Ernst & Young recently published their findings on citizenship programmes concluding that “citizenship should be distinguished from tax residence”.
Ernst & Young examined the concept of tax residency and citizenship
Smith & Williamson also examined the Caribbean offering further supporting EYs findings.
Ernst & Young inspected 4 key elements based from the OECD Model Tax Convention on Income and on Capital. It investigated the elements of physical presence (e.g. 180 day rule), the permanent residence element, having vital interests and /or having habitual abode in the country.
Citizenship is a concept distinct from tax residency. Citizenship should not give rise to tax avoidance and evasion opportunities, as the reporting rules [under the Common Reporting Standard] are explicit in not using citizenship as a test.
Issues with regards to tax residency would be more pertinent in Residency by Investment programmes, whereby the applicant or investor needs to be present in the host country for X amount of time. It is understood that St. Kitts is not due to establish any such programme.
Read more: Italian Tax Updates
Findings on Caribbean citizenship by investment programmes
Smith and Williamson further examined the Caribbean programmes and also supported the findings that indeed, Citizenship and Tax Residency are in almost all cases (save specific terms in the US) not linked.
Obtaining a second passport therefore does not have a direct correlation to tax avoidance/evasion as has so notably been misconstrued in criticisms by professionals and government bodies that oppose the RCBI industry’s offering.
