zlacker

  > a centuries-old tax loophole, abolished in April, that catered to the global rich. The nondomiciled—or non-dom status, as it is known—allowed foreigners living in the U.K. to pay tax only on what they earned domestically. Profits made abroad were ignored unless brought into the U.K.

I don't understand. Why is this a loophole? Why is money earned abroad and kept abroad taxable not by a foreign government but by the UK government?

>>The_su+(OP)
For virtually every other jurisdiction, natural persons pay tax where they live, not where they source their income.

If I happen to work for a foreign corporation, I don’t get to skip paying tax.

>>The_su+(OP)
It’s standard in Europe and many other countries to tax their “tax residents” on their worldwide income. The tricky part is that sometimes that external income is also taxed at source, but this is usually taken care of by tax treaties, which means that you pay the higher of the tax rates, but only once.

>>daniel+p1
In the US you pay taxes in the state where you earn the income and where you live. So for example if you own a pass-though tax corporation and it earns income in all states then you must file and pay taxes in all states.

>>daniel+p1
Not true. This is only true for US which taxes your global income.

Most of the world taxes only income earned in that country.

> If I happen to work for a foreign corporation, I don’t get to skip paying tax.

Sure, because you earned it your country, and not in the country of domicile of foreign corporation.

EDIT: Correction, I see now that most countries do tax worldwide income, just that they have DTA so you offset taxes paid abroad.

>>macleg+J1
I live in europe, and I would be breaking the law if this would true. Would love to see some citations.

It's only the US which taxes worldwide income. It's not true for rest for the world.

>>shivas+F3
You may be breaking the law. It’s common to owe taxes on world wide income in your country of tax residence. I imagine this is the same across the EU but open to be corrected

https://taxsummaries.pwc.com/ireland/individual/taxes-on-per...

>>aosaig+p4
Ok, so it's only US and Ireland and maybe a few others that tax worldwide income.

Still the common norm is that PIT is only levied on income earned in the country.

>>The_su+(OP)
Because it allows people to very easily funnel their income through offshore companies, and avoid being taxed on it because it’s “earned” in Cyprus or Cayman Islands.

>>shivas+z4
It’s not just Ireland, almost all (if not all?) EU counties do it:

https://europa.eu/youreurope/citizens/work/taxes/income-taxe...

You mentioned Estonia in another comment - it might be the case that Estonia is a special case or has a scheme for attracting talent that doesn’t include worldwide tax

>>shivas+z4
I believe most, if not all, European countries tax residents on worldwide employment and capital income.

>>aosaig+R6
Happy to be corrected.

I see now that most countries do tax worldwide income, just that most of the time they have DTA agreements so you can offset tax paid in other countries against your tax bill.

>>shivas+F3
Most countries tax worldwide income for the tax residents. Where the US is different is that US citizens need to report their income (and sometimes pay taxes) even if they don’t live in the US.

>>shivas+v3
We (the UK) have a very extensive set of double taxation treaties too. The point of non-dom status is that it doesn't even matter if your earnings were taxed elsewhere: they're still not liable in the UK.