Top countries of residence for the Rich & Famous
As part of our new section looking at the tax planning techniques of the rich and famous we thought it'd be useful to look at some of the top countries of choice for the wealthy looking to minimise their taxes. Establishing residence in a low or nil tax jurisdiction is one of the easiest ways to substantially reduce your taxes. In terms of UK individuals, for instance, by moving to a tax haven you would avoid being: subject to UK income tax on all overseas income
subject to UK income tax on many forms of UK income
subject to UK capital gains tax
subject to UK inheritance tax (if you established non UK domicile). Basing yourself in a tax haven means that you'll also get the benefit of low or reduced taxes overseas. Here's some examples of the top countries of residence for celebrities: Noel Coward lived in Jamaica and Switzerland Jamaica's not particularly attractive in income tax terms, (at least not compared with other low tax jurisdictions), with the rate of income tax set at 25%. However Switzerland can be very attractive (see below). Both Jamaica and Switzerland can be useful if you want to sell assets free of capital gains tax, as neither country levies CGT. Sean Connery and Shakira living in The Bahamas The Bahamas is one of the top Caribbean tax havens and is a nil-tax haven. So there's no: Income tax
Corporation tax
Capital gains tax
Inheritance taxLots of countries class themselves as having low taxation. However, the Bahamas truly is a zero-tax jurisdiction and it doesn't even levy any sales taxes. And this favourable state of affairs applies to everyone, including companies and trusts. There are excellent travel links and the airport has half a dozen daily flights to Miami and other major destinations such as London and New York. Paula Radcliffe, Richards Farleigh (Dragons Den), David Coulthard, Jenson Button, Roger Moore, Ringo Starr, Wafic Said, Ken Bates, Tony Ryan and Julian Lennon in Monaco Located on the stunning French Riviera there is probably no tax haven more famous than Monaco. In recent years the well-known British entrepreneur Philip Green has made full use of the favourable tax laws there to pay his Monaco-based wife hundreds of millions of pounds in tax-free dividends from UK companies. There is no income tax or capital gains tax in Monaco -- the main tax is a business profits tax that is levied on certain companies (but most expats structure their affairs so as to avoid it). Peter Ebdon living in the United Arab Emirates The UAE is a nil-tax haven for individuals. There is no: Personal income tax
Capital gains tax
Inheritance tax
Sales tax It therefore holds up well against the other tax haven states. As a bonus it also has about 40 tax treaties (as it's classed as part of the United Arab Emirates), Mick Jagger (and at one point in the early 1970s, the rest of the Rolling Stones as well) Led Zeppelin living in Malibu and Jersey The Channel Islands are particularly attractive to people in the UK who want to lose their UK resident status (for example, to avoid capital gains tax) without moving too far from home. Apart from having no capital gains tax, there is also no inheritance tax or VAT in the Channel Islands. The main tax that residents have to pay is income tax, which is set at a flat rate of 20%. Although reasonably low, if you have substantial income there are other tax havens that may be more attractive. Michael Schumacher, Kimi Räikkönen, Fernando Alonso, Lewis Hamilton, Phil Collins, Boris Becker, Tina Turner, Ingvar Kamprad and Shania Twain living in Switzerland Swiss residents are taxed on their worldwide income and the tax rates (which vary according to which district or 'canton' you live in) can be as high as 35%. The lowest tax cantons are Zug, Schwyz, Nidwald and Zurich. This is not very attractive compared with other tax havens but Switzerland is not really a tax haven in the conventional sense of the word. Foreign individuals can drastically reduce their tax bills by taking advantage of what's known as the 'Fiscal Deal'. Essentially this is a tax deal which also comes with a residence permit. The Swiss authorities are very picky about who can take advantage of this tax saving opportunity -- you'll only be able to take advantage of these tax breaks if you are prepared to become a resident, don't intend working or running a business from Switzerland and aren't a Swiss national. You'll need to discuss the details with the particular canton in which you want to live and they'll tell you how your taxable income will be calculated. A common assessment could be that your taxable income might be deemed to be a multiple of what you pay for property rental. For example at least five times the rental value of your property or twice the level of your property expenses. (The rental value is simply the amount an owner would pay for renting a similar property). In order to apply for the Fiscal Deal you'll need to be worth not less than two million Swiss Francs (roughly £880,000, or $1.5 million). Sir Richard Branson UK resident living in British Virgin Islands In the British Virgin Islands there is no: Capital gains tax
Income tax
Corporation tax
Inheritance tax
Sales taxThe main taxes will be a payroll tax on employees as well as stamp duties and property taxes. If you're not planning on working there though or want to use it to escape capital gains tax or inheritance tax the BVI would be a very attractive place to go. Pat Rafter, living in Bermuda Everyone knows that Bermuda is a beautiful place. However, it's also attractive from a tax perspective. There is no: Income tax
Capital gains tax Another plus is that there are no sales taxes so all in all the taxes are pretty low and it certainly looks like a good offshore option.
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