Libertax
WORLD IN CONFLICT · WORLD IN CONFLICTINS-20220707-01

War Creates Two Tax Homes

Forced displacement can create tax-residence facts in a new country while important ties remain in the old one. Immigration protection does not answer the tax question; domestic residence rules come first, and treaties may then have to resolve dual residence.

Carlos Barredo Lago · FROM THE LIBERTAX ARCHIVE6 min
Libertax editorial visualization for “War Creates Two Tax Homes”
A Libertax editorial composition about War Creates Two Tax Homes.

KEY TAKEAWAYS

KEY POINT 01Immigration status and tax residence are different legal questions. Temporary protection can give a right to live and work in a country without itself deciding tax residence.
KEY POINT 02Domestic law comes first. A host country may treat a displaced person as tax resident because of days, a home, work or other factual tests even if strong ties remain abroad.
KEY POINT 03A tax treaty can become necessary only after dual domestic residence exists. The treaty may allocate residence for treaty purposes, but it does not erase the underlying facts.

War can move a person faster than tax residence moves on paper.

A family may leave one country for safety while keeping a home, business, spouse, investments or other ties there. At the same time, months of physical presence, accommodation and work in the host country can create a second set of residence facts.

That does not mean every refugee becomes dual tax resident.

It means forced displacement can make domestic residence rules in two countries relevant at the same time.

Key takeaways

  • Immigration status and tax residence are different legal questions. Temporary protection can give a right to live and work in a country without itself deciding tax residence.
  • Domestic law comes first. A host country may treat a displaced person as tax resident because of days, a home, work or other factual tests even if strong ties remain abroad.
  • A tax treaty can become necessary only after dual domestic residence exists. The treaty may allocate residence for treaty purposes, but it does not erase the underlying facts.

The scale of the problem

The European Union activated temporary protection for people fleeing Ukraine in March 2022.

By 31 May 2026, 4.38 million people who had fled Ukraine were registered for temporary protection in the EU. In July 2026, EU countries agreed to extend the mechanism until 4 March 2028.

Temporary protection provides rights including residence, access to work, housing and other support.

Those rights are migration law.

They do not create one uniform European rule of tax residence.

Tax residence remains determined primarily by national tax law and, where relevant, double-tax treaties.

Example one: a displaced person in the United Kingdom

The UK Statutory Residence Test illustrates why “183 days” is not the whole answer.

An individual who spends 183 days or more in the UK during the tax year meets an automatic UK residence test.

But UK residence can also arise through other tests involving a home, full-time work and sufficient ties.

HMRC has specific guidance on exceptional circumstances arising from the war in Ukraine. Subject to the statutory conditions, certain days can be disregarded up to the 60-day exceptional-circumstances limit.

That relief does not create a special refugee residence regime.

It adjusts the day-counting analysis in specific circumstances.

A person displaced from Ukraine could therefore be UK resident under domestic law even while retaining important Ukrainian ties.

If Ukraine also regards that person as resident under its domestic law, the UK–Ukraine double-tax treaty becomes relevant.

Treaty residence is a second step

The current UK–Ukraine convention contains a residence article for persons who are liable to tax by reason of residence, domicile or similar connecting criteria.

Modern treaty residence rules contain tie-breakers for an individual who is resident in both states under domestic law.

The analytical order matters:

country A domestic test → country B domestic test → if both say resident, treaty analysis.

Starting directly with the treaty can produce the wrong answer because a treaty usually does not create residence from nothing.

It allocates taxing rights where domestic systems overlap.

Example two: a displaced person in Germany

Germany demonstrates a different domestic route.

Under German law, a person can become subject to unlimited income-tax liability if they have a domicile or habitual abode in Germany.

The Fiscal Code defines a domicile by the factual holding of a dwelling in circumstances indicating that it will be maintained and used. It also provides that a continuous stay of more than six months is generally treated as habitual abode from the beginning, subject to the statutory exceptions.

Again, immigration protection and tax residence are not identical.

A Ukrainian family can therefore obtain temporary protection for migration purposes while separately accumulating German residence facts for tax.

Germany and Ukraine currently have a double-tax treaty dating from 1995. Germany and Ukraine signed a new treaty on 19 May 2026, but the German Ministry of Finance states that the new treaty is not yet in force and requires ratification.

That detail matters: the treaty actually in force must be used, not the newest document merely because it has been signed.

Interpretation: forced movement can split the factual centre of life

Normal tax-residence planning assumes some degree of choice.

War removes much of that choice.

A person may sleep in one country while keeping a spouse, company, property and intention to return in another. Children may attend school in the host country while assets and economic interests remain at home. Work may be performed remotely for an employer in the origin country.

The person’s factual life can therefore become divided before the legal system resolves how to classify it.

That is the mechanism behind “two tax homes”.

The strongest countercase

Displacement does not automatically create dual residence.

A person may remain in the host country for too short a period to become resident. Domestic exceptional-circumstances rules may remove some days from particular tests. A home in the original country may cease to be available. The family may relocate completely. A treaty may clearly allocate residence to one state for treaty purposes.

The correct conclusion is fact-specific.

The war explains why the facts changed.

It does not determine the tax answer.

Scenarios, not forecasts

Under temporary displacement, the person returns before host-country residence becomes durable and retains the original centre of life.

Under long-term settlement, work, family, accommodation and economic ties increasingly shift to the host country.

Under continuing dual ties, domestic law in both countries remains relevant for an extended period and treaty analysis becomes central.

Observable triggers include day counts, availability of homes, location of family, employment, registrations, tax filings and residence certificates.

Practical consequences

A displaced person should reconstruct the facts from the first day of the move.

Keep travel records. Record where homes were available. Document employment and workdays. Track where spouse and children lived. Preserve immigration documents, but do not assume they answer the tax question.

Where two countries may claim residence, the applicable treaty should be reviewed using the version actually in force.

Tax residence during war is not solved by a slogan such as “183 days”.

It is solved by evidence, domestic law and then — if necessary — treaty coordination.

Sources

Disclaimer

This Insight provides general information on tax residence. It is not tax, immigration or treaty advice. Residence depends on domestic legislation, the relevant tax year, individual facts and the treaty actually in force between the countries concerned.

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