Updated: August 26, 2021 | 5 minute read
    The terms "Domicile" and "Residence" are often mistaken as the same. However, the two have different legal definitions. "Domicile" is your "permanent home," while "Residence" is your "temporary home."

    What is the difference between Domicile and Residence?

    The difference between the two lies in how long you plan to live in a specific place. Nonetheless, both are important in determining your taxes, benefits, and other obligations. Get a deeper understanding of Domicile and Residence for your advantage.  

    Understanding Domicile

    Fundamentally, you may have several residences, but you can only have one domicile. Your domicile is where you maintain your "forever" home. When you intend to stay in a specific location indefinitely, you become that location's "domiciliary."  

    Moreover, your country of domicile is the country where you will forever reside in. Even if you move abroad, your domicile remains the same.  

    Your domicile of origin at birth is where you live with your parents, and this goes on until you reach the age of acquiring the domicile of choice. If your parents were not married at your birth, your domicile status would be the same as your mother's. However, this depends on your parents' circumstances.  

    What does Domicile mean?

    Why is your domicile important?

    See your domicile as a legal construct on paying taxes, voting, claiming benefits, filing lawsuits, and cooperating on governmental authority. Among other things, determining your domicile becomes crucial for tax purposes. The three main areas are the following:  

    • Income Tax  
    • Capital Gains Tax  
    • Inheritance Tax  

    Your domicile also becomes an essential factor when you need to govern your estate in the event of your death. It also plays a vital role if you were to own financial or property assets overseas. 

    Overview on Residence

    Any place you live in or own is considered your residence. It is where you intend to live temporarily. You are a resident of any location for tax purposes if you remain for at least 183 days per tax year. Your residence gives you the legal right to live, work, set up a business, travel, or study in the country.  

    When you are a resident of a country or state, taxing authorities have limited reach to tax your income within the borders. Generally, your domicile can be your residence, but your residence may or may not be your domicile.  

    Malta Permanent Residency Programme

    Regarding residency, Malta allows non-EU/EEA/Swiss nationals to acquire Permanent Residency in the country through the Malta Permanent Residency Programme (MPRP). You and your family can join under one application and move to one of Europe's most dynamic economies.    

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    The MPRP offers numerous benefits, including the right to reside, settle, and stay indefinitely in Malta. You also get lifetime access to the 26 Schengen countries and the possibility of a special tax status when coupled with the Malta Global Residence Program