In March 2024, the UK government announced its plan to abolish the centuries-old non-domiciled (non-dom) tax regime beginning April 2025—a move that will profoundly affect how long-term residents and returning UK citizens are taxed on global income and assets. Under the new rules:
- Anyone who has been a UK tax resident for over four years will no longer be exempt from tax on their worldwide income, even if that income is not remitted to the UK.
- After ten years of residency, individuals will also become liable for UK inheritance tax on global assets (UK Government Budget Statement, March 2024).
This shift marks a clear movement toward residency-based worldwide taxation, with increasing scrutiny on offshore structures and foreign-held wealth.
From Non-Dom to Worldwide Taxation: A Global Pattern?
The UK is not alone. A growing number of governments are revisiting the taxation of offshore income and assets, reflecting a broader trend in global tax policy. This includes citizenship-based taxation, a model currently unique to the United States, but increasingly discussed in France and other European jurisdictions.
United States: The Global Outlier with Citizenship-Based Taxation
The U.S. remains one of the only countries in the world to enforce citizenship-based taxation, where all citizens must file U.S. tax returns and report foreign bank accounts—even if they live permanently abroad. Expats are often required to pay taxes on foreign-earned income unless they qualify for the Foreign Earned Income Exclusion or offset liabilities through foreign tax credits (IRS – Foreign Income Reporting).
This complex reporting burden has led to a rise in citizenship renunciations—especially among high-net-worth individuals (HNWIs) seeking to simplify their tax obligations.
France: Toward a “Universal Tax” on Citizens Abroad
In late 2023, France’s National Assembly’s Finance Committee approved a proposal to explore a “targeted universal tax” for French citizens living in low-tax jurisdictions. The proposed measure would apply to:
- French nationals who move to countries with low or no income tax and who were residents in France for at least three of the ten years preceding their departure.
This move was largely political—designed to ensure tax fairness and prevent “fiscal exile”—but signals growing interest in citizenship-linked tax obligations across the EU.
Why Are Countries Making This Shift?
Governments are increasingly shifting toward taxing worldwide income as a response to mounting fiscal pressures, anti-avoidance sentiment, and global transparency standards. Here’s why this shift is accelerating:
- Fiscal Pressures and Revenue Needs
Following the economic impact of the COVID-19 pandemic and inflationary burdens, many countries are looking to broaden their tax base. In the UK, the abolition of the non-dom tax regime is expected to raise between £2.6 and £3.4 billion per year, according to the UK Treasury. The aim is to ensure that long-term residents contribute proportionately to the domestic economy (Le Monde, August 2024).
- Addressing Tax Avoidance and Ensuring Fairness
Public and political pressure has been building against structures that allow HNWIs to escape taxation while retaining economic ties. In France, legislators introduced a proposal in 2023 to tax citizens abroad—especially those relocating to low-tax jurisdictions—under a “universal tax” concept, aimed at restoring fairness in the tax system (Her Expat Life, 2023).
- OECD and Global Anti-Avoidance Efforts
The OECD’s Base Erosion and Profit Shifting (BEPS) Project has been instrumental in guiding global tax reforms. With its 15-point action plan, the OECD pushes countries to tax income where economic activity and value creation actually occur—discouraging artificial tax residency and offshore shell structures (OECD – BEPS Project).
- Enhanced Transparency Through Information Sharing
The adoption of the Common Reporting Standard (CRS) has made it easier for tax authorities to identify offshore accounts held by their residents and citizens. Over 100 jurisdictions now automatically exchange financial account data, vastly increasing tax transparency and enforcement (OECD – Tax Transparency).
UK Citizens Abroad: What Now?
With the UK’s non-dom abolition, UK expats who return or maintain ties to the UK could face significant exposure to worldwide taxation. Key considerations include:
- Tax residency status: Determining whether you remain a UK tax resident based on the Statutory Residence Test.
- Offshore asset structuring: Reviewing trusts, companies, and investment vehicles to assess exposure under new rules.
- Alternative residency or citizenship: Some HNWIs are exploring options in jurisdictions with more favourable tax frameworks (e.g. UAE, Portugal, or Singapore). Read here
Even those who currently reside abroad but may inherit UK property or maintain UK business interests should carefully review their international tax position in light of these changes.
The Future of Tax and Mobility
The concept of “taxing rights following the passport” is no longer theoretical. As more countries move toward taxing worldwide income—whether through residency or citizenship—global investors and expats will need to be far more strategic about their personal and corporate tax planning.
What began as a headline reform to end the UK’s non-dom regime may be part of something much bigger: a global realignment of tax frameworks to follow wealth wherever it moves. From the U.S.’s long-standing citizenship-based model to France’s recent legislative proposals and the UK’s aggressive tax reforms, a clear message is emerging: tax authorities are closing in on worldwide income.
Caption for the article: The global tax map is being redrawn.
With the UK ending its non-dom regime, France proposing a tax on citizens abroad, and the U.S. continuing citizenship-based taxation—governments are closing in on worldwide income. Our latest deep dive unpacks why this shift is happening, what it means for UK citizens abroad, and how HNWIs should respond.
Explore the trends shaping the future of cross-border tax planning—only on Outbound Investment.
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