Luxtoday

Highlights of the week of April 22-28

Last time updated
29.04.24
Source: Robert Anasch, Unsplash

Source: Robert Anasch, Unsplash

Wealthy expats are scared away by Britain's tax reform. At the same time, skilled foreign workers in the EU are operating in a "brain waste" mode and are losing money.

The United Kingdom is getting rid of one of its tax rules

The reform, announced in March by UK Chancellor of the Exchequer Jeremy Hunt, will no longer allow tax avoidance on income earned by UK residents in other countries.

An important aspect of the regime was the requirement that such income should not be passed on to the United Kingdom for taxation. If this condition was met - there was no tax. Such a system was extremely convenient for wealthy expats who lived in the UK but did not receive payments in the country. Such people have non-domicile status, which means that they do not consider the country to be their home.

Now, the tax rate for such residents could be as high as 45%, which has caused extreme concern in certain circles. An exodus of wealthy expats who have enjoyed the privilege and thereby saved a significant portion of their budget is expected.

Europe bans cash payments over 10,000 euros

The law, which has been approved by the European Parliament, will come into force in 2029 if it is also approved by the EU Council. This tightening is due to the ongoing fight against terrorist financing and money laundering. It will be mandatory in all EU countries without exception.

Transactions involving cryptocurrencies, luxury goods and art, jewelry, expensive cars, yachts and private jets will come under scrutiny. These are the areas where the risk of money laundering is highest. Football clubs, which often receive multi-million dollar investments, will also be affected.

Responsibility for monitoring suspicious activity will also fall to banks and other relevant parties. If questionable transactions are detected, they will have to notify the relevant authorities for further investigation.

Low incomes for foreigners in Europe

Lighthouse Reports, Financial Times, El Pais and Unbias the News conducted a large-scale study that revealed a rather disturbing trend. Many highly skilled expats in EU countries can't get jobs for their level. Most countries simply cannot offer these jobs.

This has led to a phenomenon called "brain waste". The idea is that expats with high levels of expertise are forced to take jobs where their skills and knowledge are redundant and their salaries are lower than their European counterparts.

This creates two problems. The first is that a specialist's resources are used inefficiently; they cannot work at full capacity because they are not needed. The second problem is that a high-level specialist does not receive the money to which they are entitled, and which cannot then return to the economy. According to the study, the EU could have received almost 34 billion euros more if "brain waste" did not exist.

Another worrying trend in skilled workforce migration is unemployment. It is almost twice as high among expats as among the local population. This is especially true for women.

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Last time updated
29.04.24

We took photos from these sources: Robert Anasch, Unsplash

Authors: Aleksandr, Kadriia

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