🌐 SCOPE SCAPE · TOPIC

Tax & Residency · Scope Scape

Tax and residency is the vertical where most cross-border decisions actually compound. Where a person is tax-resident determines whether their global income is taxable, where their next-year capital gains land, whether their pension and investment income is double-taxed, what reporting they owe in how many places, and ultimately how much of their lifetime wealth survives transfer to the next generation. AJG's approach treats tax residency as a multi-jurisdictional decision graph with 4,000+ bilateral tax treaties as the edges and a small number of substantive residency tests at the nodes.\n\nThe substantive tests are surprisingly few. The 183-day physical-presence test variants (most countries, with adaptations); the "substantial presence" test in the US that uses a weighted three-year formula; the centre-of-vital-interests / ordinary-residence tests common in continental Europe and the UK's Statutory Residence Test (15-46-91 day brackets layered with tie tests since 2013); the domicile concept distinct from residence in the UK, Ireland, Cyprus and a few others; the citizenship-based taxation that the US (essentially uniquely outside Eritrea) imposes regardless of residence. India's residency rule is the 182-day Indian-presence test plus the deemed-residence-of-non-resident-Indian-with-Indian-source-income provisions added in Finance Act 2020.\n\nThe major tax-attractive residency regimes form a market that has shifted significantly since 2017-2020. Portugal's Non-Habitual Resident regime (NHR, 2009-2024, 10-year fixed 20% rate on certain income types and 0% on most foreign-source income with reform 2024 narrowing scope); Italy's impatriate regime (since 2020 with 70% earnings exclusion 5-year, plus the high-net-worth flat-tax of EUR 100K covering all foreign income); Spain's Beckham Law (24% flat for displaced employees up to EUR 600K, restricted from 2023); Cyprus non-dom (zero-tax on dividends and interest for 17 years from non-domiciliation); Malta's remittance-basis-residency; Greece's 50%-of-income-exempt regime for new tax-residents; Dubai/UAE personal-zero-income-tax-with-9%-corporate-from-2023; Bahrain's zero personal income tax; Singapore's flat 22-24% top rate plus territorial-source-rules; Hong Kong's 17% top rate plus territorial-source rules; the Cayman Islands and Bahamas territorial regimes; Monaco's residency-by-non-French-citizenship plus zero personal income tax; Andorra's 10% flat. Each has trade-offs in cost-of-living, lifestyle, family suitability, and exit-tax/exit-rules in the country left.\n\nThe non-dom regimes (UK historically, Ireland, Cyprus, Malta) are a different mechanism — separate the concept of tax-residency from tax-domicile and tax foreign-source income only on remittance. The UK's non-dom regime was the global reference for two centuries; the 2024-2025 Labour reforms abolished it from April 2025, replacing with a 4-year-foreign-income-and-gains-relief for new arrivals plus a 10-year-temporary-non-residence anti-avoidance, in the largest single shift in cross-border tax planning in a generation. The downstream effects on London's property and financial-services markets are still working through.\n\nExit taxes and trailing-tax-residency rules are the other side of the same coin. The US exit tax under IRC 877A on net unrealised gains for citizens who renounce; Canada's deemed disposition on emigration; Australia's deemed disposal of CGT assets on departure; France's exit tax on substantial holdings; Germany's recent extension of trailing taxation on substantial corporate participations; the UK's temporary-non-residence rules. India introduced a more limited version through the Black Money Act 2015 and the Finance Act 2020 deemed-residency rule.\n\nThe Common Reporting Standard (CRS, OECD, in force from 2017 with 120+ participating jurisdictions) and FATCA (US-specific bilateral framework) together mean that bank and financial-account information now flows automatically between the country where an account is held and the country of tax residency. The 2014-2018 wave of voluntary-disclosure programmes globally (Italy, Argentina, Brazil, India under the Black Money Act 2015) settled the back-end of the pre-CRS world. Transparent-by-design structures are now the norm; opaque structures are flagged automatically.\n\nDouble-taxation-avoidance treaties are the workhorse instrument that determines how income is split between two contesting jurisdictions. The OECD Model Tax Convention (and the parallel UN Model with developing-country adjustments) is the template; the actual treaty between any two countries is the binding text; the OECD's Multilateral Instrument (MLI, 2017) overlays anti-treaty-shopping principal-purpose-tests that have made aggressive treaty-shopping much harder. The Pillar 2 minimum 15% global corporate tax (in force in most major economies from 2024-25) is the first fundamental redesign of international corporate tax in a century. AJG cross-links tax-residency to the visa-immigration, banking-finance, real-estate-global, and global-commerce verticals because in practice these are one decision, not five.