Monte Carlo Conference 2022

23–25 February 2022

Meeting Summary
  • 1. Inequality and the OECD Inheritance Report: an outlook on inheritance and wealth taxesLaura Cullinane
    • The OECD Report was issued last May, dealing for the first time with personal taxation and its social implications. It analyses data. It examines estate and inheritance taxes in its many varieties. It favours these, and gift taxes, over wealth tax. It notes that the proportion of assets held by the wealthy has risen recently and is expected to rise further. The Report considers the effect of tax on individual behaviour – e.g. exemptions for close family members, the treatment of lifetime gifts, separation of ownership and business assets, taxation of unrealised capital gains. The Report makes recommendations of measures to reduce inequality. Inheritance tax needs to be reformed and provisions for reporting strengthened. 

  • 2. The Future of CyprusEmily Yiolitis
    • Cyprus remains divided between a Turkish part and a Greek part, despite many attempts at unity. The inclusion of women in the mediation process may have more success, creating a unified rather than bi-zonal state. Trust-building measures are needed, and a contingency plan for the event of failure. Peace must be simple and understandable and involve women from both the Greek and Turkish communities. 

  • 3. Working from Home: the tax challengesMark Hunter
    • Working from home is going to stay, though it puts strain on tax systems. There is a danger that it results in a change of residence of the company, particularly when virtual meetings are involved. The activities of the individual may result in residence or permanent establishment in the country where they work. Similarly, there are concerns about creating a lack of ‘substance’, shifting treaty residence, charging the exposure to the global minimum corporation tax rate, or creating transfer pricing problems. It may have other corporate consequences – e.g. to payroll management. Some jurisdictions are more inclined to make allowances for the effect of Covid. The change of working habits certainly raises concern for whether employees pay too much or too little income tax. It is an area in which we can expect future developments. 

  • 4. The Taxation of Cryptocurrency: the UK experienceRichard Citron
    • Digital currencies emerged from the financial crisis of 2007. They are networks of connected information. The price of the ‘token’ is determined by the market. Some of the 8000+ cryptocurrencies have risen greatly; others have disappeared without trace. HMRC treat the profit on disposal as a capital gain of a UK-sited investment; they issued guidance in 2014, 2019 and again in 2022. However, this treatment does not follow a long series of decisions in what is the nature of ‘trade’, which suggest that buying and selling cryptocurrency may be trading. It may also be important to know where it is sited. HMRC look at the location of the Private Keys and say that crypto is sited where the owner is resident. HMRC apply pooling rules. The usual capital gains tax is 20%. The HMRC view may change, as it did in relation to residence and IR20 and the situs of loans; a White Space Disclosure may be wise; or the taxpayer may be protected by the Practice Generally Prevailing doctrine. 

  • 5. A Fresh Look at MaltaDavid Borg
    • Malta has a long history – from the Phoenicians in the ninth century to independence from the British in 1964 and membership of the EU. It shares many of the advantages and problems experienced by small states. It has a developed tax system and is committed to tax transparency. It is remedying the deficiencies which caused it to be placed on the Grey List, building on existing infrastructure and human capital.


  • 6. Planning for French ResidenceJames Howes
    • France is the very opposite of a tax haven. Tax residence – domicile fiscal – is a criterion for tax liability – a foyer, business activity or centre of economic interest in France. The devolution of a resident’s estate is strictly regulated by law, with some exception for foreign nationals. Lifetime gifts are not tax-exempt. Life insurance wrappers enjoy some advantages. New residents retain the historic base cost of their existing assets. Bank accounts outside France are to be declared annually. France levies a wealth tax on land: there is a five-year grace period for new residents and bank debt is deductible (subject to limitations). Non-resident owners of French property may be exposed to income tax, capital gains tax, wealth tax and estate duty. SCI shares are moveable property. Trusts are treated as transparent and on the death of the settlor his liabilities may descend to a ‘beneficiaire’ in his place. There are reporting requirements for trusts. Offshore structures are the target of Article 123 bis of the General Tax Code.


  • 7. ‘Domicile’ in English Common LawMatthew Shayle
    • Domicile is relevant in many countries. No-one can be without a domicile or have more than one. Domicile must relate to a single system of law. A change of domicile must never be presumed. Domicile is determined by its own law. A person’s domicile of origin is acquired at birth – if legitimate, that of his father. For children under 16, domicile is that of his father if parents married. Women married before 1974 acquired their husband’s domicile.

      Domicile of choice requires physical presence but intention to remain permanently or indefinitely: ‘deemed domicile’ is a UK tax concept for non-UK income and gains from 2017. It applies to returners who are tax resident born in the UK with a UK domicile of origin and to long stayers with 15 years residence out of 20. Domicile offers some tax planning opportunities – the remittance basis regime exempts unremitted foreign income and capital gains. There is not inheritance tax on foreign real estate, for 15 years, extendable by settlement.


  • 8. Forced Heirship and Firewall LegislationPaolo Panico
    • Forced heirship is found in France. Lifetime gifts can be clawed back. It did not prevail over the Californian law in the Jarre case. The EU Succession Regulation provides for determining applicable tax. Courts in the EU have come to different conclusions about the applicability of forced heirship under ‘ordre public’ (public policy/provisions). The Cayman Islands Trusts Law offers the settlor the opportunity to choose the governing law and thus exclude forced heirship claims. Firewall legislation has been introduced in Cyprus and elsewhere firewalls are permitted – e.g. in Malta. Property situated in the US is immune from foreign forced heirship claims.  

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