What is Changing?
India is tightening its residency provisions specifically to push ‘stateless’ persons (Indian nationals), who are not liable to tax in any other country, within the Indian tax net.
In addition, in order to become non-resident in India you will have to stay outside of India for at least 240 days per tax year and as detailed above, Indian citizens will also need to be liable to pay tax in another country, by virtue of domicile or residence.
Who Will this Affect – What Can be Done?
Non-Resident Indians (NRIs) who are “Citizens of the World,” often find they do not stay anywhere long enough to trigger tax residence. Other NRIs are resident in countries that do not impose taxation on individuals. For both of these groups of NRIs, the changes will have a major impact.
Such NRIs will now have to accept Indian tax residency or ensure that they either cease to be Indian citizens or find a tax residence that is not too punishing in respect of their global income.
UK Tax Residence
NRIs in the above position could do far worse than to consider becoming tax resident in the UK.
UK tax residence can be triggered by a combination of connecting factors and days spent in the UK. By having a regular pattern of visits, having accommodation available, a spouse with you on your visits to the UK, and by doing some work in the UK, residence could be triggered by as little as a 46 day presence. Many NRIs spend some time in London and therefore a slight adjustment could trigger UK tax residence.
Whilst the UK is a ‘high’ tax jurisdiction, NRIs who are tax resident in the UK can enjoy a very favourable tax position thanks to the UK’s remittance basis of taxation. With proper planning, before becoming UK resident, it is possible to pay very little tax.
Giving Up Existing Citizenship
For those wanting to give up their existing citizenship and take up new citizenship, key problems can be; the amount of time that this can take and the commitment in terms of the time to be spent in the host country. To be eligible to apply for UK citizenship, for example, you would need to spend nine months a year in the UK for six years.
There are however some faster alternatives. With a significant donation, you can gain citizenship in Malta after 12 months. With a €2,000,000 investment into Cyprus real estate, you could secure Cyprus citizenship in 180 days.
St Kitts & Nevis Citizenship
A potentially faster and cheaper option is the St Kitts & Nevis Citizenship Programme, which can be fast tracked. This would enable you to secure citizenship, costing from US$186,000 (required donation and professional fees), within two months.
In addition, there is no requirement to visit St Kitts & Nevis.
A St Kitts & Nevis passport enables the holder to travel visa free or visa on arrival to all Schengen countries, Commonwealth countries, the UK and Russia.
St Kitts & Nevis Citizenship AND UK Tax Residence
A viable and attractive solution could be to gain St Kitts & Nevis citizenship while becoming UK tax resident. The advantageous UK remittance basis of taxation can be enjoyed by NIRs for up to 15 years.
If you require further information on any of the issues raised in this Information Note please speak to Peter Robertson at the Dixcart office in the UK: firstname.lastname@example.org or to your normal Dixcart contact.