Domicile is a key consideration in determining liability to UK tax. However the rules can give strange outcomes.
Consider the following two case studies:
Case one
David’s father has a domicile of origin in Scotland. He was a university lecturer and had a post at the University of Tubingen in Germany. David was born there and spent the first twelve years of his life in Germany. His father then moved to Finland, having been appointed professor at the University of Uppsala. He retired to Scotland earlier this year as had always been his intention. David went to school in Germany and is currently at university in Munich. When he graduates he intends to do voluntary work in either Africa or Asia before deciding on a career. David has never been to Scotland. Where is David domiciled?
Case two
Anne’s grandfather, domiciled in England, worked in the Indian Civil Service for over thirty years. He had intended to return to England on retirement but died whist still in India. Anne’s father was born in India. He was educated in India and England and moved to Switzerland in his early twenties to work for a bank. He married a Swiss national and chose Swiss as his domicile. Both he and his wife inherited significant wealth and decided to leave Switzerland and travel. They lead a nomadic lifestyle. Anne was born in Sydney, Australia and is currently working for UNESCO on a variety of short term projects. Anne has never visited England but hopes to do so in the near future. Where is Anne domiciled?
Principles
The basic rule is that an individual’s domicile of origin is the jurisdiction in which his/her father was domiciled at the time of the individual’s birth. This is subject to two exceptions; firstly where the father and mother were not married, the individual’s domicile is that of the mother at the time of the birth; and secondly when the father dies before the individual’s birth the domicile of origin is again that of the mother.
On attaining age 16 an individual can acquire a domicile of choice. Acquisition of a domicile of choice depends on two factors; residence in a particular jurisdiction and a firm intention to remain there permanently or indefinitely. In the absence of a domicile of choice the individual’s domicile of origin is retained.
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