Switzerland is a country that levies taxes on three levels: federal, cantonal, and municipal. The tax rates are progressive, meaning they take into account the economic capacity of a taxpayer. Each canton has a set of tax deductions that reduce the tax base and, hence, the marginal tax rate.
In terms of tax residency, individuals are liable to pay tax in Switzerland if they have their tax residency in Switzerland or if their stay in Switzerland exceeds a certain period of time. Swiss tax residents are subject to unlimited taxation on their worldwide income and worldwide assets, with some exceptions for foreign real estate and foreign business income.
Swiss-sourced employment income is fully taxable in Switzerland, unless a double taxation agreement provides otherwise. The same tax rate for employment income applies also to interest and dividend income.
Swiss-sourced interest payments and dividends are subject to Swiss withholding tax at a rate of 35%, but Swiss tax residents are entitled to a full refund provided the investment income is declared in their annual tax return.
Dividend payments from a majority shareholding are taxed to the extent of 70% at the federal level and to the extent of 50 to 80% at the cantonal level, depending on the cantonal tax provisions.
In terms of capital gains tax, there is no capital gains tax on the disposal of movable assets such as shares and collectibles, but in cases of excessive trading, hedging, and debt-financing, the tax administration may conclude that the individual is a professional securities trader subject to income tax on his or her gains. Gains on immovable property are taxable, and a real estate transfer tax is due in many cantons on the change of ownership of real property.
All cantons (and all municipalities) levy a wealth tax on global net wealth, which includes all movable, immovable, and business assets, works of art, jewelry, and other collectibles.
Spouses are exempt from gift and inheritance tax in all cantons, and lineal descendants in most cantons.
The right to tax gifts and donations is in the canton where the donor or testator is or was domiciled, and the tax rate is determined by the amount of the gift or inheritance and the degree of kinship.
Finally, Switzerland has been a signatory to the Common Reporting Standard since 2017 and has entered into various exchange of information programs with a number of participating jurisdictions. Information on a client’s Swiss bank accounts will therefore be exchanged with the tax authorities of their home country if that country is a participating jurisdiction.
If you have any queries about Switzerland personal tax issues, or Swiss tax matters in general, then please do get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
Understanding UK Non-Domiciled Status: Myths and Facts Have you ever heard of Non-Dom status?
It’s a tax status available in the UK for people who are not domiciled in the country. This article aims to clarify some common myths and facts surrounding Non-Dom status.
What is Non-Domiciled (Non-Dom) status? Non-Dom status is a tax status available to individuals who are not domiciled in the UK. It means that they only have to pay taxes on money they earn inside the UK, not on money they make outside the UK. However, specific rules and conditions must be met, which is not a one-size-fits-all solution.
Some people think that Non-Dom status is only for the super-rich. But that’s not true! Anyone who meets the criteria can qualify for this status. Non-Doms still have to pay taxes like UK residents, but they can benefit from some tax advantages.
Another common myth is that Non-Doms don’t have to pay any tax in the UK, which is false. Non-Doms are subject to the same taxes as UK residents, including income and capital gains taxes. However, they can benefit from some tax advantages, such as the remittance basis of taxation.
One of the benefits of Non-Dom status is the remittance basis of taxation. This means that Non-Doms only have to pay taxes on the money they bring into the UK, not on the money they keep in their bank accounts outside of the UK. However, there are some restrictions and additional charges.
Non-Dom status can also help people save money on taxes and inheritances. Non-Doms are not subject to UK inheritance tax on their non-UK assets. In addition, Non-Doms can have foreign bank accounts and invest in other countries without paying UK taxes.
Non-Dom status can be a valuable tax status for people who are not domiciled in the UK. However, it’s essential to seek professional advice to ensure that you qualify for this status and that it’s the right choice for your situation.
In summary, Non-Dom status is a tax status available in the UK that can benefit people who meet the criteria. Non-Doms still have to pay some taxes like UK residents, but they can benefit from some tax advantages. The remittance basis of taxation allows Non-Doms to pay tax only on money they bring into the UK. Non-Doms can also enjoy other benefits like not being subject to UK inheritance tax on non-UK assets and having foreign currency bank accounts and investments without being subject to UK tax.
If you have any queries relating to the non-dom status UK or tax matters in the UK more generally, then please do not hesitate to get in touch with a UK specalist Native!
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
Software trained to spot undeclared swimming pools has resulted in an additional €10 million of tax revenue for the French authorities.
Okay, let’s dive in!
A machine-learning tool deployed across nine French regions during a trial in October 2021 helped authorities uncover 20,356 undeclared private pools and levy additional taxes on applicable households.
Under French law, pools must be declared part of a property’s taxable value.
As such, pools can increase the value of a property – and hike the individual tax homeowners pay.
