Moving tax residency to the Dominican Republic: UK, US, Canada

UK and Canadian residents can end their tax residency by moving to the Dominican Republic, but the UK keeps you in its inheritance tax net for up to ten years and Canada taxes your unrealised gains on departure. US citizens are different: moving abroad never ends US tax filing. Only renouncing citizenship does, and that can trigger the expatriation tax.

In this article

1. The three countries at a glance
2. Leaving the UK
3. Leaving the US: why moving does not end US tax
4. Leaving Canada
5. What happens on the Dominican side
6. Timeline for a clean move
7. Common mistakes
8. Pre-departure checklist
9. Readiness test: how prepared is your move?
10. Frequently asked questions
11. Sources and references

The three countries at a glance

Leaving the UK

The statutory residence test

UK residence is decided each tax year (6 April to 5 April) by the statutory residence test in Schedule 45 of the Finance Act 2013. It works in three steps:

1. Automatic overseas tests. You are non-resident if, for example, you were UK resident in one or more of the previous three tax years and spend fewer than 16 days in the UK, or you work full time overseas, spend fewer than 91 days in the UK and work more than three hours in the UK on fewer than 31 days.
2. Automatic UK tests. You are resident if you spend 183 days or more in the UK, or if your only home (or one of your homes, where you spend too little time in the overseas one) is in the UK under the conditions of the home test.
3. Sufficient ties test. If neither applies, your days are combined with your ties: family, accommodation, work, 90-day and country ties. For someone who was resident in any of the previous three years, 16 to 45 days with four ties, 46 to 90 days with three ties, 91 to 120 days with two ties or more than 120 days with one tie make you resident.

In my experience, the accommodation tie is the one that catches people out: keeping a flat or house available in the UK, even if you rarely use it, combined with family in the UK, quickly limits the days you can spend there.

Split-year treatment in the year you leave

Without split-year treatment, a UK resident year is taxed as a whole. Split-year treatment divides it into a UK part and an overseas part. The relevant cases for leavers are case 1 (starting full-time work overseas), case 2 (the partner of someone in case 1) and case 3 (ceasing to have a home in the UK). Under case 3, broadly, you must have no UK home from the date you leave until the end of the tax year, spend fewer than 16 days in the UK in that period, and within six months become tax resident in another country or have your only home there. You also need to be non-resident in the following tax year.

Temporary non-residence

Leaving and selling assets quickly is not a free pass. If you had sole UK residence in at least four of the seven tax years before departure and your period of non-residence is five years or less, certain income and gains realised while abroad are taxed in the year you return. This includes capital gains on assets held before you left, some pension lump sums and certain distributions from close companies. If you are planning a sale, assume you need to stay away for more than five years.

The residence-based inheritance tax regime

From 6 April 2025, inheritance tax on non-UK assets no longer depends on domicile but on long-term UK residence. You are a long-term UK resident if you were UK resident for at least 10 of the previous 20 tax years. After you leave, your worldwide estate stays within UK inheritance tax for a tail period that depends on how long you lived in the UK:

UK-situated assets, such as a London property, remain within UK inheritance tax regardless of where you live. Transitional rules apply to people who were already non-resident in 2025-26.

UK income after you leave

There is no UK–Dominican Republic double taxation agreement, so UK rules apply in full to UK-source income. UK rental income stays taxable in the UK (through the non-resident landlord scheme), and UK pensions are generally taxed through PAYE. British nationals keep the personal allowance as non-residents. The UK state pension can be paid abroad, but it is only uprated each year in the EEA, Switzerland and countries with a qualifying agreement; the Dominican Republic is not one of them, so the amount is frozen at the level reached when you leave or first claim it. Tell HMRC you are leaving with form P85 or through the residence pages of your Self Assessment return.

Leaving the US: why moving does not end US tax

This is the point I most need to be clear about: the United States taxes its citizens on worldwide income wherever they live. Moving to the Dominican Republic, obtaining Dominican residency or becoming Dominican tax resident does not change that. You keep filing Form 1040 every year. Green card holders are in the same position until their status is formally abandoned.

