Comment by The_suffocated
18 days ago
> a centuries-old tax loophole, abolished in April, that catered to the global rich. The nondomiciled—or non-dom status, as it is known—allowed foreigners living in the U.K. to pay tax only on what they earned domestically. Profits made abroad were ignored unless brought into the U.K.
I don't understand. Why is this a loophole? Why is money earned abroad and kept abroad taxable not by a foreign government but by the UK government?
For virtually every other jurisdiction, natural persons pay tax where they live, not where they source their income.
If I happen to work for a foreign corporation, I don’t get to skip paying tax.
In the US you pay taxes in the state where you earn the income and where you live. So for example if you own a pass-though tax corporation and it earns income in all states then you must file and pay taxes in all states.
Not true. This is only true for US which taxes your global income.
Most of the world taxes only income earned in that country.
> If I happen to work for a foreign corporation, I don’t get to skip paying tax.
Sure, because you earned it your country, and not in the country of domicile of foreign corporation.
EDIT: Correction, I see now that most countries do tax worldwide income, just that they have DTA so you offset taxes paid abroad.
We (the UK) have a very extensive set of double taxation treaties too. The point of non-dom status is that it doesn't even matter if your earnings were taxed elsewhere: they're still not liable in the UK.
It’s standard in Europe and many other countries to tax their “tax residents” on their worldwide income. The tricky part is that sometimes that external income is also taxed at source, but this is usually taken care of by tax treaties, which means that you pay the higher of the tax rates, but only once.
I live in europe, and I would be breaking the law if this would true. Would love to see some citations.
It's only the US which taxes worldwide income. It's not true for rest for the world.
Most countries tax worldwide income for the tax residents. Where the US is different is that US citizens need to report their income (and sometimes pay taxes) even if they don’t live in the US.
You may be breaking the law. It’s common to owe taxes on world wide income in your country of tax residence. I imagine this is the same across the EU but open to be corrected
https://taxsummaries.pwc.com/ireland/individual/taxes-on-per...
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Because it allows people to very easily funnel their income through offshore companies, and avoid being taxed on it because it’s “earned” in Cyprus or Cayman Islands.