Example 1: Gerard Depardieu
At the end of 2012, French actor Gerard Depardieu gave a fine example of tax migration when he moved from France to Belgium to protest against President François Hollande’s proposal to introduce a 75% income tax on high net worth individuals. Luckily, the Constitutional Council, which is the French equivalent of the Constitutional Court, refused to tax the rich this much. However, at the end of 2013 it agreed with a revised proposal of the Government, according to which, the maximum tax for individuals is 66 percent.
Under a thorough media scrutiny, the controversial artist pushed through and became a Russian citizen, a year and a half after cancelling his permanent residence in France. It is no secret that the driving force for going east was the unbearable French tax levy. Depardieu gained permanent residency in Saransk, the capital of Mordovia.
Last month, Depardieu has filed his first Russian tax return. It is not known exactly how much income tax he paid in Russia. But when one is registered as a private entrepreneur with an annual income below 60 million roubles (about 1.3 million EUR), the tax rate is 6 percent.
Example 2: David Beckham
In 2004, the British football superstar David Beckham moved to Spain that introduced a law allowing non-residents to be taxed at a flat rate of 24 percent on their Spanish income instead of the progressive rate for residents, whose top marginal rate by 2008 stood at 43 percent. Under this so-called “Beckham Law” (Royal Decree 687/2005), Spain saw its share of tax foreign players increase while nearby Italy, which had a similar top league, was waving its foreign players good bye in a tax migration exodus.
Also Denmark and Belgium introduced reforms that gave tax breaks to foreign soccer players. And just like Spain, their leagues experienced a sudden increase in foreign players. In Greece, on the other hand, the opposite happened: After the removal of a tax cap that effectively raised taxes on high earners, the top Greek players massively migrated abroad.
Example 3: Thousands of Americans
According to CNN Money, 3000 Americans relinquished their U.S passports in 2013. That number almost doubled relatively to 2011, when 1800 Americans gave up their passport.
CNN claims that the main reason of the emigration is The Foreign Account Tax Compliance Act (FATCA), a controversial regulation approved by the Democrat-Party-dominated Congress in 2010 with new policies coming to force in 2013.
Most Americans familiar with the concept of foreign financial institutions reporting on their affairs (and paying penalties if failing to do so) to the US government consider it intrusive. According to many citizens, it undermines the basic concept of national sovereignty.
Example 4: You?
Tax driven migration is a worldwide phenomenon. Thanks to the diversity of tax systems in various countries and the possibility of mobile and remote working, nowadays everybody is ‘free to go’.
Obtaining residence in a low tax country is something Freemont Group
can assist you with so please do not hesitate to drop us an email and enquire.