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Malta residence an option for UK non-domiciliaries UK non-doms

10/03/2008

As of April, all non-domiciled workers in the UK for more than seven years will have to pay an annual charge in return for keeping their status, which allows them to avoid paying UK tax on their overseas earnings. US workers pay tax on their worldwide income and may end up paying tax twice, unless a concession is granted.

However, the scheme has come under fire from many quarters, with some warning that its sudden introduction will erode faith in the stability of the British tax system. 

The Treasury will also relax its rules about who is declared a resident for tax purposes.  It had threatened that days of arrival and departure in the United Kingdom will count towards the annual 90-day limit, over which people qualify as residents, meaning an overnight stay would count as two days.  However, it will change the definition so that a stay past midnight will count as only one day, adding that special concessions will be arranged for passengers passing through the UK.

The overall cost of the non-dom concessions is thought to be worth £50m out of the £550m it is expected to generate.

A spokesman from ClarisGlobal, which advises wealthy clients on their corporate and personal tax affairs, said: "This is unacceptable last-minute shuffling, an ill-conceived law resulting in a net loss to the financial services industry."

"Many of our clients - Americans and continental Europeans - have consulted us over the past two weeks to find out what steps to take to become non-resident. Frankly, it will take more than a last minute rethink to change their minds."

He added: "It is unacceptable to introduce complex legislation at such short notice.  This should have been laid out over at least a year".

Switzerland's cantons are targeting key groups of high earning non-domiciled executives in the UK to exploit the London government's planned tax crackdown on wealthy foreigners.

Malta too is receiving welcome attention with its favourable remittance based tax residence schemes.  Malta's attractiveness as a financial centre has soared following the Mediterranean Island's adhesion to the European Union in 2004.  This stands to win for Malta a fair share of London's exodus of non-doms following the latest changes.

Malta's popularity with rich foreigners stems from its good infrastructure and high-quality Mediterranean yet European lifestyle.  Malta boasts a UK-based legal and financial services framework, the availability of top quality banking, legal and financial service providers and favourable residence schemes that impose no minimum stay requirements.

ClarisGlobal's subsidiary in Valletta, Malta, reported increased interest from UK professional advisers examining options for clients. "We have received more inquiries from such intermediaries, especially as further details of the planned crackdown have emerged in the past three weeks," said Dr Priscilla Mifsud Parker of Claris Trustees & Fiduciaries Ltd in Malta.

"There has been a marked increase in inquiries," said Dr Jean-Philippe Chetcuti, tax partner at Chetcuti Cauchi Advocates, Malta's leading legal practice for private clients. "London firms are getting nervous calls from their clients, and they're contacting people like us."

The greatest interest has come from wealthy Europeans, resident but not domiciled in the UK, who would have the least difficulty gaining exclusive residence permits in Malta and Switzerland.

 

 

 

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