Knowledge & Opinions
29 Jan 2018

Alternative jurisdictions to consider for UK non-domiciles wishing to move out of the UK

If the decision is taken to cease to be UK tax resident, the jurisdictions of Cyprus, Guernsey, Isle of Man, Malta, Portugal and Switzerland are attractive jurisdictions to consider. They offer a number of advantages and are close to the UK. MSI's member firm Dixcart Management provides an overview.

The UK non-domicile regime remains a relatively attractive option with UK non-domiciles (“non-doms”) continuing to have the opportunity to enjoy significant tax advantages for a period of up to 15 years. Major reforms regarding how UK non-domiciles are taxed were introduced in April 2017. As detailed in the Dixcart Article: UK Tax Residence - Planning Opportunities, Case Studies and How to Get it Right, individuals are now deemed domiciled in the UK if tax resident in the UK in 15 of the previous 20 tax years. If the decision is taken to cease to be UK tax resident, the jurisdictions of Cyprus, Guernsey, Isle of Man, Malta, Portugal and Switzerland are attractive jurisdictions to consider. They offer a number of advantages and are close to the UK. CYPRUS Cyprus is the largest island in the eastern Mediterranean and an attractive European country. The population of Cyprus is approximately 850,000 and the official language is Greek; however, English is widely spoken. Cyprus is part of the EU and there are therefore no restrictions on EU or Swiss citizens moving there, including those moving from the UK. There are two options available to non-EU nationals seeking to relocate to Cyprus. These are the Citizenship by Investment Programme, which is a “fast track” means of acquiring a Cypriot passport, and the Permanent Residence Programme.
  1. The Citizenship by Investment Programme This scheme allows individuals to acquire a passport (by investing in Cyprus) and they can then obtain visa-free travel to over 150 countries. The minimum investment is €2.5 million. This, however, reduces to €2 million if the investment is entirely in residential property, with one property being the investor’s private residence worth a minimum €500,000. Full details are available from the Dixcart office in Cyprus.
  1. The Permanent Residence Permit This permit simplifies travel around Europe and is particularly relevant to individuals with several business interests across several EU jurisdictions. The applicant’s passport is stamped and a certificate is provided which indicates that Cyprus is considered a permanent place of residence for that individual. The applicant must purchase real estate property in Cyprus with a market value of €300,000 (excluding VAT). The main applicant must also have a minimum annual income of €30,000, either from pensions, overseas employment, interest on fixed deposits or rental income from abroad.
Tax Advantages Available to Non-Domiciled Individuals in Cyprus Individuals who are tax resident in Cyprus, but non-domiciled, do not have to pay a Special Contribution for Defence Tax and can benefit from a zero rate of tax on the following sources of income:
  1. Capital gains
  2. Capital sums received from payments made by pension, provident and insurance funds
  3. Dividends
  4. Interest
In addition, there are no wealth and no inheritance taxes in Cyprus. Tax Advantages Available to Companies in Cyprus
  1. Cyprus has one of the lowest levels of corporation tax in the EU at only 12.5%.
  2. Cyprus has an extensive network of Double Taxation Agreements.
  3. Cyprus is in the EU and therefore a company established there has access to European Directives. The Parent/Subsidiary Directive reduces the withholding tax on dividends from EU investee countries to zero.
  4. There is no tax on dividend income.
Read the full article on alternative jurisdictions to consider for UK non-domiciles here
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