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On 3 October 2024, the Irish High Court issued an important judgment concerning the tax residency of a Delaware LLC under the US/Ireland Double Tax Treaty (DTA).
This case involved the ability of three Irish subsidiaries of a Delaware LLC to claim group loss relief under Section 411 of the Taxes Consolidation Act 1997.
The key question was whether the Delaware LLC was considered “liable to tax” and thus “resident” under Article 4 of the US/Ireland DTA, which would enable the subsidiaries to claim group relief.
The High Court’s decision ultimately denied this relief.
The appeal was brought by Susquehanna International Group Ltd and two other companies, which sought to claim group relief by arguing that their parent, a Delaware LLC, was tax resident in the US.
The Irish Revenue disagreed, asserting that the LLC was not a company for group relief purposes and was not tax resident in the US under the DTA.
The crux of the issue was that the LLC was a disregarded entity for US tax purposes, meaning it was not subject to tax at the entity level.
Instead, its members, including several S Corporations and individuals, were taxed on their share of the LLC’s income.
This complex ownership structure raised questions about whether the LLC could be considered a separate taxable entity eligible for group relief.
Initially, the Tax Appeals Commission ruled in favour of the taxpayer, finding that the LLC was a company for the purposes of group relief and that it was resident in the US under the DTA.
The Commissioner took a purposive interpretation of the DTA, arguing that even though the LLC was fiscally transparent, it could still be considered tax resident under Article 4.
This was based on the LLC’s perpetual succession under Delaware law, which made it a body corporate.
The Irish High Court, however, overturned the Tax Appeals Commission’s decision. The Court focused on two key issues:
This ruling underscores the importance of understanding the complexities of entity classification in international tax law.
The Court’s decision hinged on the fiscally transparent nature of the Delaware LLC, which ultimately deprived it of treaty benefits and group relief eligibility.
While the LLC was structured under US law as a disregarded entity, this classification proved crucial in the Irish Revenue’s denial of relief.
For businesses with similar structures, this judgment highlights the need to carefully examine ownership arrangements and the potential tax implications.
Companies with complex cross-border structures should ensure that their parent entities meet the residency requirements under relevant tax treaties to benefit from relief provisions like group loss relief.
The Irish High Court’s decision serves as a reminder of the challenges posed by hybrid entities in international tax law.
While the Tax Appeals Commission initially supported the taxpayer’s position, the High Court’s strict interpretation of the US/Ireland DTA ultimately led to the denial of group relief.
Businesses should take note of this ruling and review their structures to ensure compliance with tax residency rules.
If you have any queries about this article on Group Loss Relief and Delaware LLCs or tax matters in Ireland, then please get in touch.
Alternatively, if you are a tax adviser in Ireland and would be interested in sharing your knowledge and becoming a tax native, then there is more information on membership here.
The UK has long been a premier destination for internationally mobile individuals due to its stability, legal system, educational opportunities, and cosmopolitan lifestyle.
However, recent policy changes have reshaped the immigration landscape, necessitating careful planning for those considering relocating to the UK.
In February 2022, the UK closed the Tier 1 (Investor) route, significantly impacting high-net-worth migration.
The focus has shifted towards visa categories that require active engagement with UK businesses and often need endorsement from third-party organizations.
On 6 March 2024, the UK Chancellor introduced major tax regime changes affecting UK-resident, non-UK domiciled individuals.
These changes will influence decisions for those already in the UK or considering a move, highlighting the importance of integrated tax and immigration planning to achieve long-term residency or citizenship goals.
Both routes offer accelerated paths to indefinite leave to remain (ILR) after three years, unlike the standard five-year requirement.
Visas are also available for those with a family connection to the UK, including partners of British citizens or permanent residents and individuals with UK ancestry.
This newly launched program allows significant investment in approved Hong Kong assets, leading to residency and potential permanent status after seven years.
Programs in countries like Antigua and Barbuda, Grenada, and St. Kitts and Nevis offer fast-track citizenship through investment, with benefits including visa-free travel to over 145 countries.
For clients considering international relocation, it’s crucial to navigate the complex interplay of immigration laws, tax implications, and family considerations.
With expert guidance from specialized immigration and tax advisors, clients can make informed decisions about their relocation strategies, ensuring compliance and optimizing their relocation outcomes.
If you have any queries about this article on High Net Worth Immigration Options then please get in touch.
