This time I am writing you from Greece, as always I am here for work and had quite a few valuable insights, which I will share with you soon. For for now, please find below the second part of an article written by Florian Rochat on his expat adventures (if you have not read yet Part I, you can find it here). This time the article is focused on such practical issues as tax landscape, insurance; touches upon some sensitive topics as marriage and divorce, succession and will, and provides some tips on doing business in the UK. Enjoy!
4) Tax landscape: The tax regime, known for being quite harsh on high income (top rate amounting to 45%), is in turn highly beneficial for individuals who became resident in the UK without also becoming domiciled.
Non-domiciled residents in the UK are entitled to a more favourable system of taxation than UK domiciled individuals provided they claim what is known as the remittance basis of taxation, as opposed to the arising basis.
The advantage of the so-called “Res Non-Dom” status is well-known among the expatriate community. However, the fine prints, and the distinction between remittance and arising basis in particular, are also an abundant source of misconceptions. One of the most persistent urban legends I came across is that, as a “Res Non-Dom”, you do not have to do or report anything to the UK tax authorities, including the filing of a tax return, to enjoy the benefit of this status. This is completely wrong.
5) Insurance: the UK has inherited a very sophisticated and competitive insurance market: it is possible to have virtually every aspect of your life insured, ranging from your health to your favourite shirt, at very competitive price. To the extent that life insurance coverage is very often use as an efficient tax planning tool, as a way to set off inheritance tax liability upon death.
6) Marriage and divorce: You would probably hear that the UK is a good place to get married but not to divorce. You should actually give credits to this popular wisdom!
English law offers interesting possibilities and large leeway when it comes to enter into customized marital agreements. On the other hand, the country is also known as a hub for divorce.
7) Succession & Will: succession under common-law jurisdictions (like the UK) and the same under civil law jurisdictions are two completely different animals (the latter offering much less flexibility). Thus, expatriates should consider executing several wills, covering different assets, depending on their location.
It will be essential to ensure that any foreign companies are centrally managed and controlled outside of the UK. This is because the UK tax authorities will treat a non-UK incorporated company as being tax resident in the UK if, on the facts, it is centrally managed and controlled in the UK. The practical effect of that would be that the foreign company would be liable to UK corporation tax on its income and gains (subject to any available treaty relief).
“Home is Where the Heart Is” say the romantics. However, relocation in a foreign country is a life-changing event, whereby many aspects come into play and must eventually click in before you can call this new place “home”. You learn that the heart needs to be comfortable and rested before it can start feeling for a city or a country.
It is my hope the above can help you avoiding some pitfalls whilst settling down in a new country and in the buzzing city of London in particular.
Long life to the global village!
About the author:
Florian is practising as a lawyer in London within a major law firm. He has been advising individuals and companies on business law for more than a decade (previously in Switzerland and in New York City). He also knows where to eat a decent Swiss cheese fondue in every country he lived in!