Proving Tax Residency: Why You Need More Than Just Good Intentions

You know where you’ve been and where you live. But can you prove tax residency and do it convincingly if the tax authorities ask?

For many high-net-worth individuals (HNWIs), “home” isn’t confined to a single location. It might be a beachfront estate in Barbados, a ski chalet in Verbier, or a pied-à-terre in Mayfair. Global mobility is the norm, not an exception for many people. But in the eyes of the tax authorities, movement invites scrutiny. And increasingly, your word isn’t enough.

Tax enforcement has entered a new era that is defined by cross-border collaboration. Authorities aren’t just talking increasingly with each other, sharing information. They also use AI tools to collect and cross-reference huge amounts of data. Today, being confident about your residency status is no longer the same as being able to defend it.

Tax investigations are on the rise. In the UK alone, HMRC opened around 300,000 compliance investigations during the 2022/23 tax year. And while high-profile evasion makes headlines, the reality is more mundane: many inquiries begin with human error, not malice.

“I didn’t spend 183 days there. I thought I wasn’t resident.”

It’s a familiar refrain and one that reflects a common misunderstanding. The 183-day rule is widely known but far from the whole story. In some jurisdictions, you can trigger tax residency well before reaching that threshold—or even without spending significant time there—if certain lifestyle or financial ties remain.

That’s where things become complicated. Owning a home, having a spouse or dependent in the country, keeping a mobile contract, and maintaining a gym membership can all weigh heavily in the eyes of tax authorities, depending on the jurisdiction.

A move to Dubai doesn’t necessarily break your UK tax residency if accessible accommodation is retained. Claiming Italy’s flat tax regime might invite questions elsewhere if economic or personal ties aren’t carefully managed.

This is the gap between lifestyle and legislation, and it’s where many stumble.

Tax agencies apply a multifactorial test to assess where you live. It’s no longer just about where you say you reside but also what you do there and how much time you spend there. All of these require proof, not just a claim. 

Here’s a comparative snapshot of how some countries determine tax residency:

Authorities are looking at where you spend time, where you earn, where you stay, where your family lives, and what your lifestyle suggests.

While tax residency is assessed using a mix of factors, day counting remains the foundation to prove tax residency. It’s the first metric authorities look at and often the most objective. Yet it’s also where many people go wrong because manual records are patchy, memories fade, and trips blur together over time.

The solution? Recognise that day count is your starting line, not the finish. It’s the core of a defensible residency position. Still, it must be backed by clarity, consistency, and corroborating evidence across your broader footprint.

What’s changed in recent years is how this information is gathered.

At the heart of this shift is the Organisation for Economic Co-operation and Development (OECD). In response to growing pressure on governments to reduce tax evasion and improve transparency, the OECD launched the Common Reporting Standard (CRS), a global framework that compels financial institutions to automatically report account information to local tax authorities, who then share that data across borders.

As of 2025, over 120 jurisdictions have signed on, including many that were once considered “low disclosure” destinations. CRS is now regarded as the global standard for information exchange.

Here’s what that means in practice:

• A UK resident with a bank account in Monaco may have that account reported automatically to HMRC.
• A trust in the BVI with links to a beneficiary in France may trigger compliance queries, even if distributions have yet to occur.
• A holding company registered in Singapore could expose a beneficial owner in Switzerland to scrutiny—based purely on CRS data sharing.

These exchanges occur annually and silently. There’s no opt-out and no notification. 

But these aren’t the only digital trails that tax authorities are following.

The authorities are:

• Cross-referencing mobile location data
• Examining social media posts
• Checking credit card metadata
• Reviewing hotel check-ins and immigration logs
• Scrutinising smart home access data (like door keypads or Wi-Fi usage)

These are digital breadcrumbs. And they’ve already been used in audits, with authorities building compelling cases based on modern tech.

Let’s take a step back. If your tax residency is challenged, what actually counts as compelling proof? How can you prove tax residency in the era of digital surveillance?

To strengthen your claims, you should prioritise the following strong evidence:

• Automatically logged, timestamped location data
• Passport stamps corroborated by mobile location
• Utility bills and local lease agreements
• Digital bank records with geographic metadata
• Objective app-based day counts with location logging

On the other side is the “weak evidence” that often fails to stand up to scrutiny and, in some cases, can even lead to a higher risk of human error:

• Manually created spreadsheets or calendars
• Vague “statements of intent”
• Booking confirmations without proof of stay
• Contradictory social media or public content
• Lack of supporting third-party verification

The real challenge is that memories fade, records get lost, and personal declarations are no longer persuasive without backup. Your documentation must be objective, reliable, and available on demand in this new environment.

A failed tax residency claim doesn’t just mean a slight inconvenience and a one-off fine. It can lead to:

• Double taxation in two jurisdictions
• Penalties and interest on unpaid taxes
• Frozen accounts or extended audits
• A need to file years of retrospective tax returns
• Reputation damage, especially for public figures or professionals under regulation
• Emotional distress

For globally mobile HNWIs, these risks extend beyond finances. They affect lifestyle flexibility, asset structuring, and family peace of mind. What’s the point of freedom if it leads to uncertainty?

Rather than living in fear of an audit or retroactively scrambling to build a timeline, the smartest individuals are adopting a proactive stance. This means:

• Real-time day counting with automatic logging
• Secure, exportable location trails
• Notes and evidence are added while memories are fresh
• A clear, consistent narrative backed by objective data

These systems aren’t about bureaucracy. They’re about preserving freedom. Establishing a continuous record ensures that your lifestyle stays aligned with your legal obligations without sacrificing flexibility.

In many ways, tools that automate this process are becoming the new insurance for international living. They not only protect you from audits but also allow you to live with clarity and control.

Wealth offers mobility and the ability to follow the opportunities, no matter where they take you. But with that mobility comes complexity. In today’s regulatory environment, proving where you don’t live is just as important as proving where you do.

Tax authorities no longer take your word for it, and neither should you. You want to be proactive in understanding your movement patterns and keeping a record of them. Together with the right digital tools and professional tax advice, you can create the confidence to state: 

‘There’s nothing to see here, everything is in order.” 

So ask yourself:

If asked to justify my residency status over the past year, could I prove my tax residency with objective evidence?

If the answer isn’t a confident yes, it might be time to build a system that protects your assets and the lifestyle you’ve worked so hard to build.

Take our Tax Residency Risk Score Assessment today and see how your current setup fares under scrutiny. It’s quick, free, and can help you spot potential weak spots before the authorities do.