Cannes 1980 meeting

The test of corporate residence varies from one jurisdiction to another – the usual test is that of the seat of “effective management”, but in some countries it is that of place of incorporation, statutory seat, domicile or nationality, and in the U.K. that of “management and control”. The British jurisdictions look to the head; continental jurisdiction to the centre of gravity. The jurisdiction where the trade is carried on or where the economic cycle is completed, or the jurisdiction where the income otherwise has its source may also impose tax.
The expression “management and control” refers to the management by the Board of Directors and not to shareholder control. “Day to day management” may not always involve the real decision-making process, but looks rather to where the visible activities of the company are conducted. “Seat of effective management” often seems to be an extension of the concept of “permanent establishment”.

Once a company is found to have a place of management it may find it difficult to avoid the attribution of other income to that place of management.

Acts of directors, keeping of books and records, management and executive acts, accounting and other financial functions – all these are factors to be considered in deciding where a company is resident. In general, there is no problem in holding board meetings in Luxembourg, Switzerland (though there may be an advantage in moving from one Canton to another) or the United States. A foreign company is not taxed in the U.S. unless it carries on business through an office or fixed place of business there, and even then only on income “effectively connected” with that place of business. Germany seems also a good location – though the German tax authorities are strict, and the company should be ready to show that the day to day activities of the company are conducted elsewhere. France is also possible, though it may be prudent not to have regular meetings in the same place. Belgium, the Netherlands and Denmark are possible for occasional and irregular meetings.

As a place for day-to-day management, one may first consider Monaco – either using a Monegasque management company or an administrative office of the foreign company itself.

Jersey and Guernsey permit day-to-day management, so long as the company is not “doing business” there¹ . Agreement can be reached with the tax authorities that the administrative office will suffer an effective 4 % tax ². Similar agreements can be reached in the U.K. and the Irish Republic – though the tax rates are higher³ . An alternative may be a Luxembourg holding company, which can have an office in Luxembourg. The United States and Liechtenstein present other options, and so does France, but there it is generally wise to use a separate management services company with an office in France. In Belgium, Italy and the Netherlands one should use an independent agent for such activities.

Accounting and financial services can always be conducted by independent agents.

A company may have a mere address in the U.K., Switzerland, Channel Islands, the Irish Republic or Italy. A physical presence may be maintained in U.K. or Monaco, in limited circumstances in Belgium or in exceptional circumstances in Liechtenstein. In France and Switzerland, a separate service company is to be preferred, as indeed it is generally in other jurisdictions also.

FOOTNOTES (MAY 1998)¹ In certain cases, Jersey and Guernsey now also permit management and control, as does the Isle of Man.² The effective rate is now 2%.³ Tax is generally computed on a cost plus basis, normally at cost + 12%.

The removal of Exchange Control in the U.K. has led to increased use of U.K. non-resident companies, holding non-U.K. sources of income either as beneficial owners or as trustees.
It is generally thought that the U.K. government cannot change the tax systems of the Channel Islands, the Isle of Man or Giibraltar without the consent of the inhabitants. Recent developments in relations with Spain may help or hinder the use of Gilibraltar.

All four territories have company laws following the old U.K. law. In Jersey and Guernsey it is difficult to give security for charges.

Tax-exempt companies are available in each jurisdiction at a small licence fee : a non-resident Gilbraltar company pays no licence fee. Exempt companies (except Giibraltar exempt companies) cannot trade locally. Each of the territories recognises trusts, but there is no developed trust law in Jersey or Guernsey.

Partnerships in the Channel Islands have some interest in the context of their treaties with the United Kingdom. Guernsey has become popular for captive insurance companies, but the Isle of Man and Gilbaltar permit the establishment of captives there.

Companies are resident in those territories if they are “managed and controlled” there. A company is resident in Gibraltar also if it is controlled by Giibraltar residents.

