Comments on: Osborne’s Domicile plan will fall foul of Europe http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/ Richard Murphy on tax and corporate accountability Thu, 08 Jan 2009 01:20:13 +0000 http://wordpress.org/?v=2.6 By: Andrew Brooks http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-210724 Andrew Brooks Wed, 10 Oct 2007 12:39:49 +0000 http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-210724 I take the point and, indeed, do not dispute that it was not recorded in the opinion, but that is not to say that it was not considered. I should stres that I am not saying it was but, rather, that we would not know for sure given the manner in which the commission reviews and records these matters. I have not read the referenced Italian complaint but would venture, in the loosest sense, that there will be a reticence in finding on the basis a harmful practice because of the far reaching ramifications to other members' domestic systems. I take the point and, indeed, do not dispute that it was not recorded in the opinion, but that is not to say that it was not considered. I should stres that I am not saying it was but, rather, that we would not know for sure given the manner in which the commission reviews and records these matters.

I have not read the referenced Italian complaint but would venture, in the loosest sense, that there will be a reticence in finding on the basis a harmful practice because of the far reaching ramifications to other members’ domestic systems.

]]> By: Tax Research LLP http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-210704 Tax Research LLP Wed, 10 Oct 2007 12:20:55 +0000 http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-210704 Andrew Fairly argued. But I am expecting a government challenge on the basis of harmful practice - and that was not considered by the announcement in question Richard Andrew

Fairly argued.

But I am expecting a government challenge on the basis of harmful practice - and that was not considered by the announcement in question

Richard

]]> By: Tax Research UK / The PBR Highlights http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-210689 Tax Research UK / The PBR Highlights Wed, 10 Oct 2007 12:13:56 +0000 http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-210689 [...] The issue will not go away. Expect an attack from Europe now. It is very obvious now that the UK is operating a harmful tax practice. [...] [...] The issue will not go away. Expect an attack from Europe now. It is very obvious now that the UK is operating a harmful tax practice. [...]

]]> By: Andrew Brooks http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-210596 Andrew Brooks Wed, 10 Oct 2007 11:04:02 +0000 http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-210596 In contrast to the HRA, where grandfathering of pre 2000 UK legislation is reserved (witness the recent botching of the ITA 2007 rewrite for personal allowances, as a result), there is no grandfathering for pre ECA 1972 legislation; the UK was, at the time of succession to the, then EEC, in no position to negotiate such a clause. (From what I recall of my legal studies, France had us by the proverbials at the time, and the UK's hearts and minds followed !.) What is more relevant is that the European Commission is on record, as recently as March 2007, in saying that whilst the commission does not condone the remittance basis, it must, however, be applied in a non discriminatory matter. This was in the context of a review of Ireland's remittance basis for its non-doms, which led to the commission requesting that Ireland abolish its discriminatory policy towards UK sourced income. It was also requested of the Uk that it abolish its mirror policy as regards Irish source income (at section 831(5) ITTOIA), and amending legislation this effect was announced yesterday. Whilst not conclusive beyond absolutely all doubt, and EC jurisprudence remains far more flexible than than our own, it is not unreasonable for people to to use this recent opinion to say that the remittance basis will withstand EC challenge for the foreseeable future. In contrast to the HRA, where grandfathering of pre 2000 UK legislation is reserved (witness the recent botching of the ITA 2007 rewrite for personal allowances, as a result), there is no grandfathering for pre ECA 1972 legislation; the UK was, at the time of succession to the, then EEC, in no position to negotiate such a clause. (From what I recall of my legal studies, France had us by the proverbials at the time, and the UK’s hearts and minds followed !.)

What is more relevant is that the European Commission is on record, as recently as March 2007, in saying that whilst the commission does not condone the remittance basis, it must, however, be applied in a non discriminatory matter. This was in the context of a review of Ireland’s remittance basis for its non-doms, which led to the commission requesting that Ireland abolish its discriminatory policy towards UK sourced income. It was also requested of the Uk that it abolish its mirror policy as regards Irish source income (at section 831(5) ITTOIA), and amending legislation this effect was announced yesterday.

Whilst not conclusive beyond absolutely all doubt, and EC jurisprudence remains far more flexible than than our own, it is not unreasonable for people to to use this recent opinion to say that the remittance basis will withstand EC challenge for the foreseeable future.

