The International Tax Round Spring 2026

Editor’s message

The start of this year has involved more time in airports than usual, with time spent in Singapore, Perth, Dubai, and now Cape Town. Moving between jurisdictions so quickly is always a reminder of just how differently countries approach growth, wealth, mobility, and regulation.

As we approach the end of the UK tax year, international tax planning remains firmly in focus for globally mobile individuals and families.

Across multiple jurisdictions, conversations with clients and advisers consistently return to a common theme: mobility. Decisions around where individuals choose to live, work and structure their affairs are increasingly influenced by evolving tax and regulatory frameworks.

The UK is currently undergoing one of its most significant shifts in recent years. The introduction of the FIG regime and the Temporary Repatriation Facility (TRF) is already reshaping how internationally connected individuals consider the UK. Yet, we continue to advise those arriving, those restructuring, and increasingly, those leaving.

In this environment, clear planning and careful structuring are more important than ever. International mobility creates opportunity, but without the right advice it can also introduce complexity and unintended tax exposure.

Our focus remains on helping clients navigate these changes with clarity and confidence.

Contents

• Dual resident? The tie-breaker tatters.
• Offshore trusts and the April 2025 reforms: A structural inflection point.
• Temporary Repatriation Facility (TRF): A time-limited opportunity.
• Exit taxes and rebasing on arrival: What happens when you move.
• EU One Stop Shop (OSS): Simplifying VAT – or just repackaging it?
• Italy – Lump-sum tax regime for new residents (High Net Worth Individuals – HNWIs)

Dual resident? The tie-breaker tatters

It is increasingly common for internationally mobile individuals to be tax resident in two countries at the same time – for example, UK resident under the Statutory Residence Test while also resident elsewhere under that country’s domestic rules.

When this happens, the relevant Double Tax Treaty tie-breaker clause determines where you are treated as resident for treaty purposes.

Most treaties apply a hierarchy:

• Where is your permanent home?
• Where is your centre of vital interests (family, business, assets)?
• Where is your habitual abode?
• What is your nationality?
• If still unresolved, the tax authorities must agree between themselves.

The key point: the tie-breaker does not cancel domestic residence – it allocates taxing rights between countries under the treaty.

With capital gains, investment income and employment income all potentially impacted, dual residence should never be left to assumption. The analysis is nuanced, fact-specific and often decisive.

Offshore trusts and the April 2025 reforms: A structural inflection point

The UK shifted away from the concept of domicile on 6 April 2025. This was not simply a reform – it represents a structural recalibration of how offshore trusts interact with the UK tax system.

For many internationally connected families, trusts were designed around the concept of protected status, remittance-based exposure and long-term flexibility. The introduction of the proposed four-year Foreign Income and Gains (FIG) regime simplifies entry planning for new arrivals but creates fundamental questions for existing long-term residents.

Trustees and settlors should now be actively modelling:

• Whether income and gains accumulated to date should be distributed.
• The impact of the revised matching rules on capital payments.
• The continued relevance of protected trust status.
• The interaction between new residence-based IHT exposure and trust assets.

Importantly, this is not just about taxation. Many of these structures underpin family governance, asset protection and succession objectives. Changes in tax treatment often require a parallel review of control mechanisms, trustee strategy and beneficiary communication.

Temporary Repatriation Facility (TRF): A time-limited opportunity

One of the most significant elements of the UK’s April 2025 reforms is the introduction of the Temporary Repatriation Facility (TRF).

For individuals previously taxed on the remittance basis, the TRF offers a temporary window to remit pre-6 April 2025 untaxed foreign income and gains to the UK at a reduced rate. While full legislative detail continues to evolve, the policy intention is clear: to encourage historic offshore funds to be brought into the UK tax net in a controlled and incentivised manner.

• Identifying and categorising mixed funds accurately.
• Tracing historic income and gains within offshore accounts.
• Determining whether funds are clean capital, foreign income or foreign gains.
• Assessing whether remittance under TRF aligns with broader succession or liquidity planning.

The TRF is not automatic relief. It requires deliberate action, documentation and careful modelling.

