A tax resident is an individual or legal entity that, according to the legislation, is subject to taxation therein based on its place of residence, permanent residence or place of registration for a legal entity. Tax residency status does not oblige and does not lead to a change of citizenship. Therefore, it is important to distinguish between two resident status: tax (tax residency) and immigration (resident for immigration). The status of an immigration resident gives the right to reside in a foreign state. To do this, you must have a residence permit, permanent residence in this state. Residence permit status or second citizenship does not automatically make you a tax resident of a foreign state, but these issues are resolved in parallel and mutually complement each other.
Benefits of changing tax residency
1. Protection of assets from automatic exchange of information
The change of tax residence to a low-tax jurisdiction is beneficial in order to protect one's assets from automatic exchange of information. The Common Reporting Standard (CRS) is a comprehensive reporting procedure that provides for the annual automatic exchange of tax information between states. The main idea of the automatic exchange of tax information is that banks collect financial information about the activities of individuals on individual accounts and corporate accounts of companies, trusts and private foundations and transfer it to the tax authorities of their country, which send this information to the country of tax residence of the owner of such an account. 2. Favorable conditions of taxation
In modern conditions, this is a common practice in international tax planning, because, first of all, it is important for businessmen to build the structure of their business and optimize (reduce) the tax burden, and not evade paying taxes.
More information here - https://europa.eu/european-union/business/vat-customs_en
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