Definition: A country of domicile is the country where an individual has its permanent legal residence. It is the nation where the person actually lives.
What Does Country of Domicile Mean?
The term country of domicile is mostly employed in legal and tax scenarios. Its purpose is to identify the place where a person actually lives in. For people with single citizenships this is easy, since normally the place where they live is the place where they were born. But for people with two or more citizenships (from different countries) or people that travel often because of work, the term is a little bit more tricky. The domicile is particularly important for tax purposes. During a given year, a person might be temporarily based in a different country, but his country of domicile will, in the end, be the one where they will declare and pay their taxes.
On the other hand, the domicile doesn’t have to be the place where the person was born; it could be a different country, as long as the person is properly registered as a citizen or as tax payer. Domicile is also very important to deal with legal issues. A person’s domicile will have an impact to the extent a particular law can be applied, since there might be different treatments depending on the country the individual is domiciled in.
Example
Mr. Murray is the Chief Financial Officer of a big financial services firm. The company has many business relationships with partners all around the world and Mr. Murray has to travel frequently and stay in some countries for 1 or 2 months.
Currently, a foreign country asked him about his country of domicile, since he spent more than 3 months there. Mr. Murray is a U.S. citizen and he explained that as part of his job he has to travel frequently but his country of domicile is the United States of America. He provided the government authorities with tax fillings from previous years, which resolved the matter easily.
