Iran Tax Residency Guide

183-Day Physical Presence Rule

• Primary test: An individual is a tax resident of Iran if physically present in the country for 183 days or more in any 12-month period. The 12-month period is the Iranian calendar year (Farvardin to Esfand, i.e., 21 March to 20 March of the following year).
• Counting days: The days of arrival and departure are counted as full days. The temporary absences from Iran (for business trips, holidays, or medical treatment) of fewer than 30 consecutive days do NOT break the residency period.
• Short-term presence: An individual present for fewer than 183 days in the Iranian calendar year is generally considered a non-resident, unless the centre of vital interests test (below) applies.

Centre of Vital Interests Test

• Economic ties: Iran is the centre of vital interests if the individual's economic ties are strongest in Iran — e.g., the primary place of business, the main source of income, the location of the bank accounts, the investments, and the business operations.
• Personal ties: The personal ties include the location of the permanent home (the "مسکن دائمی" — the "permanent residence"), the family (the spouse and the children), the social connections, and the cultural affiliations.
• Factual analysis: The tax authority (the "سازمان امور مالیاتی" — the "TAO") applies a facts-and-circumstances analysis to determine the centre of vital interests. The decision is based on the totality of the evidence rather than a single factor.
• Burden of proof: The burden of proving that the centre of vital interests is outside Iran rests with the taxpayer. The documentary evidence (e.g., the lease agreements, the utility bills, the bank statements, the family certificates) is essential.

Nationality-Based Residency Rule

• Iranian citizens abroad: An Iranian citizen who works abroad but maintains a permanent home in Iran (the "مسکن دائمی" — the "permanent home") may be treated as a tax resident of Iran, even if physically present for fewer than 183 days.
• Permanent home test: The test determines whether the individual owns or rents a home in Iran that is available for use at all times (i.e., not rented out to a third party on a long-term lease).
• Diplomats and civil servants: The Iranian diplomats and the civil servants posted abroad are treated as residents of Iran regardless of the physical presence.
• Exceptions: The Iranian citizens who have permanently emigrated from Iran and have cut all residential ties may be treated as non-residents, provided they can demonstrate the abandonment of the permanent home in Iran.

Non-Resident Taxation

• Iranian-source income only: Non-residents are taxed only on the Iranian-source income. The types of Iranian-source income include the employment income for work performed in Iran, the business income from an Iranian permanent establishment, the rental income from Iranian property, the dividends from Iranian companies, the interest from Iranian sources, and the capital gains from the sale of Iranian assets.
• Withholding taxes: The non-resident income is generally subject to the final withholding taxes — 42.5% on dividends, 35% on interest and royalties, and 25-35% on the rental income (for non-resident landlords). The reduced rates may apply under the applicable tax treaty.
• Tax return: Non-residents with Iranian-source income (other than the income subject to the final withholding) must file an annual tax return. The tax return must be filed within 4 months of the end of the Iranian calendar year.

Exit Tax and Dual-Residence Tiebreaker

• No exit tax: Iran does NOT impose an exit tax on individuals leaving the country. There is no charge or tax on the act of emigration or the change of residence.
• Dual-residence tiebreaker under treaties: Where the domestic laws of two countries both claim the residency of the same individual, the applicable tax treaty (where one exists) provides a tiebreaker rule. The steps are: (1) the permanent home, (2) the centre of vital interests, (3) the habitual abode, (4) the nationality, and (5) the mutual agreement procedure between the competent authorities.
• Treaty relief: An individual who is determined to be a resident of the treaty partner country under the tiebreaker rule is treated as a non-resident of Iran for the tax treaty purposes and is entitled to the treaty benefits (e.g., the reduced withholding tax rates).

FAQs

How do I prove my non-resident status?

You must obtain a certificate of residence (the "گواهی اقامت مالیاتی" — the "tax residence certificate") from the tax authority of your country of residence and submit it to the TAO together with the supporting documents (the passport stamps, the lease agreements, the employment contracts).

Can I be a resident of two countries at once?

Under the Iranian domestic law, yes — you may be a resident of Iran and another country simultaneously if you meet both tests. However, the applicable tax treaty will resolve the conflict through the tiebreaker rule. Without a treaty, the dual residence may result in double taxation (mitigated by the foreign tax credit).

Do I need to notify the TAO of a change of residence?

There is no formal notification requirement for the change of residence. However, you should maintain the documentary evidence of the new residence and the date of departure for the tax audit purposes.