According to Le Parisien newspaper, which first reported the news, a 30-square-metre pool is taxed at €200 (£170) a year.
Google and French consulting firm Capgemini have developed an application that uses machine learning to scan publicly available aerial images of properties for indications that a swimming pool is present.
The most obvious indication is a blue rectangle in the back garden!
After identifying the pool’s location, its address is confirmed and cross-checked against national tax and property registries.
In April 2022, The Guardian reported that the software had a 30% error rate. It would often mistake solar panels for pools or miss existing pools if they were heavily shadowed or partially covered by trees.
The French Treasury said it would expand a tool across the country that it expects will bring in around €40m (£34m) in new taxes on private pools in 2023, exceeding the £24m cost of developing and deploying the software.
The tool could eventually detect undeclared home extensions and patios that are also considered when calculating French property taxes.
“We are particularly targeting house extensions like verandas, but we have to be sure that the software can find buildings with a large footprint and not the dog kennel or the children’s playhouse,” said the deputy director general of public finances, Antoine Magnant to Le Parisien.
He added, “This is our second research stage and will also allow us to verify if a property is empty and should no longer be taxed.”
According to the Federation of Professional Builders (FPP), France has the largest market in Europe for private swimming pools, with an estimated three million in existence.
This is partly due to a boom in construction during the Covid-19 lockdowns and recent heat waves.
However, the issue has been contentious this year because of the drought in France, which has led to rivers drying up and restrictions on water usage. One MP for the French Green party has called for a ban on new private pools.
If you have any general queries about this article, please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
This year’s tax changes include:
The COVID-19 development and high inflation of 2022 resulted in several changes to the Canadian tax system.
Taxpayers must be aware of these changes when filing income tax returns in 2023 and beyond.
To help Canadians offset inflation, which was at a historic high last year, the federal government has adjusted tax brackets for the 2022 tax year.
The new brackets and tax rates are as follows:
The Basic Personal Amount (BPA) is a non-refundable tax credit that can be claimed by any Canadian who files income taxes.
The BPA is a tax break that gives individuals making less than a certain amount a full income tax reduction. Taxpayers who make more than this basic amount receive a partial reduction.
In December 2019, the Government of Canada announced a goal to increase the Basic Personal Amount to $15,000 by 2023. This increase is being phased in over time and will reach $14,398 for the 2022 tax year.
The First-Time Home Buyers’ Tax Credit is a federal government initiative to make homeownership more affordable for some Canadians by providing a tax credit on purchasing newly built homes.
As of December 2022, eligible first-time home buyers can now claim a $10,000 non-refundable tax credit — double what they could before — which could result in tax savings of up to $1,500.
The Home Buyer’s Tax Credit will help you offset taxes you owe—enter the amount of $10,000 on Line 31270 of your income tax return.
The Old Age Security (OAS) program provides retired Canadians with income to help them throughout retirement.
However, seniors who make less income are sometimes asked to pay back some of their OAS.
The following are the revised thresholds for the 2023 tax year:
The Canada Pension Plan changed in 2023. The new calculations will be based on a legislated formula using the average growth rate of salaries and weekly wages earned throughout Canada.
The maximum pensionable earnings under the Canada Pension Plan (CPP) will be $66,600 in 2023. The basic exemption amount stays the same at $3,500 in 2023.
The CPP contribution rate has also been adjusted accordingly.
Employees and employers will pay 5.95% of their income in 2023 (up from 5.70% in 2022) to a maximum contribution of $3,754.45.
Self-employed individuals will pay 11.90% of their income in 2023 (up from 11.40% in 2022) toward a maximum contribution of $7,508.90.
The annual dollar limit for RRSPs is $29,210 for the 2022 tax year, an increase from $27,830 in 2021.
However, remember that your contribution limit is still capped at 18% of your earned income.
The Government of Canada created COVID-19 benefits to provide financial aid to those affected by the pandemic.
Those who received COVID-19 benefits in 2022 will receive a T4A slip showing all the information required to complete their income tax return.
Individuals with incomes over $38,000 might be required to pay back part or all of the benefits received.
Refusal to repay may result in the Canada Revenue Agency keeping some or all future payments, including tax refunds and GST/HST credits.
If you can’t pay in full, the CRA may work with you to arrange a payment plan.
If you have any general queries about Canadian Tax or this article, please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
In December 2022, Kazakhstan amended its tax legislation.
We set out some of the relevant amendments in this article.
New restrictions will be imposed in relation to Kazakhstani companies seeking to apply double tax treaty benefits.
The changes relate to the following payments made to a foreign related party:
In particular, where a related party is in receipt of income, then the treaty rates may only be applied if the recipient is subject to an effective income tax rate of at least 15% on receipt in its home country.
This change was effective from 1 January 2023.
Here, individuals that are not classed as independent contractors will now become withholding agents in relation to capital gains in respect of share deals.
