In recent decades, we have witnessed significant cooperation between national tax authorities in the field of international taxation. Both the OECD and the European Union have taken important steps towards preventing and eliminating tax evasion, closing loopholes, and increasing transparency. In the European Union, they have taken specific measures against major global companies, for example by restricting illegal state subsidies, which we will present in more detail in a later article through the ruling against Apple. However, in the area of individuals, a type of tax competition has developed within the EU Member States, which aims to attract highly capitalized taxpayers to the country in question. The United Kingdom was one of the first countries to enter the so-called competition by creating a non-domestic resident regime.
“old” Non-resident resident order
Under the current English system, taxpayers who have obtained UK tax residency (“resident”However, if they have permanent residency outside the country, they may be eligible Non-resident resident To the situation and Basis of transfers For taxation according The essence of this tax situation is that the taxpayer is subject to tax in the United Kingdom only on the income that he has remitted (“Converted“) to or originated in the United Kingdom. Another important element of the old system is the so-called clean capital account, the essence of which is that the taxpayer can deposit any amount of money in a separate account until the tax liability arises, the amount being considered taxable income in UK, i.e. the taxpayer can transfer money from the Clean Capital Account to the UK without any subsequent tax liability, “for transfer”. With proper structuring, the Clean Capital Account has been covering the costs incurred by the individual in the UK for many years, so it has not He is forced to transfer money to it from elsewhere, while the United Kingdom does not impose taxes on an individual's other foreign income.
Change in the number of non-resident taxpayers paying tax in the UK from March 2008 to 2023
Source: BBC.com
New Foreign income and gains mode(“shape”).
As early as March 2023, the UK government announced that it would radically change the rules for foreign taxpayers, abolishing… Non-resident resident mode and the so-called “FIG” system was introduced instead.
The essence of the system is that for the first four years of an individual's arrival in the UK, the individual's income from abroad is tax-free, thus attracting foreign taxpayers in the hope that they will remain in the country even after the four years are up. years – although from then on, according to general rules, their foreign income will also be taxed. For taxpayers who have Non-resident resident The system was used, the so-called TRF (Temporary compensation facility) The system is provided, according to which their foreign income generated before April 6, 2025 can be “brought” into the country with a lower tax burden. Taxpayers who obtained tax residency during the past four years can also choose the new system, and this option is open to them until the end of the fourth year from the date of obtaining tax residency. It is important to stress that the regulation is not yet final, and the detailed rules are being developed, so changes may occur, but we can already get an idea of the new British tax system that will be introduced. The new regime will come into effect from 6 April 2025 and aims to create an internationally competitive system, ensuring fairness in the UK tax system by ensuring that all UK tax residents are responsible for paying UK tax in the long term.
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