it.

It also has to be said from the start: changing tax residence is not always possible. If your family, your business or your main interests are going to remain in your current country, you may stay resident there however much time you spend here.

Two separate questions

These are two separate analyses, and each country answers only its own:

1. Are you tax resident in the Emirates? Emirati rules decide.
2. Have you ceased to be tax resident in your current country? That country’s rules decide.

Meeting the first does not settle the second.

What your current country looks at

Every country sets its own test, but most look at some combination of these factors:

1. The days you spend there. Thresholds vary, and some countries count absences they consider occasional.
2. Where your economic interests are centred. A business you still run or income generated there can carry a lot of weight.
3. Where your family lives. In many countries, a spouse and minor children who stay behind point to you remaining resident.
4. Where you have a home available. Keeping one can be read as keeping your life there.

Often one is enough. That is why the days test, important as it is, is only the start.

The date you leave matters

Many countries assess residence by tax year. Leaving part-way through may mean you remain resident for that whole year. The date you leave is a decision with consequences.

What the Emirates look at

Under Cabinet Decision 85 of 2022, an individual may be tax resident in the Emirates in any of these situations:

1. Having their usual residence and the centre of their personal and financial interests in the Emirates.
2. Being physically present in the Emirates for 183 days or more in a period of 12 consecutive months.
3. Being present for 90 days or more in that period, holding a residence permit and also having a permanent home or a job or business in the Emirates.

If you meet the requirements, you can ask the tax authority for a tax residency certificate. It is valuable evidence, but it does not oblige your current country to stop treating you as resident.

Double taxation treaties

This is a point that is often overlooked. Treaties differ from one country to another, and some define a UAE resident in a way that leaves out foreign nationals living here.

In practice, you cannot assume that a treaty will resolve a residence conflict in your favour. It has to be checked treaty by treaty. What is decisive is genuinely ceasing to meet the rules of your current country, and being able to prove it.

What to review before leaving

1. Your family. If they stay behind, or move later, you need to analyse how that affects your position.
2. Your businesses. A company you continue to run from here may keep a strong link with your current country.
3. Your shareholdings. Some countries tax unrealised gains on significant shareholdings when you leave.
4. Your property and income back home. These will generally continue to be taxed, now as a non-resident.
5. Your tax registration. You will normally need to report the change to your tax authority and put banks, insurance and official registrations in order.

Documentary evidence

If the authorities ask, they will do so years later. It is worth keeping the following from day one:

1. Residence visa and Emirates ID.
2. Tax residency certificate from the Emirates.
3. Registered housing contract and utility bills.
4. Record of entries to and exits from the country.
5. Employment contract or licence for your activity in the Emirates.
6. Bank accounts and card transactions showing where you live your life.
7. Children’s schooling and medical insurance.
8. Notice of the change to your tax authority back home.

Starting well

A well-executed move begins months before you board the plane. Because the rules of your current country matter so much, I coordinate this work with an adviser there where necessary. On the relocation and residency page I explain how I work on it, and if you are also concerned about how to organise what you own, on the wealth structuring page.