As such, they will need to deduct and withhold capital gains tax from the purchase price of shares. They will then need to pay this over to the authorities.
This change will take effect from 21 February 2023.
For those with, or clients with, subsidiaries in Kazakhstan, we would suggest reviewing these changes in line with any proposals to pay dividends, royalties or interest.
Further, those dealing with individuals who will now be brought within the capital gains tax withholding requirements then they should ensure they consider their compliance with these obligations.
If you have any queries relating to the Kazakhstan’s recent tax amendments or tax matters in Kazakhstan more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
The United States and Croatia signed their first double tax treaty (“treaty”) on 8 December 2022.
This means that all member states of the European Union (“EU”) now has a tax treaty with the US, as Croatia was the ‘last man standing’ in terms of not having such a treaty.
So, what does the treaty say?
| Item | Description |
| Dividends | The treaty reduces withholding taxes (“WHT”) on dividends. The treaty rate is capped at 15%. One exception is where the beneficial owner of the dividend is a company which has held a direct interest of at least 10% of the company paying the dividends for the preceding twelve-month period. Here, the maximum rate under the Treaty is reduced to 5%. In addition, dividends generally paid to certain pension funds qualify for a full exemption from WHT in the source company. |
| Interest | The treaty seeks to eliminate WHT on most interest payments. However, WHT is payable and capped at 15% in some circumstances. Those circumstances include: interest arising in Croatia that is determined with reference to receipts, sales, income, profits or other cash flow of the debtor, to any change in the value of any property of the debtor or to any dividend, partnership distribution or similar payment made by the debtor interest arising in the United States that is contingent interest of a type that does not qualify as portfolio interest under the law of the United States. |
| Royalties | The treaty limits WHT on royalties to 5%. |
| Reservation | In the treaty, the US reserves the right to impose what is known as the “BEAT” tax under US Internal Revenue Code section 59A (“Tax on Base Erosion Payments of Taxpayers with Substantial Gross Receipts”). This applies to relevant profits of a company resident in Croatia and attributable to a US permanent establishment. |
| Limitation on benefits (“LoB”) | Those familiar with double tax treaties where one of the contracting parties is the US will be familiar with the LoB article. Broadly, such a clause has applied since the introduction of the 2016 US model tax convention. It is a complex limitation on benefits clause. The result of the LoB in this case means that the application of the treaty is generally limited to “qualified persons” as defined in Article 22 of the Treaty. In general, Article 22(2) requires a resident to be a qualified person at the relevant time that treaty benefits are sought. For the ownership-base erosion test under Article 22(2)(f), the resident must also satisfy the ownership threshold on at least half of the days of any 12-month period that includes the date when the treaty benefit would be accorded. Alternatively, a resident that is not a qualified person under paragraph 2 may still be eligible for treaty benefits for an item of income if it meets one of the other tests under the LOB provision, namely the active trade or business test (ATB test), derivative benefits test or headquarters company test under Articles 22(3), (4) and (5) respectively. |
The signing of the treaty by the US and Croatia is a welcome development. It will clearly be of great application to businesses and individuals operating across the two jurisdictions.
The Treaty will enter into force after both contracting parties have approved it in accordance with their internal legislative procedures.
If you have any queries about the United States / Croatia double tax treaty, or US or Croatia tax matters more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article
Several weeks ago, we commented on the Spanish Government’s recently proposal to introduce a Solidarity Wealth Tax.
However, this article considers new wealth tax proposals – in respect of the Net Wealth Tax and the Solidarity Wealth Tax – for non-Spanish-tax-resident individuals who hold Spanish real estate through one or multiple non-Spanish-resident entities.
It is envisaged that non-Spanish-tax-resident individuals would be subject to the Net Wealth Tax (“NWT”) when they hold shares in an unlisted entity. This would be where “at least 50% of its assets are directly or indirectly made up of real estate located in Spain”.
These new proposals would replace the current domestic provisions which historically have required non-resident individuals to pay NWT in circumstances where they directly own real estate only.
Additionally, the Spanish Government plans to bring in the Solidarity Tax (“ST”) to supplement the regional NWT. The ST will be calculated and assessed at the federal level.
The ST will be levied on non-Spanish-tax-resident individuals with a net wealth in Spain of at least EUR 3 million. It should be noted that this will include any interests in non-resident entities that own Spanish real estate
The NWT can be credited against any ST liability.
It is expected that these measures will be passed before the end of 2022.
If the new legislation is published prior to the end of 2022, then both would apply to indirect holdings of Spanish real estate held on 31 December 2022.
It is currently expected that both would have to be paid in June or July of the following year.