In the Isle of Man, dividends are deductible in computing profits; the other territories have a classical system. Capital allowances are available in all territories. Losses may be carried forward subject to different rules in different territories. Only the Isle of Man has a form of “group relief”. Partnerships are taxed in somewhat different ways; trusts are taxed in the same way in all the territories. Only Giibraltar has estate duty.

There are tax treaties with the U.K. – except for Gibraltar. Each territory has a form of anti-avoidance provision, but the effect of these is questionable. Only the Isle of Man has V.A.T.

Andorra is still a feudal society, which has not changed for 700 years. It is an autonomous Principality, with a 32-member council and two co-princes – one French, one Spanish. The languages are French, Castilian Spanish, and Catalan. There is no general income tax and none is proposed. There are no capital taxes and no death duty. There is no international debt. There are no political parties and little government. Government revenue is derived from a small import duty.
An individual wishing to spend time in Spain, Portugal or France, may establish his domicile or base in Andorra. The new airport will soon be open. The cost of living is lower than in France and many things are cheaper than in Spain. Prroperty is dear. A foreigner can own one apartment or chalet; “rates” are payable on property.

Andorran banks are efficient and have numbered accounts, though higher interest rates are paid in Spain.

Andorran companies are not available to foreigners, but the Principality is suitable for the administration of companies incorporated elsewhere – which is especially useful if the company holds Spanish property.

Andorrans respect privacy. The country has good communications. Much of the shabby property is being replaced by modern buildings.

HONG KONG is an ideal base for a holding or headquarter company. The rate of tax is 17% on corporations, 15% on individuals. Income arising outside the Colony is not taxed. There is no capital gains tax, no withholding tax on outgoing interest, dividends and royalties, but there is estate duty.
The place where credit is made available to the borrower determines the source of interest; exceptionally, interest paid by Hong Kong deposit-taking companies is deemed to have a Hong Kong source. Only 10% of a royalty which has its source in Hong Kong suffers Hong Kong tax. Royalties from patents, designs, trademarks and know-how used in Hong Kong itself are deemed to have a Hong Kong source. There is a “closely connected” rule by which transfer prices between a resident and connected nonresident may be effectively adjusted, by deeming the nonresident’s entire income to have a source in Hong Kong.

Resident shipowners pay Hong Kong tax on shipping profits- residence in Hong Kong for this purpose includes incorporation in Hong Kong, But the amount of profit may be reduced bya bareboat charter to a non-resident or by interest charges or capital allowances. Where a non-resident sells goods in Hong Kong through an agent, tax may be based on a percentage of turnover. Re-invoicing and like transactions between non-residents should be done by an agent outside Hong Kong.

There are no tax treaties with Hong Kong : a “stepping stone” may be used to obtain treaty benefits.

An executive is liable to tax on his remuneration arising from services rendered in Hong Kong, unless he is in the Colony for less than 60 days in the year.

SINGAPORE’S tax system is territorial in that foreign income not remitted to Singapore is not taxed in the hands of a resident, but some attempts have recently been made to tax non-residents on certain foreign income remitted to Singapore. The tax rate is 40%, which is imposed on dividends, interest and royaltiess having a Singapore source. Interest and royalties deductible for Singapore tax are deemed to have a Singapore source. Interest and royalties paid through a permanent establishment situated outside Singapore suffer no Singapore tax.

Interest on deposits with an authorised bank is exempt in the hands of a non-resident.

A Singapore-resident company may become non-resident, but the anti-avoidance provisions of the Act may perhaps be applied.

All profits from ships registered in Singapore are exempt.The “closely connected” rule is similar to that of Hong Kong.

Singapore has a large number of tax treaties ; a foreign permanent establishment of a Singapore company may benefit from a treaty without causing any Singapore tax liability – but some treaties (the U K. treaty, for example) limit relief to income remitted to Singapore.

Section 30 of the Act penalises excessive accumulations, but does not appear to be applied in practice.

