What is Dual & Split Residency

 

What is Dual Residency?
 
As the name suggest, under dual residency an Individual is considered as resident of two countries for the same period according to the residential status conditions of the respective jurisdictions.

 
What is Split Residency?
 
Split residency has been derived from Dual Residency. In case, an Individual becomes resident of two countries or more, Article 4 of Tax Treaties relating to Residence needs to be applied in order to split the residency between the two periods and restrict the taxation of global income on the basis of permanent home, centre of vital interests, habitual abode and nationality of the Individual. Although the concept of split residency has not been recognized by the Indian domestic tax law.
 
Few of the following case laws which deal with the above concepts :
 
1. Sameer Malhotra [TS-1010-ITAT-2022(DEL)] – ITAT held that income earned outside India during the period for which he is also the resident of the country apart from India from where he earned income is excluded from taxable income in India.
 
2. Raman Chopra [TS-5466-ITAT-2016(DELHI)-O] – ITAT held that exemption is available in respect of income earned outside India by applying Article 4(2) of Tax Treaty (where Individual becomes resident of both contracting jurisdictions) for the period when the assessee is resident of that country also from where he earns income in order to avoid double taxation.
 
3. Kumar Sanjeev Ranjan [TS-191-ITAT-2019(Bang)] – On the same reasoning of above rulings, ITAT held that exemption is available in respect of income earned outside India in relation to services performed for the period he is resident of the country outside India.