]]> By: Anne Murphy http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-209012 Anne Murphy Tue, 09 Oct 2007 12:32:15 +0000 http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-209012 Looking again at the "harm" tests, even if they do apply, simply charging 25k would not fall foul of any of them - all the "harm" arises from the existing domicile law, not the 25k charge. Remember, the Tories are not proposing to change domicile law (whose "harmful" effects you argue are exempt because they are of longstanding). Under their approach the existing law would stand and no one who would not previously have benefitted from non domicile status would do so in future. The charge would be akin to an administrative charge which, if anything, would make it less attractive to benefit from the domicile rules, so making them less harmful, not more. But my original point was a political one. It would be political suicide for Labour to argue that a domestic tax proposal was untenable because of EU regulations. Looking again at the “harm” tests, even if they do apply, simply charging 25k would not fall foul of any of them - all the “harm” arises from the existing domicile law, not the 25k charge. Remember, the Tories are not proposing to change domicile law (whose “harmful” effects you argue are exempt because they are of longstanding). Under their approach the existing law would stand and no one who would not previously have benefitted from non domicile status would do so in future. The charge would be akin to an administrative charge which, if anything, would make it less attractive to benefit from the domicile rules, so making them less harmful, not more.
But my original point was a political one. It would be political suicide for Labour to argue that a domestic tax proposal was untenable because of EU regulations.

]]> By: Tax Research LLP http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-207542 Tax Research LLP Mon, 08 Oct 2007 16:01:33 +0000 http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-207542 Anne You're right. Except that the current rule pre-dates the EU. Any change of it wouyld fall foul where keeping what we have does not. But Brown is a defender of the status quo in this area - a conservative (small c) Richard Anne

You’re right. Except that the current rule pre-dates the EU. Any change of it wouyld fall foul where keeping what we have does not.

But Brown is a defender of the status quo in this area - a conservative (small c)

Richard

]]> By: Anne Murphy http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-207517 Anne Murphy Mon, 08 Oct 2007 15:35:11 +0000 http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-207517 It seems to me that if this does apply to the Tory proposals then it applies even more strongly to the existing domicile situation. And since it would mean Gordon Brown admitting that the European Union's rules trumped British rules on Tax law just as he is facing the problem of how to get the Consitution treaty through, I will be ver surprised if he wants to use this particular double edged sword against the Conservatives. It seems to me that if this does apply to the Tory proposals then it applies even more strongly to the existing domicile situation. And since it would mean Gordon Brown admitting that the European Union’s rules trumped British rules on Tax law just as he is facing the problem of how to get the Consitution treaty through, I will be ver surprised if he wants to use this particular double edged sword against the Conservatives.

]]> By: Tax Research LLP http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-202597 Tax Research LLP Fri, 05 Oct 2007 14:29:14 +0000 http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-202597 Richardr I reiterate - you may believe that. The fact is that it has been enforced as law. And personal taxes have been affected. In that case it is powerful as a precedent Richard Richardr

I reiterate - you may believe that. The fact is that it has been enforced as law. And personal taxes have been affected.

In that case it is powerful as a precedent

Richard

]]> By: Tax Research LLP http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-202589 Tax Research LLP Fri, 05 Oct 2007 14:16:07 +0000 http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-202589 Alastair ECJ rulings have forced enormous changes in domestic tax laws over the last few years This is the big topic of discussion at all tax policy debates these days The answer is most technical tax changes are EU driven right now, bar those aimed at avoidance, and all EU countries are doing them anyway Richard Alastair

ECJ rulings have forced enormous changes in domestic tax laws over the last few years

This is the big topic of discussion at all tax policy debates these days

The answer is most technical tax changes are EU driven right now, bar those aimed at avoidance, and all EU countries are doing them anyway

Richard

]]> By: Richardr http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-202590 Richardr Fri, 05 Oct 2007 14:16:07 +0000 http://www.taxresearch.org.uk/Blog/2007/10/05/osbornes-domicile-plan-will-fall-foul-of-europe/#comment-202590 Of course the EU has a huge impact on tax law. The point being though is that that particular document is not a directive, it is a code of conduct and as such, as it states, is not legally binding. It also states itself that "the code of conduct is a political commitment and does not affect the Member States’ rights and obligations." It is also a code re business taxation. Of course the EU has a huge impact on tax law.

The point being though is that that particular document is not a directive, it is a code of conduct and as such, as it states, is not legally binding. It also states itself that “the code of conduct is a political commitment and does not affect the Member States’ rights and obligations.”

It is also a code re business taxation.

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