The international executive is taxed, at progressive rates up to 40%, on remuneration derived from Singapore; but director’s fees are taxed at a flat 40%.

Income derived by an Australian resident from a foreign source, which is subject to tax in the country of source (the source being determined under the Australian rules), is not subject to Australian tax – section 23Q. Dividends suffer a 30% withholding tax and interest a 10% withholding tax. The tax on dividends is reduced by treaty to 15% but the tax on interest is not reduced. Royalties are widely defined : they suffer tax at 51%, but this is reduced to 10% under the treaties (except the New Zealand and Philippines treaties, where the rates are 15% and 25% respectively).

No AUSTRALIAN tax is payable on incoming dividends, but only public companies can accumulate without distribution.

There are anti-transfer-pricing provisions in the law, and Australia has a number of tax treaties – under which much information is now being exchanged.

Governments are realising that exchange of information under tax treaties is a potent weapon against tax avoidance. There are several types of information exchange:
1. Routine: the U.S. Revenue Service supplies an enormous amount of information about U.S. dividends; this used to be reciprocated only to a small degree, but the U.S. is now receiving more and is making use of it.

2. Spontaneous: Article 4 of the EEC Directive calls for a spontaneous transmission of information in certain circumstances. The policy of the Netherlands tax authorities when giving a ruling is expressly to reserve its right to pass on all information to other EEC countries.

3. Pursuant to specific request: this is becoming more common. The U.S. Model treaty permits requests for information about all taxes, and not merely those with which the treaty is concerned (to which the OECD model is limited). There have been several Court decisions in this area – e.g. the Swiss have refused to provide documents to the U.S. on the ground that their obligation is limited to the provision of information, and their Supreme Court has upheld this refusal; in the U.S. Burbank decision, it was held that the Internal Revenue were entitled to obtain information from a U.S. taxpayer which related not to U.S. tax but to Canadian tax, and was required for the purposes of exchange under the U.S./Canada treaty.

In U.S. v. Philips, a Canadian carnival “skimmed” its profits, using “bag men” who were U.S. tax payers. The Canadians obtained help from the U.S. Internal Revenue Service and in return supplied information to them without any formal request being made.

Notes Applicable to the Summary
Captive companies may be formed in certain countries. A licence for the formation of a captive insurance company is required in the Bahamas, the Cayman Islands and Nauru.
No licence is required in a number of other countries but none of them are among the zero tax jurisdictions. Costa Rica and Panama are, however, among the countries taxing on a territorial basis; Switzerland regards a trust as transparent and is, therefore, particularly suitable for foreign income arising under a trust for the benefit of foreigners only.

The same applies to the United Kingdom as regards trusts in which a non-resident has a life interest, The countries on the list which have laws based on the law of England regard all trusts as fiscally transparent.

The Working Papers also list countries where a mutual fund may be formed, countries which permit the issue of bearer shares, “stepping stone” countries, suitable places for emigration and countries which permit numbered bank accounts.

Primary motives for use of a tax haven may be to seek political or business freedom. But often a tax haven operation simply does not make money, and would be better conducted elsewhere. This is more often true of trading concerns than purely financial operations. Trading companies often have difficulties with personnel and communications, and tend to have highoperating costs in tax havens. However, with large shipments, simple routines for ordering, and adequate time margins for documentation, a trading operation in a tax haven may be feasible. A good test is to see whether others are conducting similar operations in the chosen tax haven.
Will the operation generate more net (after tax) profit in the tax haven than in a high-tax jurisdiction? How contingent are the tax savings foreseen? The evaluation is finally a business judgement: sometimes by aiming for less tax saving, one may make the operation more viable – e.g. by locating the highly technical activities outside the tax haven.

The costs of an investment or holding company tend to be at more acceptable levels, but in this area it is very difficult to produce satisfactory results for a small operation.