The Portugal Golden Residence Permit Program, often referred to as the Portugal Golden Visa Program, offers a compelling five-year residence by investment opportunity for non-EU nationals.
This program allows investors to live, work, and study in Portugal while enjoying visa-free access to the Schengen Area.
With a minimal physical presence requirement averaging just seven days per year, this program not only facilitates ease of living but also paves the way for citizenship eligibility after five years.
The Portuguese Golden Visa is laden with benefits:
Investors can secure their Portuguese Golden Visa through several investment options:
The application process includes:
The first permit is issued for two years due to adjustments made during the Covid-19 pandemic, with subsequent renewals every two years.
The entire process to secure a residence permit through investment typically extends beyond 18 months due to administrative procedures.
The Portugal Golden Residence Permit Program stands out as a highly attractive option for investors seeking not only a European residence but also a straightforward route to citizenship.
With flexible investment options and a lenient residency requirement, the program offers a practical solution for global investors aiming to enjoy the lifestyle and benefits Portugal has to offer.
If you have any queries about Portugal’s Golden Visa, or tax or other matters in Portugal, then please get in touch.
Introduced in the 2023-2024 Budget and launched on 1 March 2024, Hong Kong’s revamped Capital Investment Entrant Scheme (New CIES) is designed to attract substantial new capital and enrich the city’s talent pool.
This initiative is a part of eight policy measures to develop Family Office Businesses, as outlined by the Financial Services and Treasury Bureau in March 2023.
The New CIES is tailored for natural persons who meet specific criteria:
Applicants must invest in both of the following categories:
The application process requires that the investment assets be managed by approved financial intermediaries and kept in accounts under the applicant’s name.
Compliance with ongoing portfolio maintenance is essential, and applicants must not withdraw any capital gains if the value of their investments exceeds HK$30 million, though they are allowed to withdraw dividends, interest, and rental income.
This streamlined scheme emphasizes capital investment without the added requirements of educational background or work experience, unlike other immigration pathways such as the Top Talent Pass Scheme.
The New CIES not only raises the threshold for permissible investments to HK$30 million but also broadens the scope of acceptable investment assets.
This approach is expected to draw high-net-worth individuals to Hong Kong, bolstering its reputation as a global hub for asset and wealth management.
The New CIES has generated significant interest among financial institutions, underscoring its potential to transform Hong Kong’s economic landscape by attracting new capital and fostering the growth of strategic industries beneficial to long-term development.
As this scheme progresses, it is poised to make a marked impact on Hong Kong’s position in the global financial arena.
If you have any further queries about Hong Kong’s Capital Investment Entrant Scheme then please get in touch.
Italy, a country celebrated for its picturesque landscapes, rich history, and vibrant culture, offers more than just a travel destination.
With major cities like Milan, Rome, and Venice, Italy presents a unique opportunity for investors to gain residence in a well-connected EU market.
The Italy Residence by Investment Program provides a gateway to Europe with a variety of investment options tailored to meet different needs, enabling successful applicants to obtain residence rights within three to four months.
The Italian Golden Visa comes with numerous benefits, including:
Applicants can choose from two main investment avenues to qualify for the Italian residence:
– Invest a minimum of EUR 2 million in Italian government bonds.
– Commit at least EUR 500,000 to Italian shares, reduced to EUR 250,000 for innovative start-ups.
– Make a non-refundable donation of EUR 1 million to projects of public interest in Italy, including fields like culture, education, ecology, and more.
Family members such as a spouse, children, and dependent parents can also apply for a visa under the main applicant’s investment without the need for additional funds.
– Ideal for individuals who can demonstrate a stable annual income from foreign sources.
The Italian Golden Visa is initially granted for two years and can be renewed for an additional three years as long as the investment is upheld. The application process generally takes between 90 to 120 days from submission, with the investment required to be made within three months of entering Italy.
For the Investor Visa Program, purchasing or renting residential property in Italy is necessary following approval. Applicants under the Elective Residence Program must also secure residential real estate and prove stable income.
Residency can evolve into permanent residence after five years, provided the investor relocates to Italy. Interestingly, the program does not mandate a minimum physical presence in Italy, offering flexibility for global investors.
Italy’s Residence by Investment Program not only opens the door to a life in one of the world’s most enchanting countries but also offers a strategic foothold in the European Union.
With flexible investment options and a straightforward application process, this program stands out as a premier choice for those looking to invest in Italy and enjoy the myriad benefits it offers.
