How exactly Russian oligarchs take advantage of UK non-dom status?

[DavidS]

Apparently getting non-dom status in Ireland or UK helps you avoid taxes somehow.

Often used by Russian oligarchs?

But how does it work exactly and what's the catch?

 

[John Andrews]

Are you an employee of The Guardian or ICIJ? ns2

 

[Vor]

John Andrews said:
Are you an employee of The Guardian or ICIJ? ns2
Click to expand...

oh how i hate the ICIJ lol

 

[ThePassportMan]

for UK - easy, get a second passport from Vanuatu for example, stay in UK for 6 months, exit and come back again and stay for 6 months, and being a Vanuatu citizen - pay no taxes with bak accounts in HK, Switzerland, Austria, UAE etc 🙂

 

[khinkali]

@DavidS the UK's basis of taxation is roughly as follows:

• UK domiciled, UK resident
  • Taxed on worldwide income (subject to thresholds and excluding some kinds of investments, gambling, etc)
• UK domiciled, non-UK resident
  • Taxed on UK income and some UK capital gains (for some number of years, if previously UK resident)
• Non UK domiciled, UK resident
  • Taxed on UK income and if opting for the remittance basis, taxed on foreign sourced income remitted to UK
• Non UK domiciled, non UK resident
  • Taxed only on UK income

Some countries (e.g. GE) don't tax non-local income of residents, even if domiciled. Some countries (e.g. US) tax income of citizens even if non resident. Some countries tax all residents on worldwide income, even if non domiciled.

An "oligarch" is presumably non-domiciled and has a lot of money. If they have passive income (e.g. offshore share ownership) and they don't bring the money into the UK, then they might not be due UK taxes on that income.

DavidS said:
what's the catch?
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Being taxed on offshore income brought into the country (other places like GE and TH don't necessarily tax this).

Also if they stay a lot of years then they have to pay £30k or £60k per year tax to get the remittance basis, but for an oligarch that is probably good value compared to being taxed on offshore income and capital gains.

The big catch is that it's quite burdensome and you would end up spending time with lawyers and accountants. Living somewhere like UAE would be simpler and less bureaucratic, plus you won't pay remittance tax or local income taxes.

 

[troubled soul]

SPEND money in UK but Do not earn money in UK.
SAVE TAX
Simple

 

[berbo]

khinkali said:

• Non UK domiciled, non UK resident
  • Taxed only on UK income

An "oligarch" is presumably non-domiciled and has a lot of money. If they have passive income (e.g. offshore share ownership) and they don't bring the money into the UK, then they might not be due UK taxes on that income.

Being taxed on offshore income brought into the country (other places like GE and TH don't necessarily tax this).
Click to expand...

khinkali,
Thank you for your interesting insights.
So, if I have a non resident UK company (sole director/shareholder) and I am non dom, would it be better to NOT have a UK bank account?? This way , it would be impossible to ''bring the money into the UK''
Looking forward on your thoughts

 

[wellington]

khinkali said:
Non UK domiciled, non UK resident

• Taxed only on UK income

Click to expand...

I'm this, I do pay world wide wealth tax out of Switzerland, and am expected to pay tax in my country of resident, as for the UK, no tax.

 

[khinkali]

@berbo if you opt for the remittance basis as a UK resident non-dom then it seems sensible that you would pay remittance basis tax if you remit offshore income to your UK account. I don't think that means that you shouldn't have a UK account for your UK money.

There are some simple things that I think you don't need to pay advisors for. But navigating the UK non-dom remittance basis regime is not one of those things. From my basic understanding, the remittance basis for some non-dom residents reduces your exposure to some foreign income that you don't bring to UK, but I don't know if any CFC (controlled foreign company) or PE (permanent establishmnet) rules apply. If it's similar to the territorial taxation in other places (e.g. TH, GE) then you *do* need to be concerned about PE at the least. My situation is the opposite (UK citizen moving between territorial tax countries) and I can assure you that 90% of people who think they've found a loophole for running an offshore company with no tax liability are in blissful ignorance.

@wellington fortunately the UK doesn't currently seek to tax non-citizen non-residents for non-UK income any more. There was a time when we did, notably for narcotics and table salt.