The client and his adviser should always pay a visit to the chosen haven to discuss the establishment of the operations in great detail. Judgement as to which service organisation, if any, is to be used, is of course critical: a reliable introduction is important. The organisation should have staff sensitive to the tax considerations concerned and with the expertise required for the particular business venture – e.g. insurance expertise for a captive insurance company. The staff should understand the tax parameters governing the fiscal success of the enterprise. If “mind and management” is to be in the haven, the role of the client should be discussed fully. An experienced organisation can make useful practical suggestions. Government fees and duties should be taken into account – stamp duties, for example. Care and judgement is required in choosing the banks and other financial institutions, lawyers, and auditors: the client should make direct personal contact with the persons intended to be employed. An audit of a tax haven operation is generally desirable.

Problems can emerge after the organisation has been set up: a continuing operation needs to evolve, and the tax adviser should review the tax aspects at regular intervals, particularly in the light of changing law and practice in the client’s home country.

The client must learn to discipline himself, so that he does not prejudice the fiscal success of the venture by interfering with its management or transactions. With a large company, staff not concerned with the initial planning may inadvertently take steps inconsistent with the structure required for tax purposes.

Seychelles consists of some 90 scattered islands with a population of 60,000. The official language is English, but Creole is the lingua franca and French is widely understood. After the 1977 Coup d’Etat, the government is socialist, with a policy of economic diversification. The currency is the Seychelles rupee, currently 3.56 rupees to the U.S. dollar. There is no intention of introducing exchange control. There are numerous banks and good accounting and insurance services. Communications are good – direct dial telephones are due to be introduced in 1981.
The legal system is based on the British system. The civil and commercial codes are basically French.

Foreigners can acquire land only with permission. A fee of 1% is charged for a direct acquisition of land, plus 9% stamp duty. For the acquisition of shares in a land-owning company there is a standard 500 rupee fee, plus stamp duty at 2 _%.

The Companies’ Act is based on the present U.K. Acts. Provision is made for private companies – which may not have corporate shareholders. Off-shore companies and foundations (or trusts) may be formed under a 1978 decree : these must not operate in Seychelles. These entities are not governed by the Companies Act and are exempt from all taxes.

In 1976 an Act was passed to make provision for off-shore banking. An annual fee of $25,000 is charged.

In 1978 a new Income Tax Assessment Decree was enacted : the rate of tax is 35%, but extra-territorial income is not taxed (expenses incurred in generating this income not being deductible). There is no capital gains tax, but a vague provision in the Act may have the effect of taxing certain gains arising in Seychelles.

Seychelles is a useful base for an intermediate holding company.

There is no withholding tax on dividends paid out of income arising outside Seychelles. Interest arising to enterprises which are not financial institutions is tax-free, wherever arising.

Seychelles may be used as an employment base. New legislation exempts from tax salaries paid in respect of overseas employment, but 15% social security contribution is chargeable.

Perhaps the most interesting off-shore vehicle is the Exempt Entity. There is an annual fee of $425. The exemption covers stamp duties as well as tax, and any exchange control would not apply to an Exempt Entity. No audited accounts are required by statute. The initial registration fee is $225. No-par value shares and bearer shares are permitted. There is a provision for change of domicile : a foreign company may transfer its domicile to Seychelles, and a Seychellois Exempt Entity may transfer its domicile elsewhere.

The law allows consular officers of Seychelles to register Exempt Entities : at present this service is available only in Zurich.

There are moves by government to permit Exempt Entities to opt for a low-tax status instead of total exemption.

Seychelles is well suited for a base for business in Africa or the Middle East.

For the purpose of establishing the use of tax havens they may be divided into five groups :
Zero tax jurisdictions, those levying tax on a territorial basis, countries which do not tax the foreign source income of non-residents, those exempting companies engaged in international business and low tax countries with treaty relief.

