Legal Resident vs Tax Resident: What’s the Difference?

tax residency certificate uae for company

What’s the difference between being a legal resident versus a tax resident? The implications for your choice of residency does, to some extent, depend on your country of citizenship (more on that later). For those looking to do business across borders, you must consider this, especially considering your tax burden. Fortunately, our extensive experience in this realm gives us a privileged perspective to break down this distinction. So let’s get to it.


First, let’s cover the difference between legal resident vs tax resident

Every country has a different way of defining who is a legal resident and a tax resident. In the UK context, they determine whether you are a tax resident based on where you are residing in a calendar year. As for what the Brits call domicile, a person’s domicile reflects a person’s long-term roots. If you’re French living in the UK, you may be a resident in the UK, but if your long-term roots are still in France, the British authorities will not deem you a domicile for tax purposes. Therefore in the British context, tax domicile is distinct from tax residency and legal residency. 

Now, for Americans, it’s much trickier. Whilst most countries follow residency-based taxation, American citizens and permanent residents must file a tax declaration every year. In addition, if their earnings exceed the ex-pat exception, they’ll have to pay taxes both in the country where they reside as a legal and/or tax resident and back home even if they are not living in the States. 


The difference between residence visa and employment visa in the UAE

We have previously detailed how residence and employment visas differ in the UAE. Most foreigners living in the Emirates will move on employment-based visas, and if they change companies, they must get a new visa. Others who invest in real estate have a UAE residence visa, but their visa circumstance does not entitle them to a work permit. Most visas also tend to have a validity of two to three years, but the UAE also has a permanent residency scheme, called the Gold Card Visa, that offers a longer-term opportunity. 

Even if you’re living in the Emirates but not working, one of the long-standing benefits of living in the UAE is not paying any taxes. There are dozens of Double-Taxation Avoidance Treaties in place, so you will not have to pay taxes in another country as long as there is an agreement in place. 


How to become UAE tax resident

If you’d like to take advantage of becoming a tax resident in the UAE, the best place to start is to go through the process of obtaining a UAE residence visa. Our team of Relocation Experts specialising in the UAE will guide you through the necessary paperwork and procedures for a successful application. In addition, there are a wealth of new residency schemes such as the UAE Retirement Visa and the Remote Work Visa you can use to reap the benefits of living in the UAE and a lower tax burden. 

 If you would like a faster UAE visa processing time, don’t hesitate to contact us. We can also assist in procuring the tax residency certificate in the UAE for a company or the Tax Domicile Certificate and the equivalent UAE tax residency certificate for individuals. So don’t hesitate to get started on your UAE visa journey and book your initial consultation today. 



Written by
Adrian Oton
Adrian Oton

CEO, Europe Emirates Group  

Citizenship, Residency and Relocation Services
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