Which factors bring an individual within the scope of tax on income and capital gains?
Two factors bring an individual within the scope of tax on income and capital gains in France. The individual is resident of France (1.1.) and the income and/or capital gains is generated in France or assets are located in France (1.2.).
1.1. The individual is resident of France for tax purposes
Article 4B of the French tax code defines the residence in the same way for all tax purposes (income tax, wealth tax, IFI, gift and inheritance tax). Four alternative tests are provided for determining whether an individual is treated as a resident for tax purposes:
- He/she has his/her home in France;
- His/her primary place of residence is in France;
- He/she performs an activity in France;
- His/her centre of economic interest is in France.
Individuals who are resident of France under article 4B of the French tax code are liable to French taxes in respect of their worldwide income and/or assets, except when a tax treaty provides otherwise.
1.2. French source income/capital gains and French located assets
French source income/capital gains as well as French located assets may entail French tax burden on individuals who do not qualify as French resident for French tax purposes as defined by article 4B of the French tax code (see §1.1.).
Withholding taxes are generally levied at different rates depending on the nature of the income/capital gains received.
In Italy income and capital gains are subject to income tax. Income tax is levied upon residents on their worldwide income, while residents are subject to income tax only in Italian-source income.
For Italian income tax purposes, an individual is regarded as a resident of Italy if at least one of the following conditions is fulfilled for most part of the tax period (i.e., the calendar year): (i) he/she is registered with the Italian Official Register of the resident population; (ii) he/she has his/her residence in Italy for civil law purposes. Residence is defined by the Civil Code as the place in which the person has his/her habitual abode; or (iii) he/she has his/her domicile in Italy for civil law purposes. Domicile is defined by the Civil Code as the place in which a person established the main seat of his/her business and interests.
The rules to determine the source of the income depends on the type of income. However, in general terms, income from employment and self-employment is sourced where the activity is performed, income from real estate is sourced where the property is situated, income from capital is sourced where the payor is resident or has a permanent establishment, and other income is sourced where the income-generating asset is situated or where the income-generating activity is carried out.
Under Israel’s tax regime, Israeli residents are generally subject to tax on their worldwide income, and non-Israeli residents are generally taxed on their income derived from Israeli sources (subject to applicable double tax treaties). Special provisions may apply to individuals who are Israeli residents, qualifying as "New Immigrants" or “Veteran Returning Residents”.
As a general rule, an individual is considered as an Israeli resident if the "centre of his life" is in Israel. In addition, the Israeli tax law provides for two presumptions of Israeli residency based on the number of days that the individual spent in Israel.
The Israeli Income Tax Ordinance provides a number of indications which can be used to determine where is the centre of an individual’s life. The indications are as follows:
- The place of his permanent home.
- The place in which he and his family live.
- His regular or permanent place of business or his permanent place of employment.
- The place of his active and substantive economic interests.
- The place where he maintains memberships in various organizations, unions or institutes.
In addition, the Israeli legislation stipulates two rebuttable presumptions, by which an individual would be deemed as an Israeli resident (the: "Day Tests"). The first presumption applies when an individual stays in Israel during the relevant tax year for 183 days or more and the second presumption applies when he stays in Israel during the relevant tax year for 30 days or more, and he has stayed in Israel for 425 days or more during the relevant tax year and the preceding two years.
However, these Day Tests are solely presumptions and are rebuttable by both the Israeli Tax Authority (the: "ITA") and the taxpayer, based on the Centre of Life Test.
The factors that bring an individual within the Greek scope of tax on income and capital gains are:
A. The Greek tax residency status, in which case worldwide income is taxed in Greece [in light of any applicable double taxation avoidance treaties as well as any foreign tax credits].
An individual is generally considered to be a Greek tax resident if:
(a) the individual maintains their permanent or principal or habitual residence or habitual abode [e.g. social, family, professional, economic links] in Greece or
(b) the individual’s physical presence in Greece exceeds 183 days [short stays outside Greece are included when calculating this period], while certain categories of individuals [related to tourist, medical and similar activities] are excluded [subject to conditions].
B. The income is generated within Greece, regardless of the individual’s tax residency jurisdiction [in light of any applicable double taxation avoidance treaties].
Tax liability in Germany is determined by the concept of residence. The concept of domicile, however, is not recognised in Germany. An individual is a German resident if he or she has either a permanent home (accommodation permanently available to the individual which is used at least from time to time) or a habitual abode in Germany. The resident individual’s worldwide income and gains are subject to German income tax.
Personal income tax is due by inhabitants of Belgium, i.e. persons whose domicile or seat of wealth, if not domiciled in Belgium, is located in Belgium. ‘Domicile’ refers to a factual situation characterised by the person’s habitual residence (which implies a certain continuity); ‘seat of wealth’ refers to the central place from where one’s assets concerned are managed.
Unless proven otherwise, all individuals listed in the National Register of Individuals are considered inhabitants of Belgium. A taxpayer is liable to the additional income tax of the Region (Flemish Region, Brussels Capital Region or Walloon Region) in which his tax residence is located on 1 January of the tax year.
Subject to the provisions of double tax treaties, non-residents are in principle subject to non-resident income tax on their Belgian source income.
British Virgin Islands
In the Virgin Islands (the British Overseas Territory in the Caribbean commonly referred to as the British Virgin Islands or BVI) the rate of income tax is zero, and there is no capital gains tax.
There is currently no income tax, capital gains tax, or any other personal taxes payable within Dubai. That being said, expat residents may still have an ongoing tax liability in their home country and should ensure that they keep themselves up to date with the relevant regulations and reporting standards.
This will usually turn on the residence of the individual, location of assets and economic activity. An individual is tax resident if they have a permanent place of abode or is personally resident in New Zealand for one or more periods exceeding 183 days in an aggregate 12-month period. A person (including a company) who is a New Zealand tax resident (“NZTR”) is subject to New Zealand income tax on all gross income irrespective of the origin country.
Certain categories are important indicators of New Zealand sourced income, these include but are not limited to the following:
- salaries and wages;
- the ownership and mortgaging of land;
- shares of a resident company;
- government pensions, annuities, income and securities;
- beneficiary income under a trust where the income is derived in New Zealand;
- royalties from a New Zealand resident; and
- any other source in New Zealand (directly).
There is no capital gains tax (“CGT”) in New Zealand, although care must be taken not to buy and sell property in such a way that a business activity is established, thereby making any gains taxable as a business or trading activity.
Residence (for all Monegasque residents) and nationality (with respect to French nationals only).
Monaco law does not provide for an income tax for individuals acting within their private activities. There is no capital gains tax.
Monaco law does not provide for any income tax for Monegasque nationals and foreign nationals resident in Monaco, except for French nationals, subject to the 1963 Bilateral Tax Convention between France and Monaco. French nationals are deemed to be residents of France and accordingly liable to tax in France and accordingly liable to tax in France.