The zero tax jurisdictions in the Caribbean are suitable to any transaction because of the total lack of governmental requirements. Nevertheless a choice is occasionally to be made : the Caribbean should not be used for business with a country which is politically at loggerheads with the United States, or with a country which operates racial discrimination as a matter of policy. Bermuda is perhaps the most universally acceptable jurisdiction.

The Bahamas and the Cayman Islands have a large number of banks and trust companies.

St.Vincent is also among the countries which exempt companies engaged in international business, and so are Antigua anid Grenada. The type of legislation there in force is modelled on the example set by Jamaica and Barbados, and generally does not tax foreign trading income but imposes a 2_% tax on foreign investment income (Barbados now taxes foreign trading income at that rate as well). Cyprus has an exemption for shipping companies and some others; Israel exempts international trading companies.

The Netherlands are mentioned among the low tax countries with treaty relief because a company pays no tax there on its direct investment in companies paying tax in other jurisdictions.

The Netherlands are also among the countries taxing on a territorial basis in that a company does not pay tax on profits of a foreign branch which are taxed elsewhere. Tax on outgoing distributions is, however, high.

Among the other countries in this category the B.V.I. levies a 15% tax, but as that is equal to the U.S. withholding tax on U.S. dividends there is in effect no liability for B.V.I. tax (apart from a licence fee calculated at l% of a company’s assets).

The Republic of Ireland is less attractive with its 10% tax on manufacturing profits. Cyprus is among the most attractive; the benefit of its treaties with other countries are available to any one willing to suffer Cyprus tax at the rate of 4_ %.

Luxembourg is well known as a basis for holding companies, with an effective 2% tax on outgoing dividends. Other possibilities are Liechtenstein, Nauru and the Netherlands Antilles, but the taxation on outgoing dividends in Liechtenstein reduces the attractiveness of that country.

Interest on deposits with banks, savings and loan associations, or insurance companies is exempted from U.S. tax unless it is “effectively connected” with a U.S. trade or business. So is interest on deposits with U.S. branches of foreign banks (whether or not “effectively connected”). Interest paid by foreign companies with less than 50% effectively connected U.S.-source income or paid by domestic corporations with less than 20% U.S. source income, whether or not effectively connected (“80/20 corporations”) is exempt. Treasury bills with less than 6 months maturity yield exempt interest. Municipal bond interest is tax free, but the rates are not attractive to non-U.S. investors. With the aid of a finance subsidiary in e.g. the Netherlands Antilles, bond interest may be paid free of U.S. tax to non-U.S. persons. Negotiations are going on between the U.S. and the Antilles and with the B.V.I. which may result in substantial changes in the tax treaties between the U.S. and these countries. Treaties provide sometimes for a zero rate and sometimes for a 10% rate of withholding tax on interest, in place of the standard 30%. In the absence of a treaty, dividends from foreign companies with less than 50% effectively connected U.S. income or domestic companies with less than 20% U.S.-source income, are free of U.S. tax. Dividends of a foreign company may be generally exempted by the relevant treaty. This is true of the Netherlands Antilles and the B.V.I.
Treaties reduce the dividend withholding rate generally to 15% for portfolio investment or 5% for direct investment. The 5% basis may be obtained only after enquiry by the I.R.S. into the circumstances of the investment.

With real estate, the allowable deductions generally offset the rent to leave no net taxable income. Methods have been developed of eliminating the gains on the sale of the property, but these are currently under examination by Congress. There is a move to impose a 28% capital gains tax on gains from sales of real property or of shares in real property companies. A 5-year period of grace will be allowed, so that the treaties affected may be re-negotiated – notably the treaties with Canada and the Netherlands.

The income of a “grantor trust” is taxable on the grantor, not on the beneficiaries. This works to the advantage of the parties where the grantor is a non-resident alien but the beneficiaries are U.S. tax payers. In these circumstances the beneficiaries receive non-taxable gifts. It may be desirable to use, a trust with more than one grantor – so that the death of a grantor does not cause the trust to cease to be a grantor trust.

