There has been an awful lot talked about being a ‘non-dom’ recently. Some of it might not be very great talk. The better talk on this topic tending to come from dull quarters such as private client lawyers and tax advisers rather than more excitable politicians and media people. That is not to say an otherwise boring status such as a ‘non-dom’ does not have political dimensions and that, irrespective of the rules, the optics can matter. And beyond tax rules, the discussion on this has also brought up the issue of ‘conflict of interest’ (one that we usually keep for our charity law comment). But to strip back the notion of being ‘non-dom’ it makes us think about its very important but sometimes overlooked and less exotic twin: domicile.
What is one’s domicile?
While, as we have seen, domicile has consequences for tax purposes, the notion of domicile itself is something more profound and fundamental. It is, broadly, the country and legal system to which someone considers themselves to be permanently connected.
So, how do we determine someone’s domicile?
The favourite legal answer can now be deployed: it all depends on the facts and circumstances.
Much will have been said in the press about domicile deriving from one’s father (aka ‘domicile of origin’). That is to some extent absolutely correct. But once someone has attained the age of legal capacity to make their own decisions, it is possible to acquire a new domicile: a ‘domicile of choice’.
Identifying one’s domicile of choice involves a wide factual matrix. Anything and everything can be important. It will be based on objective fact but has important subjective elements. It can in some ways be a state of mind. It can be emotional. It can be physical. What it must evince is a permanent intention to be connected to one place as your home.
The rules are trying to uncover where someone is most closely connected for the purposes of governing a variety of personal law matters. To quote one text on the topic: “Scottish case law on this issue reveals that there are no set criteria to establish whether a new domicile has been acquired. There need not be permanent establishment in the other jurisdiction, but there must be an intention to settle in that jurisdiction that is unlimited, not for any defined period or particular purpose, but general and indefinite in its future duration.” (International Succession (5th ed.) (2022) (For complete transparency, we disclose that the writer of those words is the same writer of this blog!)
A vast array of information could be relevant. From home ownership to friendships and clubs to schooling of children through to burial plots. Indeed, the reading of a Scottish newspaper by a George Bowie who had lived in Liverpool for 35 years featured in one of our favourite domicile cases: Ramsay v Liverpool Royal Infirmary and others (1930 House of Lords). Does wearing tartan trews, following Scottish football and having Scottish family make you Scottish? The Rod Stewart test of domicile, as such (Da Ya Think I’m Scottish? as was sung, never). [We understand Sir Rod considers himself to not be Scottish domiciled.]
As well as the case law not setting out hard and fast rules on the issue, there is also the matter of whether the cases reveal rules that attempt to identify close connecting factors to one country or are respecting and giving legal voice to one’s emotional and sentimental outlook on the country to which they are most connected. While a question for wider consideration, domicile as having an emotional and sentimental heart might have a part to play in the current ‘non-dom’ discussions.
Why does domicile matter?
It matters as the treatment of a variety personal legal matters will be subject to the law of the country of one’s domicile (or as it is oft-called by Latin loving lawyers: lex domicilii).
For most countries, succession to moveable assets are governed by the law of their domicile. So, succession to shares in a French company owned by a Scot will be determined by Scots law. There may be some French formalities to follow but Scots law decides who inherits (indeed this very principle applied to many pre-August 2015 structuring of the ownership of French villas via companies (called SCIs)). Similarly, domicile matters on issues such as forced heirship. A Scottish domiciled person’s estate will be subject to ‘legal rights’ – automatic rights of succession that apply irrespective of the terms of a will. So, as with George Bowie, domicile can decide who inherits an estate.
On the other hand, most countries ascribe to the principle that succession to land and buildings devolves according to the law where the land is situated (aka lex situs) rather than the law of one’s domicile.
A smaller segment of countries apply the law of domicile to all succession matters.
As domicile matters for succession, it matters for the form and validity of wills.
For those who have had the opportunity to complete the inheritance form IHT400 for an estate were the deceased was born in the United Kingdom but had moved elsewhere the consequences of domicile (in this case tax) and the evidence and information needed to set out where someone is domiciled become much starker in practice. And in this situation, obituaries can matter. To return to George Bowie, a description of being a proud Scot can matter in questions of domicile.
Domicile is not…
In some situations and legal systems other rules can apply that seem like domicile but are not. These include habitual residence, tax residency, nationality and citizenship. Care needs to be taken when using these terms and making sure they are applied in the correct setting.
For help and advice on succession, get in touch with Alan Eccles: alaneccles@bkf.co.uk / 07359001038.
Alan Eccles is the Scottish contributor to the textbook, International Succession.
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