If you have any queries about the Spanish Net Wealth Tax or Solidarity Wealth Tax, or Spanish tax matters in general, then please do get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
A new ruling was issued by Judge Yardena Seroussi in respect of an appeal to the Real Estate Tax Appeals Committee. The ruling concerned how luxury apartments should be taxed.
The Appeals Committee considered whether a land appreciation tax exemption should be granted to several sellers during the sale of a luxury apartment.
It was claimed by the vendors that they were entitled to the full sum of the maximum exemption for a single apartment prescribed by law.
However, the Israel Tax Authority held that the exemption applies only to sales of an entire apartment unit and not each share in a multiple ownership arrangement. Accordingly, it calculated its tax on the maximum exemption per seller—not according to their actual portion of ownership.
The owner of a single apartment is entitled to an exemption from land appreciation tax, up to the amount permitted by law.
At the moment, this amount stands at ILS 4.6 million.
It is worth noting in the case that:
The Israel Tax Authority had decided that the exemption was available in respect of the entire apartment rather than to each individual seller.
However, the Appeals Committee ruled that the exemption applied to the sale of a single apartment and therefore the exemption should be granted to each separate vendor.
This was on the basis that the sellers were not part of the same family unit
It seems quite likely the Israel Tax Authority will appeal this ruling.
If you have any queries about this Israel Real Estate Tax Appeal or Israel tax matters in general, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article
As from 1 January 2012, according to the provisions of article 5 (2) of the Income Tax Law 118 (I) / 2002, whenever a company grants a loan or any other monetary facility including cash withdrawal (other than balances derived from trade transactions) to natural persons, being its directors or shareholders or their spouses or their relatives up to second degree, then that person is deemed to have a monthly benefit equal to nine percent (9%) per annum on the balance of the loan or of any other monthly cash benefit at the end of each month (including cash withdrawals during the month).
The tax on the monthly benefit is calculated based on the applicable income tax rates and is due in accordance with the Pay-As-You-Earn ‘PAYE’ regulations. This means that the benefit is included in the taxable income of that person in Cyprus.
It is noted that calculation of the benefit does not take into consideration the number of days spent in the Republic by the individual throughout the year (circular 14, dated 14 November 2017), as was the case up to the end of 2017.
Considering the above, the individual will have an obligation to register with the Income Tax authorities in Cyprus and submit an annual tax declaration provided that the annual amount of the deemed benefit, including any income from other sources, exceeds the tax-free amount of €19.500. If his total income is less than €19.500 then the Company has no obligation to withhold any tax.
We note that in case the company charges interest to the individual’s debit balance, then that amount of interest reduces the value of the deemed benefit.
Result: An obligation arises for the Company to withhold tax on behalf of the shareholder according to the applicable rates and pay the tax under the PAYE system.
Result: No obligation arises for the Company to withhold tax on behalf of the shareholder.
Result: No obligation arises for the Company to withhold tax on behalf of the shareholder.
If you have any queries about this article, Cyprus tax , or the matters discussed more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article
Last week, Belgium approved its federal budget for 2023 – 2024.
The new budget agreement will have a tax impact for individuals and companies established or operating in Belgium. Below is an initial discussion of the tax measures announced in this context.
The highlights in the Belgian Budget are as follows:
| Curtailment to aspects of the copyright regime | At present, copyright income is subject to withholding tax of 15% following the deduction of lump sum expenses of up to 50%. This will be curtailed over a phasing in period of two years. |
| Tax relief for second homes | From 2024, tax relief for second homes will be abolished. |
| Flexi job scheme extension | The scope of the flexi jobs regime will be extended with an increase in hours for student jobs. |
The prime cuts of corporate measures in the Belgian Budget are as follows:
| Employer contributions on indexed wages | There will be a reduction for employer contributions on indexed wages. This applies to contributions for quarters one and two of 2023. |
| Restriction on offset of carried forward tax losses | Tax losses from earlier periods are restricted if the profit of the current taxable period is in excess of €1m. For the 2023 year, large companies would be able to offset only 40% (as opposed to 70%) of profits that exceed €1m against carried forward tax losses. |
| Restrictions to deduction for risk capital | From financial year 2023, the application of the deduction for risk capital will be restricted. |
| Energy Producers Profits Tax | For energy produced between 1 January 2022 and 1 November 2022, there will be an excess profits tax on profits above €180 per MWh. This is a retrospective tax. From November to June 2023, excess profits above EUR 130 per MWh will be taxed. |
The main indirect tax measures are as follows:
| Excise taxes on tobacco | An increase in tobacco excise duties was announced |
| Excise taxes on e-cigarettes | Further, the introduction excise duty on e-cigarettes was unveiled |
| Eco tax on polluting packaging | The tax on polluting packaging was extended |
It is worth noting that the budget has not yet been finalised at this stage so there might be changes or revisions to these proposals.
If you have any queries about the Belgian budget and the proposed tax changes, or Belgian tax more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.