If you have any queries about this article on Italy’s Golden Visa regime, or Italian tax or other matters in general, then please get in touch.
Obtaining tax residency in Monaco is appealing to many high net worth individuals due to its favorable tax regime.
Famously, Monaco does not levy personal income tax, which makes the process and requirements of obtaining tax residency an important step.
Tax residency in Monaco is officially recognized through the issuance of a tax residence certificate by the Principality’s authorities.
This certificate, known as the “certificat à des fins de formalités fiscales,” serves as proof of residency for fiscal purposes.
To qualify as a tax resident, applicants must meet specific criteria laid out in Sovereign Ordinance No. 8,372 dated November 26, 2020.
The criteria, which are controlled by the Monegasque government, include:
Applicants must hold a valid “carte de séjour,” or administrative residence permit.
Applicants should either:
Applicants need to prove their residence in Monaco by showing ownership, rental agreements, or cohabitation within the last year, supported by utility bills or other approved documents.
Depending on the case, additional documents such as bank statements or electricity bills might be required to further prove the legitimacy of the residency.
Monaco’s tax policy offers multiple benefits for residents:
These policies make Monaco an attractive destination for individuals seeking to optimize their tax liabilities.
For EU and EEA nationals, applying for residency involves submitting a valid identity card or passport, along with the necessary forms provided by the Monegasque government.
For those outside the EU/EEA, other specific requirements may apply.
For many high net worth individuals, tax residency in Monaco is seen as the holy grail. However, other nil personal tax jurisdictions, such as the UAE, also offer a similar light touch.
However, if one is looking to switch one’s tax residency to another place, then this is not a task to be taken lightly. You need to plan and plan early.
The road to becoming a tax exile is peppered with bear traps.
Looking to obtain tax residency in Monaco? Find your international tax expert here to help navigate the process. For specific Monaco tax residency advice, get in touch with our experts and start planning your tax-efficient future today!
The Greece Golden Visa Program stands out as one of the most accessible and affordable residence by investment programs in Europe.
Launched in 2013, this program offers non-EU nationals and their families the opportunity to obtain permanent residence permits in Greece, providing a straightforward path to living and traveling throughout Europe.
Key Features of the Greece Golden Visa Program
The Greece Golden Visa offers several compelling benefits:
The Greece Golden Visa Program requires a qualifying investment in one of several categories:
Purchase property worth a minimum of EUR 250,000, with higher values required in prime location’s like Mykonos and Santorini.
Deposit at least EUR 400,000 into a Greek credit institution for a minimum of one year, with a standing order for renewal.
Invest a minimum of EUR 400,000 in a Greek company for share capital increase or bonds.
Contribute to a real estate or closed-end investment company with the intention to invest exclusively in Greece.
Purchase Greek government bonds, corporate bonds, or shares with minimum specified values, ensuring investment in regulated markets within Greece.
The application process for obtaining a Greece Golden Visa is streamlined into several clear steps:
The entire process, from choosing the investment to receiving the permit, is designed to be completed within three to four months, making it one of the fastest and most efficient programs of its kind.
The Greece Golden Visa Program offers a lucrative opportunity for non-EU nationals seeking a permanent residence in Greece with the added benefit of visa-free travel across the Schengen Area.
With its flexible investment options, minimal residency requirements, and quick processing times, the program is an excellent choice for investors looking to expand their global mobility and access the European lifestyle.
The cost of the Visa Program will increase from the current EUR 250k minimum investment to a new minimum of EUR 400k.
Investors may still apply under the current threshold as long as they pay a 10% deposit by 31 August 2024. They will also need to finalise the investment by 31 December 2024.
If you have any queries about Greece’s Golden Visa, or tax matters in Greece, then please get in touch.
On March 12, 2024, the Legislative Assembly of El Salvador passed an amendment to the Income Tax Law (LISR).
This law significantly impacts the taxation of income earned abroad.
Here’s a breakdown of the key changes and their potential effects:
The amendment adds a new provision (IV) to Article 3 of the LISR, specifying that income obtained abroad in any form, including capital movement, remuneration, or emoluments, is not taxable under the law.
Additionally, the amendment exempts income covered under this new provision from the requirement to apply proportionality in determining costs and expenses, as outlined in Article 28 of the LISR.
The reform repeals several existing provisions that currently tax income earned by individuals and entities domiciled in El Salvador from overseas deposits, securities, financial instruments, and derivative contracts.
Overseas profits and returns that were previously taxable will now be considered non-taxable income for taxpayers in El Salvador.
