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Temporary and non-habitual residents
Several countries have already introduced the concept of “temporary non-residents” into their tax orders, thus enabling them to lay down special rules regarding the taxation of income received by those who are habitually resident in these countries, but take up residence in another country for a certain period – which as a rule does not exceed 5 years and is very often a result of secondment - and subsequently return to their former country of residence.
This is the case with the United Kingdom, which sought to prevent taxpayers using the provisions of double tax treaties to move their residential status to other countries during the period in which they intend to dispose of property, thus benefitting from a more favourable tax rate on the respective capital gains in the new country of residence, such as for example, the income tax (IRS) regime currently in effect in Portugal which excludes capital gains obtained from the disposal of shares held for a period of over twelve months. In the year of their return, “non-temporary residents” are taxed in the UK on the gains they made during the period in which they qualified as non-residents under the double tax treaty in force between the UK and the other country. However, this effectively leaves devoid the provisions of the double tax treaty that attribute the power to impose taxes exclusively to the country of residence in the year the gains are obtained.
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