.png)
The death knell has finally been rung for the UK Res Non Dom and global high-net-worth individuals are scrambling for alternatives. In this article, Andersen tax advisors explore the preferred non-dom alternative destinations for UK Res Non-Doms.
Abolition of UK Res Non Dom Tax System
The UK Res Non-Dom tax regime, once an attractive option for high-net-worth individuals, is officially coming to an end. This regime allowed UK resident individuals who are not domiciled there to benefit from the remittance basis of taxation. No taxation applied to the Non-Dom’s foreign unremitted income and capital gains. The abolition of this tax system was announced in March2024 and is set to take effect from April 2025.As a result, many UK Res Non-Doms are now exploring alternative jurisdictions that offer similar or better tax benefits to mitigate the impact of this significant change.
Alternative Res Non-Dom Tax Regimes
A jurisdiction qualifies as a non-dom regime, if it offers favourable conditions to individuals who are "not domiciled" within that jurisdiction but are"resident" there. The term "not domiciled" refers to individuals whose permanent home or domicile is outside the jurisdiction in which they reside. A "resident" is an individual who has a significant presence (physical, personal, economic or otherwise) in a particular country for a specific tax year, meeting specific criteria set by that jurisdiction’s domestic tax laws. The remittance basis of taxation allows such residents to be taxed only on income and gains remitted to the country where they reside, whilst their worldwide income falls out of scope of taxation. This tax regime is particularly interesting for individuals whose income or capital gains are mainly derived outside of the jurisdiction in which they are residents of.
European Non-Dom Star: Malta
Malta’s Res Non-Dom tax system, originating from the UK's historical tax practices, posits an attractive alternative for high-net-worth individuals affected by the abolition of the UK Res Non-Dom tax regime. Similar to the UK's system, Malta allows individuals who are resident but not domiciled within its jurisdiction to benefit from the remittance basis of taxation. There are few differences in the application of the Res, Non-Dom regime. In Malta,the foreign capital gains are not taxable even if remitted to Malta. Another distinction is that Malta does not apply deemed domicile rules.
Under Maltese domestic law, an individual can establish residence for tax purposes in Malta under two criteria. Either by physical presence in Malta for at least 183 days within a tax year or alternatively,by evidencing their intention to reside in Malta ordinarily. While the core principle of only taxing remitted income and gains is maintained, Malta uniquely offers access to a robust financial services infrastructure and a high standard of living, further augmented by its strategic location within the EU. The clarity and certainty of Malta's tax system enhance its appeal as a viable alternative for individuals impacted by the termination of the UK Res Non-Dom tax regime.
Asian Non-Dom Star: Singapore
Whilst Singapore does not have a specific Non-Dom tax regime akin to the UK, the main benefit of the Singaporean tax system is that foreign sourced income is only taxable in Singapore, if it is remitted to Singapore. Residency for tax purpose scan be established in two ways, by satisfying one of the following tests. First is the quantitative test: By being physically present in Singapore for at least 183 days in the calendar year preceding the year of assessment; or by exercising an employment in Singapore for at least 183 days in the calendar year preceding the year of assessment (excluding directors of a company). Next,we have the Qualitative Test which requires that the resident individual must prove to the Singaporean tax authorities that Client’s absence from Singapore be temporary and reasonable.
Latin American Non-Dom Star: Uruguay
Uruguay offers a highly attractive tax environment for residents, although it does not have a formal "Non-Dom" tax regime similar to the UK. The benefits of Uruguay's regime relate to the territorial basis of taxation, i.e. only income sourced in Uruguay is subject to tax in Uruguay. It is however important to obtain appropriate advice on the local rules which address the basis on which the source of the income is determined. Foreign capital gains are not subject to tax in Uruguay, irrespective whether these are remitted or not.
To establish tax residency status in Uruguay, a taxpayer should either spend183 days during the calendar year in Uruguay or, a taxpayer should establish his main economic activities or have their permanent family base in Uruguay.
Middle East Non-Dom: Dubai
Dubai, as part of the United Arab Emirates (UAE), does not impose personal income taxes on individuals. Consequently, its tax residency criteria are primarily relevant for international tax planning and establishing residency for the purpose of benefiting from the UAE's network of Double Tax Treaties. To establish tax residency status in Dubai, eligible taxpayers must spend 183 days in UAE during a calendar year and hold a UAE Residency Visa.
How can we assist?
At Andersen, our Private Clients tax advisors have a breadth of global tax residence expertise covering UK tax advice and pre-immigration tax advice and non-dom tax experience in all countries having tax systems that are attractive to non-doms.
