In recent years, a growing number of professionals, especially in the tech, marketing, and consulting sectors, are opting for remote work and beginning to ask themselves a question that, just a decade ago, seemed exotic: can one live between two countries and still maintain tax stability? In an era of flexible employment models and increasing professional mobility, the vision of spending part of the year in the UK and part in the warmer climate of Southern Europe is no longer a fantasy, but a realistic life scenario.

However, the moment a migration plan stops being a holiday and starts involving work, income, and investments, a question arises that is far less romantic than a sea view from a balcony: where exactly do you pay taxes?

Tax Residency – The Foundation of the Entire System

In the tax systems of developed countries, tax residency is a key concept. It is this that determines which country has the right to tax an individual's global income. It's not just about the place of work or administrative address, but about the entirety of one's life and economic ties.

A tax resident of a given country is subject to what is known as unlimited tax liability. In practice, this means the obligation to declare all income, regardless of the country in which it was earned. For individuals operating between two countries, there is therefore a risk that both tax systems will consider the same person to be their resident.

This is why British law established a mechanism known as the Statutory Residence Test– a set of rules used to determine whether an individual should be considered a UK resident for a given tax year.

Statutory Residence Test in the UK

The Statutory Residence Test is based on a combination of several elements that are analyzed together. First, the number of days spent in the UK during a given tax year is checked. Many popular guides mention the magic number of 183 days, but in reality, this is just one point of reference, not the sole rule.

The British system also provides for an additional analysis of ties to the UK, which can maintain resident status even if an individual spends a significant part of the year outside the country. The assessment takes into account elements such as permanent place of abode, family relationships, the nature of work, and the length of stay in previous tax years.

This is where the most common misunderstanding arises among people planning to live between two countries. Simply spending a certain number of days outside the UK does not automatically mean losing tax residency. In many cases, economic and personal ties are crucial.

The trap of living between two countries

In the case of our client, Mr. Marek, the plan involved working remotely and spending part of the year in the UK, while also staying in Spain for several months. He wanted to retain his British source of income and maintain his property in the UK as a "permanent" place of residence.

At first glance, such a model seems safe, as the main center of life remains in the UK. However, a problem arises when the stay in the second country begins to take on a more permanent character, including renting property, performing work from the territory of another state, or building local economic ties. As a result, an individual operating between two countries may find themselves in a situation where both states consider them their tax resident. This phenomenon is referred to as dual tax residency, which can subsequently lead to problems with income settlement between countries.

Dual Residency - Do I Have to Pay?

Dual tax residency does not automatically mean having to pay tax twice on the same income. In most cases, the applicable document is a double taxation agreement between the countries concerned. However, the very need to determine proper residency and interpret regulations can be complicated.

International agreements provide so-called tie-breaker rules, which allow one country to be established as the proper place of residence. The analysis takes into account, among other things, the place of permanent abode, the center of vital interests (e.g., family, work), the place of habitual abode, and nationality.

In practice, this means a detailed analysis of the taxpayer's entire lifestyle, not just their travel calendar. This is precisely why planning to split the year between two countries requires a prior tax strategy.

Strategy Instead of Improvisation

The most important conclusion from similar consultations is that living between two countries requires significantly greater tax awareness than the traditional emigration model. In the world of mobile work, it's easy to assume that since the activity is digital, the place of residence doesn't matter much. However, tax systems operate based on specific rules that don't always keep pace with the speed of technological change.

Individuals planning to divide their lives between different countries should begin a tax analysis even before changing their lifestyle. In many cases, it is possible to create a structure that remains compliant with the law and helps avoid unnecessary complications. The condition, however, is an understanding of the principles of tax residency and the consequences of working in different countries—including TaxOne helps clients daily.

The dream of working in the sun of Southern Europe while maintaining British income is achievable. However, it requires more than just a plane ticket and a rented apartment—it requires a tax plan that considers both British regulations and those applicable in the second country.

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