The question of nationality, domicile and residency is one which many expatriates are not clear on. An individual’s status will depend on their particular circumstances and determining them can be complex. For those countries with a death or inheritance tax, failing to realise that they remain domiciled in their home country, even if they have lived abroad for many years, can result in a large, unexpected tax bill for their beneficiaries.

In some countries Inheritance tax, often also referred to as death duty, is tax paid on an estate when the owner of that estate dies. Depending on certain criteria, the tax may also be payable on gifts or trusts made during that person’s lifetime. Alternatively, the recipient of a legacy may be taxed in some territories as a result of the transfer of an asset.  Your resident and domicile status defines your tax liability.

Your nationality is the country you come from, usually the issuer of your passport.

Your residency is where you have made your permanent home and where you intend to remain.

Your domicile is a legal concept.  Every individual has a domicile, which they originally acquire at birth; it is not necessarily the country that you were born in, or are currently living in. It is only possible to have one country of domicile at any given time. You can be domiciled in a different country from where you are resident or ordinarily resident.  It is important that you understand where you are domiciled as it can affect your tax liability, however for death tax purposes your domicile will only be determined at your death.