Interest paid by a partnership to a partner is not treated as a distribution of a share of profits. A German resident, for instance, could receive interest exempt under the U.S. treaty, which interest is nevertheless deductible in computing the profits of the partnership for U.S. tax purposes; in Germany, however, the interest payments would be treated as a partnership distribution, and be free of German tax accordingly (but nevertheless be taken into account in determining his rate of tax on his taxable income).

Foreign companies are not taxable in the U.S. except, as Eric Pfaff said earlier, on “effectively connected” income. Many pre-1966 treaties – e.g. the Swiss, B.V.I. and Netherlands Antilles treaties – exempt all foreign source income, including that which would be “effectively connected”.

The U.S. multinational using the Netherlands Antilles to issue Eurobonds, or the Argentinian resident investing in the U.S. through a Netherlands Antilles company, would be regarded as “treaty shopping”. Recent letter rulings indicate that the I.R.S. will tolerate treaty shopping to some extent. But some new treaties – e.g. with Iceland, Finland, Norway, Trinidad and the United Kingdom (and some proposed new treaties – including that with Cyprus) counteract the use of companies in those territories for the benefit of residents of other countries.

The Islands are a British Colony. They inherited the English common law and equity. They are some 500 miles off Miami, at the South East end of the Bahamas archipelago. The population is 7,000. The climate is “not oppressive”. There is no tax except small testamentary duties, a departure tax, customs duties and stamp duties.
The Colony has little infrastructure but has the stability which comes from colonial status, a small population, and a democratic constitution. There are U.S. military installations, and it is part of the American home security zone.

The constitution derives from a British Order in Council of 1976. There are elected members of the Legislative Council but considerable power is reserved to the Governor and thence to the U.K. government.

Laws must have the consent of Westminster as well as that of the local community. The objective of the new laws was to introduce regulated tax exemption, so that such exemption would remain entrenched in the laws for the future.

The Companies’ Law follows the U.K. pattern. The new laws provide a measure of anonymity without giving scope for dishonest enterprise.

Like the other new laws, the International Company Registration and Certification Ordinance has the approval of the Foreign and Commonwealth Office. At the time of the Conference, this law had not yet been enacted, but has passed its second reading in the legislature. The Act will create an Authority. It defines “International Company”. Provision is made for the appointment of an International Registrar and for the participation of the government in the shares of the International Registrar.

An International Company requires a certificate and a local agent. The agent has the responsibility of ensuring that his company continues to comply with the provision of the law. The Authority may make enquiries into the affaires of an International Company, as to whether a certificate should be withdrawn, but there is no power to enquire into the affaires of an Applicant company.

As well as being exempt from tax, an International Company is exempt from various requirements of the Companies’ Ordinance, and may dispense with the word “Limited” in its name.

Section 15 of the law imposes requirements of secrecy on the Authority and its staff. The Islands have a statute providing for confidentiality, and this is reinforced by the common law.

Application for banking licences will be closely scrutinised, and licences may be revoked. The Colony does not intend to allow its off-shore banking business to be in any way productive of scandal. However, the law expressly permits international financial institutions freely to transfer assets in and out of the Islands.

The effect of the constitution is that these permissive laws would be extremely difficult to change to the disadvantage of persons using the tax-haven facilities of the Islands.

The U.S. does not tax a Virgin Islands resident on any income – not even income arising in the United States.
The U.S. Code has effect in the Virgin Islands, but as a separate tax system – as a ” mirror” of the U.S. Code. The Organic Act provides that a Virgin Islands resident satisfies all his tax obligations by filing a return in the Virgin Islands, and has no obligation to file any return in the United States.

No U.S. withholding tax is charged on dividends or other payments to a Virgin Islands resident. Revenue ruling 80/40 recognises that U.S. domestic corporation can be resident in the U.S.V.I.: it seems that a foreign-incorporated company can also be resident in the U.S.V.I. if it has its management and control there. A Court will probably look at all the facts and circumstances in deciding a question of residence: a U.S. domestic corporation wishing to be considered resident in the U.S.V.I. should not only hold its directors meetings there but should also have an active business there.

