Let us note right away that non-domiciles can spend the lion's share of their time in Foggy Albion and even hold a British passport. Their status is determined by the fact that they were either born in another country or have a father who lived abroad at the time of their birth. To obtain this status, it is enough to show tickets indicating regular flights to their homeland and prove an intention to return there permanently someday.
Among the non-domiciles there are also very wealthy people, including members of the list of the world's top billionaires published annually by Forbes magazine. Suffice it to name the Indian Lakshmi Mittal, the Russian Roman Abramovich, the Swede Hans Rausing, and the Egyptian Mohamed Al-Fayed. In total, by the way, 23 billionaires of such magnitude live in London.
Non-domiciles have one significant advantage – they pay income tax only on income earned in British territory. At the same time, money earned abroad can be transferred to the UK. To avoid being taxed, it needs to be structured as capital. Instead of the required 40%, they pay mere pennies. According to experts, due to non-domiciles, the treasury loses at least £1 billion annually. And it must be said that this attractive loophole in UK tax legislation is used by everyone who can. Out of 400 rich people earning more than £10 million a year, only one in six pays income tax. London is not a tax Mecca only for wealthy Americans, who, according to their country's laws, pay taxes on all earnings regardless of place of residence.
In 2005, 112,000 non-domiciles were registered in the UK. That figure is comparable to the population of such well-known tax havens as Monaco, Andorra and Liechtenstein combined. It is no coincidence that in April of this year the IMF called London and Bermuda the main offshore zones on the planet.
Of course, ordinary Britons are not happy with this state of affairs. Calls to repeal the law on non-domiciles, adopted back in 1799, are heard more and more often. While serving as Chancellor of the Exchequer, Gordon Brown himself ordered a report on this subject in 2002. However, it was never published, and the issue was soon swept under the rug. Labour ministers are in no hurry to abolish the tax privileges, fearing that the UK will lose its attractiveness to wealthy foreigners and they will take their billions to Monaco or Switzerland.
But many believe that it is too late to close this tax loophole. After all, London and the entire British economy have become thoroughly dependent on super-rich foreigners. In principle, the Conservatives offer non-domiciles a choice: pay taxes like all Britons, or keep their status but pay 25,000 pounds sterling each year to the host country's budget. According to their estimates, there are currently between 150,000 and 200,000 non-domiciles in Foggy Albion. Even taking into account that not everyone will pay, the new levy would yield approximately £3.5 billion a year.
Of course, for Mittal or Abramovich, 25,000 is a mere trifle, but tens of thousands of qualified specialists living and working in the UK will face a difficult choice. Not many have capital abroad from which it would make sense to pay the tax. Therefore, thousands of foreigners are already leaving. For example, to Switzerland, where the enviable status of 'tax fugitives'—as they are called there—is still unshakable.
But the Swiss Confederation was recently rocked by a scandal centered on one of the richest 'fugitives.' Multiple world champion in auto racing Michael Schumacher has been hiding here from high German taxes since 1996. The Formula 1 legend even registered... as unemployed, taking advantage of a local law that bans car racing and allows him to be considered a person without permanent income. Of course, Schumacher's main goal is to save even more on taxes. This time – on real estate. The ex-champion built a house on the shores of Lake Geneva worth at least €50 million! As Swiss newspapers noted, he tried to save on everything and even hired construction workers from Eastern Europe, to whom he paid peanuts. Of course, Michael Schumacher also did not forget about his own sports center. It consists of a gym, a large jacuzzi, a sauna with steam room, a solarium and a swimming pool. Near the castle, a helipad and a filling station have been built (all owned by Schumacher). The housewarming of one of the world's richest athletes, receiving unemployment benefits, was the last straw for the Swiss. Two years ago, the Social Democrats had already tried to amend the tax legislation to deprive foreign rich people of privileges. That time, however, they failed. And now at the beginning of this year, the 'anti-Schumacher' amendment was again submitted to parliament. True, the parliamentarians postponed the issue for six months and have not returned to it since.
Sergey LAVINOV.
Novye Izvestia