Suppose I stayed in multiple countries in a year for significant durations ( say 3 months each in 4 nations) and further assume that double taxation avoidance treaties are in place so how does one determine which jurisdiction one pays taxes in?

For arguments sake say we are considering US, UK or German laws for example.

Is it based on longest stays, or on the source of the income? Or on citizenship?

Furthermore what ensures that the laws of multiple jurisdictions become consistent. I.e you don't end up having US law determine you are a resident subject to taxation and German law saying the same. In which case the DTA treaty is rendered ineffective.

Details from my Research:

e.g. If I spend 2 months in the US, 2 months in Switzerland and 8 months in Germany this year (and all previous years I spent in the US) then according to the rules below I would be regarded as a tax resident in all three jurisdictions Germany, Switzerland and USA?

How are these things decided then?!

USA rules say:

"You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period...."

German rules say:

"....individuals are deemed to be tax resident if they are physically present in Germany for more than six months in any one calendar year "

Swiss rules say:

"...For tax purposes, residence may also arise if a person stays in Switzerland for 30 days,"

Source: https://en.wikipedia.org/wiki/Tax_residence

  • What research have you done? – quid Dec 27 '20 at 15:36
  • that's actually a pretty hard question to know the answer to IMO, quid old bean. it's a good question for the site .. IMO – Fattie Dec 28 '20 at 15:32
  • @quid: Thanks! I have modified the question to indicate some of my research now. – curious_cat Dec 29 '20 at 13:18

How is income tax residency determined ... longest stays, source of income? on citizenship?

It simply depends on each nation. It's quite different for each country (indeed state where relevant). You can easily look it up in each case.

Furthermore what ensures that the laws of multiple jurisdictions become consistent

Absolutely nothing.

You're probably thinking of a situation where "both countries" (or even three or more!) all claim that were a tax resident.

This can and does happen.

There is indeed no "international meta residency determination" system or authority.

The outcome you're thinking of can in fact happen in obscure cases.

(Try googling something like "caught with two tax residencies" for some articles. As a curiosity, law practices and immigration practices know that on Obscure Topics if they post some sort of article they get a lot of hits; for this reason you can usually find some articles on most any such obscure tax or similar topic.) (All of life is now just SEO.)

(Article pointing out that a few people can and do get marked as residents in two states - both of which "... have the right to tax ALL of your income" https://www.blog.rapidtax.com/can-resident-two-states-time/ )

  • Thanks! I added exactly such an example based on the rules I could find. Potentially here I would end up paying taxes for all three nations USA, Germany and Switzerland. Want to find if there are any legal precedents on such cases! – curious_cat Dec 29 '20 at 13:19
  • @curious_cat - yes, that's exactly correct. I'm not really sure what you mean by "legal precedents", but quite simply, this does happen - YES. (I deal with many "international-lifestyle" people and I am sure I know of someone who this has happened to, it's not that uncommon.) There is no "legal" aspect, simply, all 3 nations will tell you that you owe them tax. If you don't pay, they will fine or otherwise punish you. They don't care at all about the other nations. Best of luck! – Fattie Dec 29 '20 at 14:28

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