This change is expected to encourage increased capital investment within El Salvador, as investors will no longer face taxation on income generated abroad.
Specifically, the following types of income will be exempt from taxation:
The amendment to El Salvador’s Income Tax Law represents a significant shift in the taxation of income earned abroad by individuals and entities domiciled in the country.
By exempting such income from taxation, the government aims to attract more capital investment into El Salvador.
However, taxpayers should consult with legal and financial advisors to understand the full implications of these changes for their specific circumstances.
If you have any queries about this article on El Salvador’s Income Tax Law, or tax matters in South America more generally, then please get in touch
If you are a tax adviser – whether from a legal or accountancy background – then we would love to discuss how you can become one of our ranks of Tax Natives.
All you need is your local tax knowledge. For more information please see here or get in touch.
Who would be an internationally mobile multi-millionaire, or dare I say it, billionaire these days?
It wasn’t so long ago that dozens of countries around the globe were practically falling over themselves to tempt some of the planet’s wealthiest people to spend some of their fortunes on their respective patches.
Of course, there was a catch.
A costly catch, well beyond the means of most people but mere pocket change for some of the individuals interested in moving from their place of origin to a more economically, culturally or politically stable location.
In the case of the UK, anyone granted clearance under what was known as the Tier One (investor) visa scheme needed to invest in excess of £2 million in shares or loan capital in “active and trading UK registered companies”
That the scheme could lead participants to obtain citizenship was hugely popular. Between its introduction in 2008 and 2021, in fact, some 13,276 applicants and their dependents were granted what became known as ‘golden visas’.
However, the influx was not without criticism.
A decade after Tier One status was unveiled, for instance, one of the UK’s leading economics think-tanks suggested that one less desirable consequence of foreign investment (of all kinds – not just the golden kind) was a hike in average 19 per cent house prices in England and Wales, exacerbating difficulties which many people had getting a foothold on the property ladder.
That report was published only weeks after the poisoning in Salisbury of the former Russian intelligence officer Sergie Skripal and his daughter, an incident which prompted a so far unpublished review of the visa scheme.
It would ultimately take Vladimir Putin’s decision to invade Ukraine for the Government to finally withdraw its golden visas because, as the then Home Secretary Priti Patel told the British Parliament it was no longer clear that it “offers the best means of encouraging investment-related migration”.
Although golden visas were at the hear of only some of the foreign investment referred to above, these two issues, house prices and the attraction of some ‘unsavoury individuals’ as cited by Patel, appear to be replicated around the world.
The European Commission also increased pressure on member states to follow suit because of the “inherent risks” posed by investor citizenship schemes.
Within the last few weeks, Spain has become the latest country to announce an end to its ‘golden visa’ scheme, echoing the Royal Economic Society’s observations on house prices rather than national security.
Ireland terminated its own ‘cash-for-visas’ system in February last year but has since warned that it will take “years” to clear a backlog of applications.
Having announced that its scheme would be scrapped, Portugal promptly backtracked, deciding to tighten the rules instead.
Malta, meanwhile, simply dug in its heels, a decision which has seen it referred to Commission’s Court of Justice.
Greece has also recently announced significant changes to its Golden Visa program, raising the required investment for prospective foreign investors from 250,000-euro property investment.
Again, this is said to because of an over-heating property market.
As of 31 March the investment threshold will see a substantial increase, with a new minimum set at 800,000 euros for properties in high-demand regions including Attica, Thessaloniki, Mykonos, Santorini, and islands with populations exceeding 3,100.
For other areas, the starting investment requirement will be adjusted to 400,000 euros.
One of the reasons that the issue hasn’t disappeared is that whilst many territories share concerns about being seen to host those who could be regarded as apologists for conflict, money talks.
If oligarchs don’t fancy coming to the UK, for instance, they can always consider Italy, Hong Kong, Latvia, Jersey, Mauritius, Namibia or Singapore where golden visa schemes or their rebranded equivalents remain.
It could be said that, in the UK, things aren’t much better for non-doms – those individuals who, like Rishi Sunak’s wife, may live in the UK but whose permanent residence is elsewhere.
Up to now that has enabled them to claim significant tax breaks by not having to pay UK tax on foreign income…but no more.
One of the eye-catching elements of the Spring Budget unveiled by the Chancellor of the Exchequer, Jeremy Hunt, last month was the abolition of that exemption and its replacement by a residence system ().
