Tax exile

A tax exile is a person who chooses to leave a country with a high tax burden and instead, reside in a foreign nation or jurisdiction which takes a lower portion of earnings. Going into tax exile is a means of tax mitigation or avoidance.

Legal status

In most countries one becomes liable to be taxed in that country if one is resident there. For taxation, residence is often defined as spending six months (or some other period) in any one year in the country, and/or having an abiding attachment to the country, such as fixed property.

United Kingdom rules

A very simplified 'rule of thumb' is that under UK law a person is "tax resident" if that person meets any of the residency tests set out under the Statutory Residency Test introduced on 6 April 2014. The reality of the matter is far more complex and unclear.

United States rules

Under the Internal Revenue Code, the income of a U.S. citizen is taxable without regard to the citizen's place of residence, and, significantly, without regard to where the income is earned or produced. U.S. citizens can completely eliminate tax liability only by both moving abroad and renouncing citizenship, but if they continue to earn money inside the United States, they will still be liable for taxes as if they were guest workers. However, substantial tax savings can be had by U.S. citizens living abroad through the Foreign Earned Income Exclusion (FEIE).

Certificate of Loss of Nationality of the United States, issued by the United States Embassy in Asuncion, Paraguay. According to the document, the subject had acquired no other nationality at the time of issuance; hence leaving him Stateless.

The process of renunciation requires the citizen to appear at a U.S. embassy or consulate, and sign various documents stating he or she is of good mental health, is acting without force or duress, and realizes that the renunciation is irrevocable. It is a common misbelief that one must have another citizenship when they renounce. However, those who will be rendered a stateless person after their renunciation are warned of the consequences.

The State Department then reviews the documentation and may decide to bar the person from entering the United States – even for visits. This decision is based upon whether the person renouncing is not doing so for tax reasons alone. For the purposes of the IRS, the effective date of the renunciation becomes the final day that income taxes are due – assuming that all U.S. assets are liquidated and have left U.S. jurisdiction. See also Reed Amendment (immigration).

An immigrant who has been granted permanent resident status in the United States is generally treated as a citizen for tax purposes unless his or her residency lapses. An immigrant not legally admitted for permanent residence (such as a guest worker) becomes liable for U.S. taxes if he or she spends more than 122 days in the year in the United States.

Famous tax exiles

In popular culture

See also


  1. "Mick Ralphs Biography". Retrieved 2013-01-23.
  2. Chris Tryhorn, City correspondent (2004-06-23). "Who are the Barclay brothers? | Media | MediaGuardian". Guardian. Retrieved 2013-01-23.
  3. "David Bowie". Montreuxmusic. Retrieved 2013-01-23.
  4. "Michael Caine comes full circle". WalesOnline. 2009-11-02. Retrieved 2013-01-23.
  5. Corbett, Ronnie. And it's goodnight from him.... Penguin, 2006. ISBN 978-0-7181-4964-2. p. 194.
  6. Lesley, p. 355
  7. Lesley, Cole. The Life of Noël Coward. Cape, 1976. ISBN 0-224-01288-6. p. 395
  8. Collins, Laura (25 February 2013). "L'Etranger: Gerard Depardieu and France part ways". The New Yorker. Condé Nast: 58–65. Retrieved 6 July 2013.
  9. "Rocker-actor Lenny Kravitz has reportedly been tapped to portray Marvin Gaye in filmmaker Julien Temple's forthcoming biopic". WENN. Nov 20, 2012.
  10. "Stingy Stones avoid tax on £240m fortune | Mail Online". 2006-08-02. Retrieved 2013-01-23.
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