I lived abroad in my late spouse's home country for over a decade after we married, but I couldn't legally own property there so I stayed in hotels during part of that time, and I kept my Virginia home, car, and driver's license the whole time for when I traveled back for medical care -- did I actually establish domicile in that other country?

Plain-English summary

The Department, tipped off by IRS information, determined a taxpayer hadn't filed a required 2018 Virginia return, found he remained a Virginia domiciliary resident, and assessed him; he appealed, claiming residency in a foreign country (Country A).

The unusual fact pattern. The taxpayer and his spouse, a Country A citizen, lived in his Virginia home starting in 2001. In April 2008, his spouse bought a residence in Country A, and the couple began spending most of their time there -- though Country A law barred the taxpayer, as a non-citizen, from personally owning real property there. His spouse died in 2012; he remained in the Country A residence until April 2016 (he says he applied for Country A citizenship several times before 2007 but never obtained it). He filed Virginia resident returns from 2003 through 2015, then a part-year 2016 Virginia return claiming his Virginia residency ended in September 2016. In October 2016, he returned to Country A -- but this time lived in hotels there until returning to Virginia in June 2019, all while frequently traveling back to his Virginia home for medical and business reasons. He got a Country A driver's license in September 2017 and cancelled his Virginia voter registration in April 2017 (he didn't vote in the 2016 general election because he no longer considered himself a Virginia resident).

Two domicile requirements, and two separate problems. Changing domicile requires (1) abandoning the old domicile with no intent to return, and (2) establishing a new one through physical presence with intent to stay permanently or indefinitely -- both proven by the person claiming the change. The Department found real evidence supporting an intent to move toward Country A: his repeated citizenship applications there, his spouse's Country A citizenship, and volunteer activities that didn't appear temporary. But living in hotels -- rather than any permanent place of abode -- raised substantial doubt about whether he'd actually established a new domicile in Country A, even if he intended to.

The Virginia side of the ledger. Even setting the hotel issue aside, he retained enormous Virginia connections: he still owned his Virginia residence (staying there whenever not in Country A), kept a vehicle registered in Virginia, and renewed his Virginia driver's license in July 2016 -- right before leaving. His tax documents were still mailed to the Virginia address. He explained he kept the Virginia house and car because it was cheaper than hotels and rental cars during his frequent medical and business trips back. The Department turned that explanation against him: after living in Country A for more than a decade by 2018, it questioned why he would still need to travel to Virginia specifically for medical care unless he hadn't genuinely relocated his life there -- concluding his continued reliance on Virginia medical care "belies his stated intent to change his domicile."

On the driver's-license and 183-day arguments. The Department reiterated that a Virginia license doesn't by itself prove domicile (someone can establish domicile elsewhere while keeping an old license, P.D. 00-151), but that obtaining or renewing one is a strong indicator of intent to remain domiciled (P.D. 02-149) -- and here, the taxpayer affirmatively renewed his license in July 2016, just before leaving. The Department also flagged, as an aside, that Virginia law bars nonresidents from holding a Virginia license at all and penalizes false residency certifications to the DMV (Va. Code § 46.2-348) -- relevant if he was, by his own claim, no longer a Virginia resident when he renewed. Separately, not spending 183+ days in Virginia during 2016-2018 didn't help him: that only rules out "actual residency," not domiciliary residency, which turns on intent and connections rather than a day count.

A broader pattern the Department flagged. Citing a long line of prior rulings (going back to 1986), the Department noted that individuals who take temporary or indefinite overseas employment rarely succeed in establishing true foreign domicile while still maintaining substantial U.S. connections -- the extent and nature of retained connections has to be carefully weighed in every case.

Outcome. Weighing the lack of a permanent Country A residence against his extensive, ongoing Virginia ties, the Department found the taxpayer hadn't met his burden to prove either that he'd abandoned Virginia domicile or established a new one in Country A. The assessment was upheld, and he was invited to file an actual 2018 Virginia return to refine the assessment amount.

What this means for you

Anyone claiming to have relocated domicile to a foreign country

You need to show BOTH that you actually abandoned Virginia (no intent to return) AND that you established a genuine new permanent home abroad. Living in hotels or temporary lodging -- even for years -- can defeat the second requirement even if your intent seems genuine, because it shows no true "place of abode" was ever established.

Anyone who keeps returning to a Virginia home for medical treatment while claiming foreign domicile

Be prepared for the Department to question why medical care wasn't available where you claim to actually live -- especially after years abroad. Retained connections explained by "it's more convenient/affordable" can be read as evidence you never fully relocated your life.

Anyone renewing a Virginia driver's license shortly before or after a claimed international move

This is treated as a strong signal of continued Virginia domiciliary intent, and Virginia law separately prohibits nonresidents from holding a Virginia license and penalizes false residency statements to the DMV -- don't renew one if you genuinely intend to abandon Virginia domicile.

Common questions

Q: If I move abroad but live in hotels rather than owning or renting a permanent home, have I established a new domicile there?
A: Not necessarily. Establishing a new domicile requires physical presence with the intent to remain permanently or indefinitely -- living in temporary lodging like hotels, without a genuine permanent place of abode, can raise serious doubt about whether that requirement is met.

