Global Residence and Citizenship Handbook - Christian H. Kälin

Скачать книгу

tax situation. However, proper planning and advice is particularly important with regard to inheritance taxes, as in many countries the distinction between residence and domicile is relevant in this case. You may well be tax resident in a jurisdiction which levies no inheritance tax, but upon your death your former country of residence may claim that you were in fact still domiciled in that country and consequently may subject your worldwide estate to inheritance taxes. Furthermore, inheritance and gift taxes can also apply to heirs and beneficiaries of gifts (for example in Germany), or to the property that is transferred, and may thus be levied irrespective of the residence and domicile of the deceased. In the case of real estate, generally the country where the property is located will tax it. If you own US securities, however, the US imposes taxation upon the death of their owner even if there is no other connection to the US than the fact that the securities (the shares, bonds etc.) are issued by US entities. Trusts, foundations, companies or life insurance structures may be used in such cases to mitigate adverse exposure.

       Tax treaties and tie-breaker rules

      Tax treaties can be relevant in finding solutions to the various tax problems associated with moving from one country to another or with having multiple residences in different countries.

      Nearly all tax treaties include tie-breaker rules that determine which country has the right to tax an individual who is deemed to be resident for tax purposes in two countries at the same time by their domestic rules. The tie-breaker tests are applied in stages in order to determine the country with which the individual has the closest connection and is therefore granted the right of taxation. The current version of the OECD model treaty makes the following provisions for an individual who is considered to be a tax resident in two countries with double tax treaties:

      1.He shall be deemed to be a resident only of the country in which he has a permanent home available to him; if he has a permanent home available to him in both countries, he shall be deemed to be a resident only of the country with which his personal and economic relations are closer (center of vital interests)

      2.If the country in which he has his center of vital interests cannot be determined, or if he does not have a permanent home available to him in either country, he shall be deemed to be a resident only of the country in which he has a habitual residence

      3.If he has a habitual residence in both countries, or in neither of them, he shall be deemed to be a resident only of the country of which he is a citizen

      4.If he is a citizen of both countries or of neither of them, the competent authorities of both countries shall settle the question by mutual agreement

      In reality, mutual settlements between countries are rare and a solution is usually found earlier, either with the tax authorities in the country where the dispute about tax residence has arisen, or in the courts of that country if no agreement could be reached with the tax authorities.

       Acquisition of real estate

      To acquire property in attractive locations and in particular in the new country of residence contributes to the quality of life, satisfies prestige needs, and to some extent also constitutes an investment. It is, however, a good idea to consider renting before purchasing a property as this is the best way to become familiar with an area before committing to a purchase. Obviously, there are many factors to take into account when acquiring property, besides tax and legal issues. It is usually advisable to appoint qualified professionals to assist with the acquisition and to navigate through the pitfalls of buying in a foreign country. Also, consideration needs to be given whether to own the property directly or through a structure, and how easy it may be to sell again in the future.

      Although most countries, including Canada, the UK and the US, do not impose any restrictions on acquisition of real estate, there are countries such as Austria, Croatia, Greece and Switzerland4 that restrict foreign persons from buying property there. It is imperative to check that there are no restrictions applicable that will pose a problem or that could affect resale.5

       Timing

      As generally in life, timing is important also in the context of tax and estate planning, and in particular regarding residence planning. Specifically, the discrepancies between the tax systems of different countries can sometimes be used in the course of changing residence. Indeed, an important element in cross-border planning is to synchronize the timing of the tax events and the taxpayer. For example, the tax treatment of income derived from activities performed before or after a person gives up his residence, and the different qualification of such income in different countries, may yield tax savings through the carefully chosen timing of a change of residence. The same goes for vesting of shares and share options, the receipt of commissions, proceeds from the sale of certain assets such as the main family home, where in many countries special tax exemptions apply, the date of signing of agreements which have significant value, the timing regarding the establishment of trusts and foundations, and so on.

       Health insurance

      Arranging adequate health insurance is an important element in international residence planning – yet it is often overlooked. If someone moves abroad, their current health insurance policy will normally expire. One is then usually left with a choice of finding another local insurer in the new country of residence or turning to an international health insurer. It is highly advisable to take out an appropriate health plan at a younger age and before the first signs of ill health manifest. Even if you are very wealthy and think you do not need health insurance at all, you need to think again: a private health policy with an internationally recognized insurer and arranged through a competent specialized consultant6 which gives you access to a 24 hour assistance service and a kind of medical family office can be extremely useful. It can even be critical if you have an accident in a remote part of the world and if the closest adequate hospital needs to be found in an instant, or to help you find and select the best doctor or clinic for a particular medical problem. Indeed, one of the first steps in a planned change of residence should be to obtain worldwide health cover which ensures the necessary international flexibility.

       Checklist: Moving to another country

      The following table provides an overview of some of the questions to ask when moving to another country.

Infrastructure
Transport and accessibility How good is general accessibility in the country including public transportation, train connections, domestic air travel, and condition of the roads?
How good are the travel connections by road, air, rail or sea to other countries?
Utilities Are the cost, access, quality and reliability of electricity, gas, water and waste services satisfactory?
Is public water clean/safe to drink?
Telecommunications, IT, Internet Are the telephone systems, mobile phone networks, broadband Internet access up to date? Are the quality and availability of IT-support services acceptable?
Access to services How good is access to standard services such as local banks, post office, grocery stores, shopping malls, etc.?
Medical facilities Are there reliable and modern hospital facilities?
Is there free access to medical services? Are there any waiting times? What is the access to medical specialists? Are private medical

Скачать книгу