I am emigrating to Portugal to take advantage of the weather, and the ‘non-habitual resident’ tax regime. A UK company I own has distributable accumulated profits in it. Portugal will charge zero tax on UK-sourced dividends. But how long do I need to be non-resident in the UK to make sure I don't pay any UK tax on the dividends? It looks as if I have to be away four years but I'm not certain. Alternatively, if I go to France, I would like to avoid IFI (wealth tax on property assets over EUR 1.3 million. Do property assets in a limited company also count towards this value, or just properties which are owned personally?
Arthur Weller replies:
Look at HMRC’s 'Guidance note for Statutory Residence Test (SRT): RDR3' at page 77, and then page 71. You can see that when you return to the UK, you will have to pay UK income tax on the dividends received while non-UK resident, unless you were non-UK resident for five full consecutive years. With regard to France, if you look at www.bandmlaw.co.uk/site/blog/bandm-blog/the-new-french-wealth-tax-ifi-replaces-isf
you can see that the new IFI (as opposed to the old ISF) only taxes actual real estate, and not securities. Additionally, non-French residents pay IFI only on their real estate assets located in France. So, if you are not planning to become French resident, it should not be relevant to you. But I would advise you to ask this question of someone who knows more about French tax than I do.
This question was first printed in Business Tax Insider in July 2019.