How double taxation is reduced

• Foreign earned income exclusion (FEIE): excludes up to USD 132,900 of foreign earned income for 2026 (Form 2555) if you meet the bona fide residence test or the physical presence test (330 full days abroad in a 12-month period). It covers salaries and self-employment income only, not dividends, interest, capital gains, pensions or Social Security.
• Foreign tax credit (FTC): credits Dominican income tax paid against US tax on the same income (Form 1116). Because there is no US–Dominican income tax treaty, there is no treaty-based relief, and the 3.8% net investment income tax generally cannot be offset with foreign tax credits.
• State taxes: some states keep treating you as resident if you keep a home or domicile there. Close the state link explicitly.

FBAR and FATCA reporting

• FBAR (FinCEN Form 114): required if the aggregate value of your foreign accounts exceeds USD 10,000 at any time during the year. Your Dominican bank accounts count.
• Form 8938 (FATCA): for taxpayers living abroad, required above USD 200,000 at year-end or USD 300,000 at any time (single), and USD 400,000 or USD 600,000 for joint filers.
• Foreign funds and companies: Dominican investment funds may be PFICs, and a Dominican company you control may require Form 5471. Both can be costly if ignored.

The expatriation tax: only if you renounce

Section 877A applies when a US citizen renounces citizenship, or when a long-term resident (green card holder in at least 8 of the last 15 years) gives up that status. You are a covered expatriate if any of these applies:

• Net worth of USD 2 million or more on the expatriation date.
• Average annual net income tax for the five previous years above USD 211,000 (2026 figure).
• You cannot certify, on Form 8854, five years of US tax compliance.

Covered expatriates are taxed as if they sold all their assets the day before expatriation, with the first USD 910,000 of net gain excluded for 2026. Special rules apply to retirement accounts and deferred compensation, and US recipients of later gifts or bequests from a covered expatriate may owe tax under section 2801. The State Department fee to renounce was reduced from USD 2,350 to USD 450 with effect from 13 April 2026. Renouncing is irreversible and personal; it should never be decided for tax reasons alone, and never without a US tax adviser.

Leaving Canada

Factual and deemed residence

Canada has no fixed day count for factual residence. The Canada Revenue Agency looks at your significant residential ties (a home in Canada, a spouse or common-law partner, dependants) and secondary ties (personal property, provincial health coverage, driver’s licence, bank accounts, memberships). If you keep a home available or your family stays in Canada, you will usually remain a factual resident. Separately, you are a deemed resident if you sojourn in Canada for 183 days or more in a calendar year. You can ask the CRA for an opinion with Form NR73, though it is optional.

The Canada–Dominican Republic tax convention, signed on 6 August 1976 and in force since 1977, includes a tie-breaker for people considered resident by both countries. Where the treaty makes you a Dominican resident, Canadian law deems you non-resident of Canada.

The departure tax (deemed disposition)

When you stop being resident, you are treated as having sold most of your property at fair market value on the date you leave. Exceptions include Canadian real property, registered plans such as RRSPs and TFSAs, pensions, and property you owned when you last became resident if you were resident for 60 months or less in the 10 years before leaving.

• Form T1243 calculates the gains.
• Form T1161 lists your properties if their total fair market value exceeds CAD 25,000 (late filing penalty: CAD 25 per day, minimum CAD 100, maximum CAD 2,500).
• Form T1244 lets you defer payment, interest free, until you actually sell. The election is due by 30 April of the following year, and if the federal tax owing on the deemed disposition exceeds CAD 16,500 you must provide adequate security.

Canadian income after you leave

• Rental income from Canadian property: 25% non-resident tax on the gross rent, or an election under section 216 to be taxed on net income.
• Pensions, RRSP and RRIF payments: 25% statutory withholding, which a treaty can reduce. Published treaty tables list a reduced rate for periodic pensions under the Dominican treaty; confirm the current rate with the CRA’s Part XIII guidance before relying on it.
• Old Age Security: paid abroad indefinitely only if you lived in Canada for at least 20 years after age 18; CPP is payable abroad.
• TFSA: you can keep it, but contributions while non-resident are penalised.

For how the Dominican side taxes this income, see our page on taxes in the Dominican Republic and the pillar guide on tax residency in the Dominican Republic.

What happens on the Dominican side

Under article 12 of Law 11-92 (the Dominican Tax Code), you are tax resident if you spend more than 182 days in the country in a fiscal year. Under article 269, residents pay income tax on Dominican-source income and on foreign-source income from investments and financial gains, and foreign individuals only become taxable on that foreign income from their third year of residence. Pension and rentier residency categories under Law 171-07 can bring further advantages; I describe them in the guide to residency by investment and retirement. None of this changes your obligations to the UK, the US or Canada: those are set by the country you leave.

