International Tax Law Barrister, Lawyer & Attorney : Leon Fernando del Canto : Private Clients, Tax Planning, Spanish Tax : Spain, UK, Europe

As the Financial Times published today, Deepak Malhotra, who advises South Asian clients for Grant Thornton said important concessions had been made on rules for remaining non-resident, as well as the non-dom tax regime.

“Non-dom clients will be more positive about things than before,” he said. “But it would have been better to consult first, rather than issue draconian proposals that upset a lot of people.”

Mr Malhotra thought the final proposals might help lift the uncertainty that has hung over non-dom taxation for many years, with proposals repeatedly aired and then shelved. “The promise of no further change in this parliament or the next should reassure businesses and individuals.”

Please see full article at FT web page

The main thesis maintained for centuries in all jurisdictions has been that taxation must be a sovereign matter together with the right to protect the privacy of their citizens and its affairs.

This seems to be the Thesis maintained by Liechtenstein and Germany, each one of them claiming jurisdictional rights to tax the income and assets of their citizens (Germany) on one side and to protect the confidential information of any investment made in its jurisdiction (Liechtenstein) on the other side.

The antithesis emerged in a global economy some decades ago, and is currently represented by the OECD and the majority of countries. Taxation, as the global economy itself, must be a matter of international or global policy and the rules must be established at international level to balance the rights and interests of the different jurisdictions, small and large alike. In this context the OECD established a protocol to access bank information for tax purposes. Have the German authorities followed the recommendations in the LGT case?, this will be seen once all the facts have come to the light.

Could the synthesis be to balance the interest of the large economies where industries and services for their residents constitutes the majority of their tax income with the small international jurisdictions with a predominant industry made of investment banks, wealth and treasury management services focused on international business and expatriates?

In this process the efforts made by the OECD to prevent money laundering activities and avoid Harmful Tax Practices is very welcomed and should be continued. Gibraltar and 33 other jurisdictions have already agree to the OECD recommendations.

Great care should be exercise by the OECD in balancing the interests of the largest economies with the small jurisdictions and the rights of every person and corporation to organize their economic affairs freely in a global economy.

For much of the last few years, however, Tax Freedom Day has been coming later and later. In fact, it falls a full week later now than it did back in 2002. That is an extra week of working for the Chancellor. At this rate, it will not be long until we spend longer working for the government than we do working for ourselves, which brings to the table some interesting historical reflections.

An interesting Book "Coffee planters, workers and wives: class conflict and gender relations on Sao Paulo plantations, 1850-1980" Macmillan Press, 1988, the evolution from slavery (room and board) toward share croppers concepts (50:50 after expenses) is discussed. An interesting reflection on tax and slavery is available at http://www.press.uchicago.edu/Misc/Chicago/194876.html

Tax Freedom Day is calculated by taking the UK's net national income and calculating how much of that is taken away in taxes. These taxes include not just income tax, but VAT, inheritance tax, stamp duty, car and fuel taxes, excise taxes on alcohol and cigarettes, taxes on companies and employment, and many more. For technical stuff about how Tax Freedom Day is calculated, click here. Tax Freedom Day varies around the country for a description of why and how much, click here.

The Adam Smith Institute has been calculating Tax Freedom Day since 1991 and has figures for it going back to 1963 – when Tax Freedom Day was more than a whole month earlier, falling on 24 April. There are also some international comparisons.

I do not endorse this approach to taxation as a political weapon, however it is an interesting tool to be able to reflect and discuss how much we contribute to the government and how they are using our funds.

The information posted here was taken from the Adam Smith Institute at http://www.adamsmith.org/tax-freedom-day/

General description of the measure

Legislation will be introduced in Finance Bill 2008 to:

• Introduce an additional tax charge for individuals using the remittance basis of taxation;
• End the automatic entitlement to certain personal allowances for individuals resident in the UK who are using the remittance basis;
• Ensure that when determining if an individual is resident in the UK in any year, days of arrival and departure are counted; and
• Address a range of anomalies in the remittance basis.

The remittance basis of taxation can apply to those UK residents who are not domiciled in the UK or who are not ordinarily resident in the UK. The remittance basis provides that such residents will be taxed on foreign income and gains only when they are remitted to the UK.
Operative date

All these changes will apply on or after 6 April 2008.

From Attorneys or Certified Public Accountants in the US to Barristers and Chartered Accountants in the UK, we must understand each other with precision for the benefit of our clients. From the Abogados and Economistas in the Spanish speaking jurisdictions to Rechtsamwälte and Steuerberater in German ones, we all use English to communicate with our international colleagues and clients.

You are welcome to read or contibute with your position on any topics. Although we are starting with Anglo Spanish matters our intention is to move on to other jurisdictions as issues arise. The forum will be moderated by Fernando del Canto and International Tax Barrister (UK) and Abogado (Spain), to comply with tax professional standards and ethics. You can contact Fernando@konsilia.es if any queries.