Reference
The borderless glossary
Plain-English definitions of the tax, residency, citizenship and Bitcoin terms you'll meet on the way to a borderless life.
183-day ruleThe common test that treats you as tax resident if you spend 183 or more days in a country during a year.Beneficial ownerThe real person who ultimately owns or controls a company, as opposed to a nominee or holding entity that appears on paper.Centre of vital interestsA tie-breaker test that locates your tax home where your personal and economic ties are strongest.CFC rulesControlled Foreign Corporation rules let your home country tax the profits of a foreign company you control.Citizenship by descentClaiming a second citizenship through ancestry — parents, grandparents or sometimes further back.Citizenship by investmentA programme granting citizenship and a passport in exchange for a significant investment or donation.Citizenship-based taxationTaxation based on nationality rather than residence — used by the United States and Eritrea.Common Reporting StandardA global framework under which banks automatically share account information with tax authorities.Digital nomad visaA residence permit for remote workers earning from foreign clients or employers while living in the host country.Disregarded entityA company the tax authority “looks through” — its income is taxed directly to the owner rather than at the company level, as with a single-member US LLC.Distributed profit taxA corporate tax that falls only when profits are distributed as dividends — retained and reinvested profits are untaxed. Estonia's model is the best-known example.Double tax treatyAn agreement between two countries preventing the same income being taxed twice, with tie-breaker rules for dual residents.E-ResidencyEstonia's government-issued digital identity that lets non-residents run an EU company online. It is not residency, tax residency or citizenship.Economic substanceRules requiring a company to have real activity — staff, an office, decisions made locally — in the country where it is registered, not just a paper presence.Exit taxA tax some countries charge on unrealised gains when you cease to be resident, as if you had sold your assets on leaving.FBARThe Foreign Bank Account Report: a US filing required when foreign financial accounts exceed US$10,000 in aggregate.Flag theoryThe strategy of planting different 'flags' — residence, citizenship, business, assets — in different countries to maximise freedom and reduce tax.Foreign Earned Income ExclusionA US provision letting qualifying taxpayers abroad exclude a capped amount of earned income from US tax.Free zoneA designated economic area — common in the UAE — offering 100% foreign ownership and tax incentives to companies that meet its activity and substance conditions.Global minimum tax (Pillar Two)An OECD framework imposing a 15% minimum effective corporate tax on large multinational groups (revenue over €750m), limiting the benefit of very low-tax jurisdictions.Golden visaA residency-by-investment programme granting residence in exchange for a qualifying investment.Holding companyA company whose main purpose is to own shares in other companies rather than trade itself — used to consolidate ownership and route dividends efficiently.Nominee directorA local resident appointed as a company's director on paper to satisfy a jurisdiction's residency requirement, while real control stays with the owner.Non-domA tax status for residents who are not domiciled in a country, often letting foreign income be taxed only when remitted.Participation exemptionA rule that exempts dividends and capital gains a holding company receives from qualifying shareholdings from corporate tax, to avoid taxing the same profit twice.Permanent establishmentA fixed place of business — an office, branch or dependent agent — that makes a foreign company taxable in a country even without a local entity.Permanent travellerSomeone who avoids becoming tax resident anywhere by continually moving — a strategy that can backfire.Place of effective managementWhere a company's real strategic decisions are made — many countries treat a company as tax-resident there, regardless of where it is registered.Registered agentA licensed local representative that an offshore or foreign company must appoint to receive official correspondence and keep its statutory filings in order.Remittance basisA tax treatment where foreign income is taxed only if brought (remitted) into the country of residence.Self-custodyHolding your own cryptocurrency private keys directly, rather than trusting an exchange or custodian.Tax residencyThe country that has the right to tax your income, based on where you live and hold your ties — not necessarily your nationality.Tax residency certificateAn official document from a country's tax authority confirming you are tax resident there.Territorial taxationA tax system that taxes only income earned inside the country; foreign-source income is not taxed.Withholding taxTax deducted at source on cross-border payments such as dividends, interest or royalties, usually when they leave a country to a non-resident.Worldwide taxationA tax system under which residents are taxed on their global income, wherever it is earned.