Monte Carlo or bust!
‘Tax havens are places where senior executives of the world’s largest financial and industrial corporations mix with figures from the artistic or social “jet-set”, together with multimillionaires who combine business with pleasure. They all rub shoulders with somewhat dubious individuals…’
(Opinion of the European Economic and Social Committee on ‘Tax and financial havens, a threat to the EU’s internal market’ INT/587 24 May 2012)
I think the members of the EESC may have slightly over-reacted, stuck as they are in that well-known haven of asceticism and hatred of all earthly pleasures apart from chocolate, Brussels. I’ve just got back from a long weekend in Monte Carlo and I didn’t see anyone remotely dubious apart from a waiter at the Monte Carlo Country Club who looked a bit like Terry Thomas. But then I’m neither a multi-millionaire nor a member of the jet-set. I was just there to watch the tennis.
I could definitely hack it as a tax exile in Monaco (well, perhaps not permanently, because, as a cost-conscious Yorkshire woman, I don’t hold with splashing out on a pastel-coloured Moncur jacket and matching Kelly bag in order to blend in with the Ladies Who Lunch). Moving to Monaco is wishful thinking of course, but the weather was beautiful and so was the scenery. It’s a short hop to the Côte d’Azur and IMHO it beats the Isle of Man, San Marino, Andorra, Liechtenstein and Zug which are the other tax havens I’ve been to. The only drawback was a shortage of taxis but I suppose the super-rich all have chauffeurs so there’s no call for them.
In case you haven’t noticed, there’s an election next week and, as a result, there’s been a lot coming out of the Ministry of Truth about non-domiciled status and its effect on the UK tax-take. Let’s take the Labour party’s claim that non-domiciled status is a tax ‘loophole’ which makes the UK ‘a tax haven for the few’. The OED defines a loophole as:
‘fig. An outlet or means of escape. Often applied to an ambiguity or omission in a statute, etc, which affords opportunity for evading its intention.’
Non-dom status gives freedom from UK taxation for foreign income and gains in certain circumstances which is known to us tax lawyers as the remittance basis of taxation. In Labour circles the remittance basis is known as ‘an arcane 200 year-old loophole’ in spite of the fact that it is explicitly provided for in the UK tax legislation in the same way as the tax-free personal allowance (and no-one refers to that as a tax loophole). The remittance basis was apparently introduced by William Pitt the Younger in the late eighteenth century so this so-called loophole has been a long time a-closin’.
It is true that the rules for determining a person’s domicile are not set out in the tax legislation. The rules derive mainly from case law in relation to questions of private international law and they are well established.
It is not true, as Labour claims, that you can become a non-dom simply by taking out a subscription to an overseas newspaper. The public rhetoric, in particular from the Labour leader, has recently veered dangerously close to Newspeak, the language invented by George Orwell in ‘1984’. The aim of Newspeak was to narrow the range of thought and I am very much against anything that does that.
Ed Miliband has said that Labour will abolish the non-dom rule and replace it with a new regime distinguishing between temporary residence and permanent residence. The SNP has confirmed it will support this. George Osborne has countered with a statement that the Conservatives will consider withdrawing non-dom tax privileges for people who have ‘inherited’ their non-dom status. The Lib Dems have pledged to review eligibility for non-dom benefits and also propose to further increase the annual charge for claiming non-dom status.
I suspect that the majority of non-doms will vote with their feet. What do you think?
Tax lawyer specialising in business tax, SDLT and VAT