Difference Between Domicile and Residence

Domicile vs Residence

Do you remain confused between domicile and residence and cannot seem to find the answer? There are many who live the life of an expatriate. You may think that they are domiciled in the country they are living, whereas it is only a country of residence for them. In some countries, applicants to a post need to prove their domicile in the particular state of the country, and there are countries where candidates running for elections may need to prove their domicile before being eligible to fight for elections. But all this is perhaps not making any sense till we are able to differentiate between domicile and residence. This article attempts to clarify these differences.

Domicile is the legal residence of a person. The place where a person has a fixed residence and pays taxes for this permanent home is called his domicile. But this does not mean that wherever a person resides is his domicile. The place, city, and country where one is born become his domicile. In fact, the domicile of a person is also that of his father. Domicile is an important concept in deciding the jurisdiction that applies to a person. The courts in a place have jurisdiction over citizens of that area only.

This is certainly not the case with residence as it is simply the place where a person is living at present. The place where a person actually lives is his residence, but it may or may not be his domicile. Knowing your domicile is important if you are an expatriate for taxation and inheritance purposes, as laws in these areas become applicable, depending upon your domicile.

If it is still not clear, assume that you are an Australian living abroad, and generating some income. This income is exempt from income tax in Australia, if you have earned it in duration of more than a year. The same rule applies to a citizen of UK, but if you are a US national, you have to pay income tax on income generated abroad. Thus, it is prudent to know your tax liability in your country of domicile if you have earned something from your country of residence.

A person’s country of domicile remains his domicile for life whether or not he lives in that country. He can, however, change domicile by applying in his country of residence if he deems fit. However, this is not as easy as it seems, and you may not only have to fill up a form but also supply information regarding years of residence in adopted country, whether married to a local person, whether you own a property and how often and for what purpose do you visit your country of domicile?

What is the difference between Domicile and Residence?

• Domicile and residence seem to be the same for someone who has not moved out of his ancestral place of birth; though for an expatriate, the place where he is actually living is his residence, whereas domicile remains his place of birth, which is decided at the time of his birth.

• Domicile is an important concept for legal purposes as taxes and laws of inheritance of the country of domicile are applicable on him.