The UK government recently announced the end of an old tax exemption that benefited foreign owners of large properties – surprising the millionaires and billionaires who chose the country to live and manage their resources.
Special treatment was given since the days of the British Empire. It is a more than 200-year-old rule that was created in 1799 to benefit the British who owned property and business in the former colonies.
By the organization, people are considered to be ‘Non-domes‘ – that is, ‘non-residents’, people who live in the UK but have tax residency in other countries – do not pay tax on profits and income earned abroad unless they remit capital gains to the UK. .
It is a classification for tax purposes without any automatic relationship to nationality or citizenship. Those admitted to this category by the authorities – for up to 15 years – were exempted from paying tax on money they earned in other countries.
This rule made London a magnet for the rich from around the world. A one-off payment of £30,000 a year or £60,000, depending on the length of their stay.
“It’s not for everyone, but I always recommend London to my clients as the best and most reliable option for tax planning,” Wealth planning An international bank said Brazil Journal.
But now, the sweet is over: Exemption will end in April 2025, announced Jeremy Hunt, Chancellor of the Exchequer, the equivalent of the UK Chancellor of the Exchequer.
By The rules are expected to come into effect next year, for the first 4 years for non-new doms, foreign income and gains, whether remitted to the UK or not, are not taxed. After this period, they will be subject to all taxes like any British citizen.
Those already in status will have a two-year transition period.Non.’ Those who have been in the category for more than 10 years can avail an additional 4 exemptions. A temporary tax exemption will be granted to those interested in sending resources to the country.
“Four years is a relatively short period of time to justify a family. It should only attract people who were already planning to move there,” said tax expert Edgar Gomez, partner at TAGD Advocates.
British politicians have long been under pressure to scrap benefits. In 2017, fellow Conservative George Osborne had already applied Tightening the rule. Foreign nationals who have lived in the UK for more than 15 years out of the last 20 years are now considered settled in that country – and therefore, from now on, Tax holidays.
The exemption window will now be much shorter, reducing from 15 to 4 years, leading to an exodus of the rich, according to wealth management experts.
There are almost 69 thousand people with status ‘Non-domes’ Most of them who live in England come from Western Europe and America.
But there are also Indians like businessman Akshata Narayana Murthy, wife of Prime Minister Rushi Sunak and heir to the Indian technology giant Infosys.
In 2022, the British press revealed that he had not paid taxes in the United Kingdom, and the resulting crisis failed to topple Sunak. Another reason for the Prime Minister to reconsider the exemption for foreigners is political.
As stated therein Financial TimesThe decision to review the tax concession has sparked “anger” and “anger” among foreigners. The end of the exemption was the Labor flag, but the announcement by the current Conservative government was a surprise.
“Nobody expected this to come from the Tories,” he said FT A European who has lived in the United Kingdom for over a decade. “Let’s leave London and go to Switzerland.”
With the decision, Hunt ‘stole’ a project from his opponents and hopes to raise £2.7 billion (equivalent to US$3.4 billion) a year. That would add an average of £8.5 billion to other local taxes that expats already pay.
As the Conservative Party has performed poorly in the polls, it has a high chance of losing the government in this year’s elections in July.
For the owners of great wealth, London will never be the same again. Since Brexit, many financial institutions have decided to reduce their presence in the British capital – and some bank executives Wealth planning Note the rise of anti-immigrant sentiment.
Besides Switzerland and Monaco, traditional havens for global plutocrats, France and Italy are other countries that stand to gain.
Portugal is another destination remembered by wealth managers, but a favorite among Brazilians – not as favorably now as in the past.
The Portuguese maintained a regime similar to the British, exempting foreigners for up to 10 years. This rule was abolished last year.
“In both cases before October 10, 2023, the benefit can be claimed for those who maintain some form of connection with Portugal, such as a current rental agreement or purchase of property,” said lawyer Roberto Barreau, a partner at Cescon. Barriew.
Another alternative, for those who do not have this link, is to apply to certain specific situations provided for in the new law, which encourages people involved in technological and scientific innovation.
Italy emerges as a potential haven, offering exemptions of up to 15 years. Expats approved by the scheme only have to pay €100,000 a year – a fixed amount, not linked to assets or income.
Another country Tax holidays Attractive for Brazilians is Uruguay, with exceptions up to 11 years. (Neighbors also do not collect taxes on donations and inheritances.)
In all these cases of tax relief, people must prove that they actually live in the country, at least for a few months of the year.
For Uruguay, foreigners must stay in the country for a minimum of 60 days/years – plus US$500,000 worth of property or investments of more than US$2.2 million.
Giuliano Guandalini
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