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A 'tax exile' is one who chooses to leave a country and instead to reside in a foreign nation or jurisdiction because personal taxes there are appreciably lower or even nil. Going into tax exile is a means of tax mitigation or avoidance.

Contents

Legal status

UK rules

U.S. rules

Famous tax exiles

See also

References

Legal status

In most countries one becomes liable to be taxed in that country if one is resident there. For taxation purposes residence is often defined as spending 6 months (or some other length of time) in any one year in the country, and/or having an abiding attachment to the country, such as fixed property.

UK rules

Under UK law a person is "tax resident" if that person visits the country for 183 days or more in the tax year or for 91 days or more on average in any four consecutive tax years.[1]

U.S. rules

Under the Internal Revenue Code, the income of a U.S. citizen is taxable without regard to the citizen's place of residence, and, signficantly, without regard to where the income is earned or produced. Hence, a citizen can only eliminate his tax liability by both moving abroad and renouncing citizenship. An immigrant who has been granted permanent resident status in the U.S. is generally treated as a citizen for tax purposes. An immigrant not legally admitted for permanent residence (such as a guest worker) becomes liable for U.S. taxes if he spends more than 122 days in the year in the United States.

Famous tax exiles

★ Sean Connery and Shakira living in the Bahamas

★ David Coulthard, Jenson Button, Roger Moore, Ringo Starr, Wafic Said and Ken Bates in Monaco

★ Peter Ebdon living in the United Arab Emirates

★ Stelios Haji-Ioannou who was quoted in the Guardian: Sir Stelios is quoted as saying: "I have no UK income to be taxed in the UK." Source: David Leigh, Monday, July 10, 2006, The Guardian.

★ Mick Jagger (and at one point in the early 1970s, the rest of the Rolling Stones as well)

★ Michael Schumacher, Phil Collins, Boris Becker, Tina Turner and Ingvar Kamprad living in Switzerland

★ Ralf Schumacher living in Austria

★ Sir Richard Branson UK resident living in BVI

★ Ozzy Ozbourne living in Florida

★ Tony Ryan living in Monte Carlo

★ Freddie Mercury

★ Pat Rafter, living in Bermuda

★ K. C. Irving owner of most media in the Canadian province of New Brunswick (lived in Bermuda from the 1970's until his death in the 1990s. Willed his empire to his sons on the condition that they become non-residents of Canada for tax avoidance).

★ The Spice Girls, who spent enough time away from the UK during their Spiceworld Tour to mean they were tax exempt, reportedly saving them over £1m each.

See also

★ Tax haven

★ Perpetual tourist

References