Changing tax residence and Forex trading – how does it work?
The global Forex market knows no borders, but tax systems do. For many investors, the concept tax residence sounds abstract – until the question arises: Where exactly should I pay tax on my trading profits? This issue is crucial because it is the residence that determines in which country the trader settles his income, what tax rates apply and whether there is a risk of double taxation.
In this article, we examine the rules that determine an investor's tax residence, explain how tax residency works in practice, and demonstrate how different countries approach financial investment returns. The purpose of this article is not to encourage a change of residency, but to reliable presentation of the mechanism, which increasingly applies to people active in global markets.
What is tax residency?
Tax residency is the formal term for the country in which a person is required to file their income. Simply put, the country that considers you a tax resident has the right to tax your income. total income, no matter where it was achieved.
In Poland, the resident status is determined by Personal Income Tax Act, which indicates two main criteria:
- Center of vital interests – the place where the centre of personal or economic interests is located (family, work, real estate, business).
- Time of visit – if a person stays in Poland for more than 183 days a year, he or she is generally considered a Polish tax resident.
Similar regulations apply in most countries, although detailed definitions and formal requirements may vary.
CHECK: Are you trading with a foreign broker and do not pay tax? IT'S A MISTAKE
Why this matters to traders
For people trading in financial markets, tax residency is one of the most important elements in organizing settlements.
It depends on it:
- where to pay investment gains tax,
- at what rate,
- can double taxation be avoided?,
- and what reporting obligations (e.g. declarations, reports, certificates) must be fulfilled.
In Poland, profits from Forex trading – both from domestic and foreign accounts – are taxed 19% capital gains tax (the so-called Belka tax). In other countries, the approach varies – from zero rates in countries with a "no income tax" model to progressive systems in Scandinavia.
Change of residence and tax residency
A common myth is that simply moving to another country will automatically "change" your tax residency. In reality, this process requires meeting specific conditions and documenting the actual center of life outside the current country.
In order for the tax authority to recognise that a person is no longer a Polish resident, it is usually necessary to:
- actually move the center of life interests (e.g. apartment, family, work),
- stay in a new country for most of the year,
- obtain certificate of tax residence from a new state,
- and, if necessary, submit it to the Polish tax office.
Without these elements, tax authorities may still consider that the investor is subject to unlimited tax liability in Poland.
Examples of approaches in different countries
Differences in investor taxation can be significant:
| Country | Capital Gains Tax Approach | Notes |
| United Arab Emirates | 0% personal income tax | Popular with expats and entrepreneurs, requires actual residency and a resident visa |
| Monako | No income tax for residents (except French) | Requires permanent residence and meeting residency criteria |
| Czech | Investment income taxed progressively, but with a simplified settlement procedure | Residency requires >183 days stay and local address |
| Portugal | NHR (Non-Habitual Resident) system – preferential rules for new residents for 10 years | Valid only for people who have not been residents of Portugal in the last 5 years |
| Estonia | No tax on profits reinvested in companies | Individuals pay tax only when they withdraw profits. |
Each of these examples shows that residence conditions, type of income and international agreements are crucial.
Double taxation and international agreements
Poland has concluded agreements on avoidance of double taxation with over 80 countries. Their goal is to eliminate situations in which the same income is taxed both in Poland and abroad. The settlement rules vary depending on the specific agreement – sometimes the "exclusion with progression" method is used, and sometimes the "proportional credit" method is used.
For example, if a trader is a resident of the Czech Republic but made a profit in Poland, then – depending on the provisions of the contract – he or she can settle the tax only in one of the countries or deduct the tax already paid.
Mobility, digitalization and new market realities
The growing number of traders and entrepreneurs operating online makes the concept tax residence is becoming more and more flexible. People working remotely from different parts of the world – the so-called digital nomads – are increasingly analyzing how their lifestyle affects their tax status.
Some countries are introducing special digital nomad visa programs, which formally define the tax residence of such individuals (e.g., Croatia, Greece, Estonia). This is a response to the new reality in which place of residence does not always mean the same as place of earning income.
Summary
Tax residency is a cornerstone of international tax law—it determines where and how a Forex trader settles their profits. However, this isn't a matter of declaration, but of facts: center of vital interests, length of stay, and documents confirming the new status. A change of tax residency can be legal and justified, but requires real grounds, not just formalities.