Income arising to a foreign corporation from a source outside the U.S. Virgin Islands, unless “effectively connected” with a business conducted in the U.S.V.I., is not “income” in the U.S.V.I., by virtue of S. 882 (b) of the U.S. Internal Revenue Code.

A foreign – incorporated company is still a “foreign corporation” for these purposes, notwithstanding that it is resident in the U.S.V.I. And a U.S. – incorporated company is “foreign” for these purposes. A U.S. – incorporated company has the advantage that it is not affected by the U.S. anti-avoidance provisions – the so-called “Pentapus”.

The U.S.V.I. are not generally fiscally attractive as a place for individuals to reside, but U.S. citizens may find it advantageous to move their residence from the U.S. to the U.S.V.I.

Income tax and (as regards U.S. citizens only) estate and gift taxes are extended to the U.S.V.I. but not other taxes – e.g. the 4 % excise tax on insurance premiums.

If a U.S.V.I. – resident company’s income is more than 50 % from non-U.S.V.I. sources, no withholding tax is levied in the U.S.V.I. on its dividends. A U.S.V.I. – resident company may own a U.S. domestic corporation. A U.S. domestic corporation frequently benefits from tax treaties, but if resident in the U.S.V.I. suffers no U.S.V.I. tax and no U.S. tax.

The attitude of the U.S. Internal Revenue to these uses of the U.S.V.I. is uncertain. The “equality principle” – that the U.S.V.I. cannot tax at a greater rate than the U.S. – has been recognised in some of the decided cases, but the Court may be unwilling to hold that the tax in the U.S.V.I. should be lower than the corresponding U.S. domestic tax.

A proposal to Congress to extend the U.S. domestic jurisdiction to the U.S.V.I. has met with considerable opposition in the Islands, but it seems likely that eventually Congress will make some changes to prevent the U.S.V.I. being used as a tax haven.

A residence permit is required to reside in ANDORRA. This is easy to obtain, but a work permit or business permit is more difficult.
There is no Exchange Control or direct tax. Middle-aged, wealthy immigrants are encouraged.

For DENMARK, a residence permit is required, even for E.E.C. nationals. Citizenship may be acquired. There is Exchange Control, a sophisticated tax system with income tax rates up to 66.6 % (reached at the equivalent of U.S. $ 20.000 a year).

A residence permit or work permit is needed for FRANCE, except for E.E.C. nationals. Citizenship will normally be available after 5 years. There is Exchange Control. Taxes on income (which includes capital gains) are on a progressive scale. LUXEMBOURG has no Exchange Control, but certain reporting requirements. Income taxes and capital taxes are levied.

Residence and work permits in ISLE OF MAN are issued to immigrants with means or with skills wanted by the government. Income tax is at the rate of 20 %, but there is no Exchange Control.

It is easy to obtain. a residence permit in MONACO but difficult to set up a business. French Exchange Control applies, but there is no personal income tax.

In the NETHERLANDS some nationals need residence or work permits. There is little Exchange Control, but income taxes and capital taxes are levied.

A residence permit is necessary in SPAIN. Work and business permits are not easily obtained. A liberal Exchange Control system is in force; income tax and capital taxes are charged.

Residence permits for SWITZERLAND are not easy to obtain each canton issuing its own. There is no Exchange Control, income and capital taxes are at modest rates.

Residence permits for U.K. are required, except for E.E.C. nationals. There is no longer any Exchange Control. Income taxes and capital taxes are levied, but non-domiciled individuals are very favourably treated.

People who have moved to another country often find themselves drawn back to their countries of origin. An immigrant needs to “fit” in his new country. Countries with high taxes may, like the U.K., offer tax advantages to newcomers.