Question

Compare the definitions of residence and domicile with your understanding and EXPLAIN the similarities and differences.

Answer 1

To oblige with the tax laws of the country, it is necessary to understand the resident status of the person in that country and for that to understand the difference between residence and domicile

Residence: Residence will be that place of aboard at which person has moved on for its employment, education or any other person. Each state have their own laws to determine whether a person is residence of that particular state. Some state follow 183 days rule while some 184 days. In countries like UK also, 183 days rule is considered to determine resident status of the person. The residence is something which can be changed many times.

Domicile : It is in simple terms considered as a place where a person is born and brought up and have a substantial connection with it. Generally, when born, place of residence of parents is considered as a domicile. However, one can change that too if they combine the acts of making a change in domicile along with the intent to change domicile. Sometimes the intent is there but the acts the taxpayer makes do not indicate that they are making a change in domicile. For example, have they changed their driver’s license to the new state? Have they signed a lease or purchased a home? Enrolled children in the local schools? Registered to vote in the new state?

Similarities

• Both refer to place where person lives or lived and have home
• The terms are given equivalent meaning when used in connection with subjects of domestic policy and right to vote

Differences

• Residence can be temporary in nature while domicile is not
• There can be one domicile but many residences
• Residency is a more flexible concept than domicile, and permanency is not a requirement for residency. Even a temporary and transient place of dwelling can qualify as residence