In practice, this may be the final opportunity to simplify historic mixed fund positions under more favourable rates. Delaying analysis risks losing flexibility — particularly where offshore accounts have decades of layered transactions.

The strategic question is not simply ‘Should funds be remitted?’ but rather ‘What long-term structure are we moving toward?’

For some, TRF may facilitate UK reinvestment or property acquisition. For others, it may allow balance sheet simplification now we are in a fully residence-based regime.

What is clear is that the window is finite. In international tax, timing is often everything and TRF is a prime example.

Exit taxes and rebasing on arrival: What happens when you move

A question we are often asked is whether a country will tax you when you leave — and whether it will rebase your assets when you arrive.

Some jurisdictions impose an exit tax, taxing unrealised gains when an individual ceases residence. For example:

• France and Spain can apply exit charges to substantial shareholdings.
• Germany taxes certain corporate participations on departure.
• The United States applies a deemed disposal regime to certain expatriating citizens and long-term resident.
• South Africa generally treats individuals as disposing of most worldwide assets at market value when tax residence ceases.

The UK does not have a general individual exit tax, although temporary non-residence rules can bring gains back into charge if an individual returns within a defined period.

On arrival, some countries offer a ‘step-up’ in base cost. Canada, Australia and South Africa may deem assets to be acquired at market value when residence begins, meaning only post-arrival growth is taxed. The UK, by contrast, does not generally provide automatic rebasing.

Understanding how departure rules interact with entry valuation is critical. In international mobility, it is not just where you are moving to that matters – but how you leave and how you arrive.

EU One Stop Shop (OSS): Simplifying VAT – or just repackaging it?

Selling to EU consumers from multiple countries used to mean one thing: multiple VAT registrations.

The EU’s One Stop Shop (OSS) regime was introduced to change that. Read more here.

OSS allows businesses making cross-border B2C supplies within the EU to report and pay VAT through a single Member State of Identification (MSI), rather than registering separately in every country where customers are located. The MSI then distributes the VAT to the relevant Member States.

OSS applies to:

• Distance sales of goods within the EU.
• Certain cross-border B2C services.
• Businesses who want to avoid registering for VAT in every Member State where their customers are located.

In principle, OSS simplifies compliance. Businesses file a single quarterly electronic return (monthly under IOSS), charge VAT at the customer’s local rate and centralise reporting.

In practice, however, complexity has not disappeared – it has shifted.

Correct classification of supplies, monitoring EU-wide thresholds, ensuring accurate VAT rate application and aligning logistics and customs processes remain critical. Errors can lead to misallocations across jurisdictions and unexpected exposure.

For e-commerce and digital businesses scaling across the EU, OSS is not optional – it is structural. The real advantage comes from integrating VAT compliance with commercial and logistics strategy from the outset.

Simplification exists – but only when managed properly.

Italy – Lump-sum tax regime for new residents (High Net Worth Individuals – HNWIs)

Italy offers a special tax regime designed to attract high-net-worth individuals who relocate their tax residence to the country. Introduced in 2017, the regime allows eligible individuals to elect a flat-tax system on foreign income for up to 15 years.

Under the regime, individuals transferring their residence to Italy from 1 January 2026 pay an annual lump-sum tax of EUR 300,000. In exchange, most foreign-sourced income is exempt from Italian taxation. An exception applies to capital gains from the sale of ‘qualified’ shareholdings realised within the first five years of the regime. Italian-source income remains subject to ordinary Italian income tax rules.

The regime also provides additional benefits, including exemption from reporting foreign assets, exemption from taxes on foreign real estate and financial assets, and no inheritance or gift tax on foreign-held assets.

To qualify, individuals must become Italian tax residents and must not have been resident in Italy for at least nine of the ten years preceding the election. The regime may also be extended to certain family members, who can opt in by paying an annual substitute tax of EUR 50,000 each.

The regime has attracted significant international interest and reflects Italy’s efforts to encourage inward investment and residency among globally mobile individuals.

For more information, please reach out to Abaco.