Timeline for a clean move

Common mistakes

• US citizens assuming Dominican residency ends US filing. It does not, and penalties for missed FBARs can be significant.
• Keeping the family home in the UK or Canada. It is an accommodation tie in the UK and a significant residential tie in Canada.
• Selling a business within five years of leaving the UK without checking the temporary non-residence rules.
• Forgetting the UK inheritance tax tail when planning gifts or estate structures right after leaving.
• Ignoring Form T1161 because no tax is payable; the penalty applies anyway.
• Investing in local funds as a US person without considering PFIC reporting.
• Treating a residency card as proof of tax residency. It is a starting point, not a tax certificate.

Pre-departure checklist

• I know which country’s rules apply to me (and, if I am a US citizen or green card holder, I accept that US filing continues).
• UK: I have counted my ties and planned my days for the next three tax years.
• UK: I know how many tax years the inheritance tax tail will last.
• US: my past returns and FBARs are up to date, and I know my FEIE or FTC strategy.
• Canada: I have estimated the departure tax and prepared Forms T1243, T1161 and, if needed, T1244 with security.
• I know how my pensions, rental income and dividends from my home country will be taxed after I leave.
• My Dominican residency application is underway and I have a home in the Dominican Republic.
• I keep evidence of my move: lease or deed, residency card, travel records, local bank accounts.
• I have reviewed the plan with a tax adviser in my home country.

Readiness test: how prepared is your move?

This short test checks the essentials for your origin country: residence ties, exit charges, reporting obligations and your Dominican paperwork. It does not replace personal advice, but it shows you where the gaps are.

Frequently asked questions

If I become a Dominican tax resident, do I still have to file US taxes?

Yes, if you are a US citizen or green card holder. The US taxes citizens on worldwide income regardless of residence. The FEIE and foreign tax credits can reduce or eliminate the tax, but the filing and reporting obligations remain.

Does the UK have a tax treaty with the Dominican Republic?

No. HMRC’s guidance confirms there is no double taxation agreement between the UK and the Dominican Republic, so UK domestic rules apply to your UK-source income.

Is there a tax treaty between Canada and the Dominican Republic?

Yes. The Canada–Dominican Republic tax convention was signed in 1976 and has been in force since 1977. It includes a residence tie-breaker and limits some withholding rates.

Can I avoid Canada’s departure tax by keeping assets in an RRSP?

RRSPs, TFSAs and pensions are not subject to the deemed disposition, but withdrawals after you leave are subject to Canadian non-resident withholding tax. The departure tax mainly affects non-registered investments and private company shares.

How long does UK inheritance tax follow me after I leave?

If you were UK resident for at least 10 of the previous 20 tax years, between 3 and 10 tax years, depending on how many years you were resident. UK assets remain in scope permanently.

Does renouncing US citizenship always trigger the exit tax?

No. The mark-to-market tax applies only to covered expatriates: net worth of USD 2 million or more, average annual net income tax above USD 211,000 (2026), or failure to certify five years of compliance. Even then, the first USD 910,000 of gain is excluded in 2026.

Every move starts from a different country, family and balance sheet. If you would like to review your relocation plan with Dominicana Way, we can organise the Dominican side and coordinate with your adviser at home.

Sources and references

1. HMRC. RDR3: Statutory residence test guidance notes (split years, temporary non-residence)
2. HMRC. Inheritance Tax Manual IHTM47020: long-term UK residence test
3. GOV.UK. Inheritance Tax if you’re a long-term UK resident
4. HMRC. Double Taxation Relief Manual DT6100: Dominican Republic
5. IRS. Revenue Procedure 2025-32, sections 4.37 to 4.39 (2026 expatriation thresholds and FEIE)
6. IRS. Expatriation tax (section 877A, Form 8854)
7. IRS. Report of foreign bank and financial accounts (FBAR)
8. Canada Revenue Agency. Dispositions of property for emigrants of Canada
9. Department of Finance Canada. Tax treaties in force (Canada–Dominican Republic convention)
10. DGII (Dominican Republic). Tax Code, Law 11-92, Title II (income tax), article 269

Informational and educational content. It is not personalised tax or legal advice: every case requires its own analysis.