That will mean all UK residents living in the UK for more than four years paying the same tax on their foreign income and gains, regardless of their domicile status
Should Labour take power at the next General Election – which is widely expected to take place this autumn – they plan to turn the screw even tighter.
It seems that there is a common cycle when it comes to golden visas and, indeed, other fiscal carrots to attract the wealthy.
Often it seems that jurisdictions seem to become victims of their own success. Sure, the financial benefits might pack in the wealthy punters, but where does it leave house prices and, importantly, those locals looking to buy them.
Often, it seems, in the political game, this is enough to lead to change…
…and an end to the gold rush.
A bustling hotel lobby in Lisbon, Portugal, filled with a mix of travelers and locals enjoying the serene atmosphere. The decor features traditional Portuguese tiles and modern furniture, creating a vibrant yet cozy environment.
The scene begins with “Tax Natives,” a poised journalist with a keen eye for detail, sitting across from our “Secret Adviser,” a well-regarded tax consultant known for their expertise in Portuguese tax law. They’re seated at a small, round table adorned with a floral centerpiece.
[smiling, as they take a sip of espresso]: “Thank you for meeting with me today in such a lively setting. Let’s dive right in. Can you explain how an individual becomes taxable in Portugal?”
[leaning back comfortably, gesturing towards the window where a tram zips by]: “Certainly. In Portugal, tax residency hinges on a few key factors. If someone spends more than 183 days, consecutively or otherwise, within Portuguese territory during any 12-month period starting or ending in a fiscal year, they’re considered tax-resident. Also, having a habitual residence here during any part of that period suggests an intention to maintain and use it as such.”
[A waiter momentarily interrupts, offering a plate of pastéis de nata, which both politely decline with a chuckle before continuing the discussion.]
“And what about the types of income that are taxable for these residents?”
[nods, picking up a napkin and doodling a quick chart]: “Taxable income under Portuguese Personal Income Tax, or PIT, includes employment income, business and professional income, capital gains, and more. Each category has its specifics, like capital income from dividends and interests taxed generally at 28%, with certain exceptions.”
[laughs as a child zooms past their table chasing a balloon]: “Seems like navigating tax law here is as challenging as catching that balloon! Now, what about non-residents?”
[smiling at the scene]: “Non-residents are only taxed on their Portuguese-sourced income. This includes employment performed in Portugal or income from Portuguese real estate.”
Tell us about the Non-Habitual Residents regime which applied for certain new migrants to Portugal. It was almost mythical in its status and was a huge success. What has happened to it?
[Laughs] “As mythical as the unicorn! It was good whilst it lasted. However, the NHR regime was terminated effective January 1, 2024. It still applies to taxpayers who were grandfathered in. In other words, those who qualified to apply for the regime in 2023 and became tax residents of Portugal up until December 31, 2024. The NHR status was particularly attractive because it provided beneficial tax treatment for certain types of non-Portuguese income for its users. For example, they might be able to enjoy overseas income in Portugal without any tax.”
“Unicorn indeed! How does Portugal handle capital gains tax?”
“Capital gains are typically taxed at 28%. But if you’re selling shares of entities in offshore jurisdictions, you’re looking at a 35% rate. Interestingly, gains from real estate are taxed on only 50% of the gain at progressive rates.”
[A hotel staff member accidentally knocks over a decorative vase in the background, causing a slight commotion but quickly resolved.]
“And what about other taxes, like on gifts or inheritance?”
“Portugal does not impose a gift tax per se, but stamp duty might apply at a rate of 10%. Inheritance involving assets in Portugal also triggers stamp duty unless exempted by relation, such as between spouses or direct descendants.”
[scribbling notes furiously]: “One final question, what are the peculiarities of non-cash assets taxes?”
“Importing non-cash assets like vehicles incurs various taxes and fees. VAT applies universally, adjusted by the type of goods and the value of transactions.”
[Both stand, signaling the end of the interview.]
[extending a hand]: “Thank you for these insights. I believe our readers will find them extremely valuable.”
[shaking hands]: “It was my pleasure. Always happy to clarify these complex topics.”
If you have any queries about this article on Private Client Tax in Portugal, or tax matters in Portugal more generally, then please get in touch.
If you are a tax adviser – whether from a legal or accountancy background – then we would love to discuss how you can become one of our ranks of Tax Natives. All you need is your local tax knowledge of Portugal and any other regions around the world
! For more information, please see here or get in touch.