Sadly, UK Tier 1 Investor visa is now abolished. It is no longer possible to apply under this UK visa category. This blog post is left unaltered for historic purposes only.
UK Investor visa and Swiss Lump Sum Taxation Model were both designed as a solution for the wealthy.
British Investor visa is intended to facilitate the relocation of wealthy individuals and their families to the British Isles (England, Wales, Scotland and Northern Ireland) and certain Crown Dependencies .
Swiss lump sum taxation is a solution for wealthy individuals and their families looking to relocate to Switzerland.
How does the Swiss lump sum taxation model work?
The mechanics closely resemble the requirements of the UK Tier 1 Investor visa. As you start your application process, one of the requirements is that you need to demonstrate that you have no less than 1 Million Swiss Francs on your bank account.
A bank’s letter stating this fact is usually sufficient to start the process.
Unlike the UK Tier 1 Investor visa you are not required to invest this amount once your Swiss visa (residence permit) application is approved.
What is unique about Swiss lump sum taxation arrangement is that you negotiate your visa and worldwide tax liability taxable by Swiss tax authorities upon your relocation to Switzerland.
There are 26 cantons to choose from and each of these cantons compete with each other in order to attract wealthy resident taxpayers.
The main requirement, however, is not to become a social burden on the population, but lead a life of contribution and pay Swiss tax as negotiated with the Cantonal Tax authorities at the beginning of the application process.
When do You consider Swiss tax residence before or after the UK Investor visa?
What I experienced with my clients, Swiss residence is under consideration once they have grown their substantial wealth in the UK or acquired British citizenship.
Swiss residence is considered when a slower pace of life is sought after and one naturally wants to slow down.
Swiss residence under Swiss lump taxation model is effectively devised for the persons who are looking to retire and have enough wealth to meet their personal needs without an entrepreneurial activity.
For instance, a major deterrent for my clients was that they were expected to stop work on their global businesses. Under the Swiss rules, you are not allowed to maintain the role of a Board member or a Director of a Swiss company.
Therefore, if you are considering continuing working and taking on or maintaining a role in business leadership, you need to ask around to make sure you do not infringe strict requirements for the Swiss lump sum taxation model to be successful.
The interest to relocate to Switzerland under the Swiss lump sum taxation model peaked in 2008 when substantial changes were made to the UK tax code.
This triggered a substantial exodus of ultra and high net worth individuals who decided that remaining in the UK was too expensive as the UK tax bill might have become quite substantial to some of them.
However, certain families decided to remain in the UK so that they could stay in touch with several generations of their families being brought up in the UK.
They said that the remaining years of life were too precious to relocate for tax reasons alone. They wanted to remain active participants in their families and doting grandparents to their grandchildren.
A worthwhile human connection cannot be replaced by tax considerations alone.
Can you replicate a Swiss lump sum taxation model in the UK if you are applying for a Tier 1 Investor visa in the UK?
The answer is a yes.
The solution will be entirely different from the tax solution that you can possibly negotiate with the Swiss tax authorities directly. Under the Swiss lump sum tax model you can actually negotiate your annual worldwide tax liability due to Swiss tax authorities.
The UK is different.
You cannot negotiate your worldwide tax liability due the UK with the UK tax authorities directly.
You can work with experienced and specialised UK tax advisors who specialise in the matters of overseas ultra high net worth individuals instead.
It is important to start this process early enough, so that your UK tax advisor has a very good idea of your global wealth structure onshore and offshore.
Here are some of the points that you will be looking to discuss and achieve with your UK tax advisor: Relocating to the UK: 3 Important Considerations.
Not sure where to start or how to find the right UK immigration adviser or UK tax expert for you to apply for the right UK visa for you and your family, schedule a phone call with me!
Schedule a phone call with me also if you are exploring Swiss lump sum taxation.
Saule Voluckyte, M.A.E.S, LL.B, FAIA
I have been working exclusively with UHNWI in Mayfair, London since January 2008. I built specialist knowledge and expertise required to serve ultra high net worth individuals investing, operating and relocating to the UK or Switzerland.
Within the industry, I am the single adviser who is able to traverse the different areas of expertise and bring a comprehensive approach across: global structuring, UK immigration, international taxation and FOREX to develop their global wealth strategy, while they build, grow and expand their wealth worldwide.
Previous experience as one of the senior advisors for the government, made me a go-to person when delicate and uncomfortable scenarios involving heads of state need to be handled with care and preserve privacy.