Q: I spent fewer than 183 days in Virginia during the years in question -- doesn't that mean I'm not a Virginia resident?
A: Not by itself. The 183-day rule only determines "actual residency." You can still be taxed as a Virginia "domiciliary resident" regardless of day count if you haven't proven you abandoned your Virginia domicile.

Q: Does retaining a Virginia home and vehicle for convenience during visits undermine a foreign-domicile claim?
A: It can, especially if the stated reason (like needing better medical care than is available where you claim to live) implies you haven't actually relocated your life there.

Citations and references

Statutes:

• Va. Code § 58.1-302 -- domiciliary resident and actual resident defined
• Va. Code § 46.2-323.1 -- Virginia driver's license requires certifying Virginia residency
• Va. Code § 46.2-348 -- penalty for a false residency statement to the DMV
• Va. Code § 58.1-111 -- assessment based on best information available

Prior rulings referenced (described here, not linked): P.D. 86-219 (11/3/1986), P.D. 94-353 (11/23/1994), P.D. 96-207 (8/26/1996), P.D. 02-33 (3/13/2002), P.D. 05-8 (2/1/2005), P.D. 10-134 (7/12/2010), P.D. 15-142 (6/30/2015), and P.D. 19-88 (8/15/2019) -- temporary or indefinite overseas employment generally doesn't establish abandonment of Virginia domicile; P.D. 00-151 (8/18/2000) -- domicile can be established elsewhere despite a retained VA license; P.D. 02-149 (12/9/2002) -- obtaining/renewing a VA license is strong evidence against abandonment.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 24-7

Original ruling text

February 28, 2024

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will respond to your letter in which you seek correction of the individual income tax assessment issued to your client, * (the “Taxpayer”), for the taxable year ended December 31, 2018.

FACTS

The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia income tax return for the 2018 taxable year. A review of the Department’s records showed that the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer in order to determine if his income was taxable in Virginia. After reviewing the information provided, the Department determined that he was a domiciliary resident of Virginia and issued an assessment. The Taxpayer appeals, contending he was a resident of * (Country A).

DETERMINATION

Two classes of residents, a domiciliary resident and an actual resident, are set forth in Virginia Code § 58.1-302. The domiciliary residence of a person means the permanent place of residence of that person and the place to which that person intends to return even though they may reside elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon their Virginia domicile with no intention of returning to Virginia. Concurrently, that person must acquire a new domicile where that person is physically present with the intention to remain there permanently or indefinitely. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained their place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the country or in another country who has not abandoned their Virginia residency continues to be subject to Virginia taxation. Additionally, a person who is not a domiciliary resident of Virginia, but who stays in Virginia for an aggregate of more than 183 days is also subject to Virginia taxation.

In order to change from one legal domicile to another legal domicile, there must be (1) actual abandonment of the old domicile, coupled with an intent not to return to it, and (2) an acquisition of a new domicile at another place, which must be formed by personal presence and an intent to remain there permanently or indefinitely. The burden of proving that the domicile has been changed lies with the person alleging the change. In determining domicile, consideration may be given to the person’s expressed intent, conduct, and all attendant circumstances including, but not limited to, financial independence, profession or employment, income sources, residence of spouse, marital status, situs of real or tangible property, motor vehicle registration and licensing, and such other factors as may be reasonably deemed necessary to determine the person’s domicile. A person’s true intention must be determined with reference to all the facts and circumstances of the particular case. A simple declaration is not sufficient to establish residency.

The Department determines a taxpayer’s intent through the information provided. The taxpayer has the burden of proving that their Virginia domicile has been abandoned. If the information is inadequate to meet this burden, the Department must conclude that the taxpayer intended to remain indefinitely in Virginia.

The Taxpayer and his spouse, a Country A citizen, moved into a residence he purchased in Virginia in 2001. In April 2008, his spouse purchased a residence in Country A, and they began spending the majority of their time there. The Taxpayer’s spouse died in 2012. Although the laws of Country A did not allow the Taxpayer to own real property, he was able to remain in their Country A residence until April 2016. The Taxpayer states that he applied for citizenship in Country A several times prior to 2007, but was ultimately unable to obtain citizenship. From 2008 through 2016, the Taxpayer frequently traveled back to the residence he owned in Virginia for medical and business purposes. In addition, he filed Virginia resident income tax returns from 2003 through 2015. For 2016, he filed a part-year Virginia resident return, claiming that his Virginia residency ended in September 2016.

In October 2016, the Taxpayer returned to Country A and lived in hotels until he returned to Virginia in June 2019. Again, during this period, the Taxpayer traveled frequently to his Virginia residence for medical and business purposes. The Taxpayer obtained a Country A driver’s license in September 2017. In addition, the Taxpayer cancelled his Virginia voter’s registration in April 2017, and states that he did not vote in the 2016 general elections because he did not consider himself to be a Virginia resident.

The evidence that the Taxpayer attempted to gain citizenship in County A, that his spouse had been a Country A citizen, and that his volunteer activities in Country A did not appear to have been temporary in nature support the Taxpayer’s contention that he intended to establish domicile in Country A when he left Virginia in 2016. The fact that the Taxpayer lived in hotels in Country A, however, raises substantial doubt as to that intent. The Taxpayer explains that he stayed in hotels because he could not legally own property in Country A, and that hotels were both inexpensive and safer than other available options.

The Taxpayer, however, still retained significant connections with Virginia. He continued to own a residence in Virginia where he stayed when he was not in Country A. He also kept a vehicle that was registered to his Virginia address, and he held a Virginia driver’s license that was renewed in July 2016. In addition, the Taxpayer’s tax reporting documents were mailed to his Virginia address.

The Taxpayer points out that he did not reside in Virginia for more than 183 days during 2016, 2017, or 2018. As stated above, however, there are two types of residents for tax purposes, domiciliary and actual. Even if he was not considered an actual resident of Virginia, he may have remained a domiciliary resident. He could only change his domicile to Country A by: (1) abandoning Virginia as his domicile and having no intent to return; and (2) establishing a new domicile in Country A by his physical presence there with the intention to remain permanently or indefinitely.

Determinations regarding an individual’s attempt to establish domicile in a foreign country can present challenging and unique issues. For example, the Department has repeatedly ruled that individuals generally lack the intent to abandon their Virginia domicile when they engage in temporary employment outside of the Commonwealth. See Public Document (P.D.) 86-219 (11/3/1986), P.D. 94-353 (11/23/1994), P.D. 96-207 (8/26/1996), P.D. 02-33 (3/13/2002), P.D. 05-8 (2/1/2005), P.D. 10-134 (7/12/2010), P.D. 15-142 (6/30/2015) and P.D. 19-88 (8/15/2019). Even in cases in which an individual moved for reasons other than employment or was employed for an indefinite period overseas, rarely, if ever, do they establish residency in foreign countries while maintaining connections in the United States. The extent of these connections and the circumstances in which they were retained must be carefully considered. In this case, the Taxpayer maintained a number of connections with Virginia that allowed him to return to his residence at any time and he did so for a regular and significant portion of the 2018 taxable year.

Virginia Code § 46.2-323.1 states, “No driver’s license ... shall be issued to any person who is not a Virginia resident.” In fact, this section states that every person applying for a driver’s license must execute and furnish to the Commissioner of the Department of Motor Vehicles (DMV) a statement that certifies that the applicant is a Virginia resident. The Department has found that an individual may successfully establish a domicile outside Virginia even if that individual retains a Virginia driver’s license. See P.D. 00-151 (8/18/2000). However, obtaining or renewing a Virginia driver’s license is considered to be a strong indicator of intent to retain domiciliary residency in Virginia. See P.D. 02-149 (12/9/2002).

The Taxpayer explains that he renewed his Virginia driver’s license in 2016 before he left for Country A, and that he retained it because he needed it when he returned to the United States. He further explains that he kept his residence and car in Virginia because it was more cost effective than staying in hotels and renting cars when he returned to Virginia for medical and business purposes. The Taxpayer’s continued connections to Virginia for the purposes of taking advantage of superior medical treatment available to Virginia residents belies his stated intent to change his domicile to Country A. After living in Country A for more than 10 years prior to 2018, surely the Taxpayer could have found satisfactory medical services there if he had truly intended to change his domiciliary residence.

In addition, the Taxpayer should be aware that Virginia law does not permit nonresidents to obtain Virginia driver’s licenses, and persons providing a false statement to an agency of the Commonwealth may be subject to penalty under Virginia law. Any applicant who knowingly makes a false statement to the DMV is subject to penalties under Virginia Code § 46.2-348.

The Department acknowledges that a change of domicile occurs as part of a process in which no single factor is dispositive. While the Taxpayer took some steps that tend to indicate intent to establish domicile in a foreign country, the Taxpayer’s failure to provide objective evidence of a permanent place of abode in Country A, however, raises doubt as to his intent. Even if the Taxpayer intended to establish domicile in Country A, the connections he retained in Virginia raise substantial doubts as to whether he intended to abandon his Virginia domicile. As stated above, the burden of proof is on the Taxpayer to show that he changed his domicile. After carefully considering all of the evidence presented, I find that the Taxpayer has not met the burden of proof, and therefore, remained taxable as a domiciliary resident of Virginia for the 2018 taxable year. Accordingly, the assessment is upheld.

The assessment at issue was made based on the best information available to the Department pursuant to Virginia Code § 58.1-111. The Taxpayer may have information that better represents his Virginia income tax liability for the year at issue. Therefore, the Taxpayer should file a 2018 Virginia resident income tax return. The return should be submitted within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *. Upon receipt, the return will be reviewed, and the assessment will be adjusted, as appropriate. If the return is not received within the allotted time, the assessment will be considered to be correct.

The Code of Virginia sections and public documents cited are available online at www.tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/4492.X

Related Documents

86-219

94-353

96-207

00-151

02-33

02-149

05-8

10-134

15-142

19-88