The International Tax Round Summer 2025

Editor’s message

Travel and fast-pace tend to be the underlying themes of my updates. Whether I’m sharing experiences about client interactions, interesting conversations or some kind of gastronomical delight, these serve to illuminate the tales of my world and international tax. For this note however, I find myself writing from a quieter place, where the usual volume of life has been turned down. This quarter did involve travel, but for quite a different purpose.

In April, I lost my mum. She was the beating heart of our family, a quietly confident presence in our lives, possessing a wealth of wisdom and strength inside her. Along with the overwhelming feeling of sadness this has brought, I’m grateful for the life she lived and the important values she instilled in me.

Much of April was spent in Kenya in a tangled mix of grief, nostalgia and connection with family. My roots are in Kenya and it will always be home but this time, it was not about lush landscapes, food or culture. This visit was about reflecting deeply on my mum’s character, values and life, and finding a way – some way – to say goodbye. With the heavy weight of loss mixed with the beauty of wisdom, I saw with renewed clarity what she meant to me and how much she shaped who I am.

The slower pace of life recently has afforded time to think, leading me to reflect on the way our work in international tax connects people, despite their geography or generation. Much of what we do relates to planning – succession, wealth preservation and trusts. It touches on legacy – and legacy I’ve come to realise, is rarely about money – it’s about people, values and the impact we leave behind.

So whilst this update is less about whirlwind schedules and cultural insights, it’s been heavier on learning than anything experienced before. I have a renewed sense of perspective and a humbled gratitude to do meaningful work with people whose lives, like mine, span countries, cultures and generations.

As I write this, I’m preparing to head to the Southern Italian city of Matera, in Puglia, maintaining an annual tradition of holidaying with a group of family members. As life would have it, this group happens to be my maternal cousins and in truth, I can’t imagine anything more fitting or cathartic. There’s a quote that resonates with me:

 “If the people we love are stolen from us, the way to have them live on is to never stop loving them”

There is great comfort in the opportunity to share, laugh, eat, celebrate, and just be with those who matter most to us. Because that too, is part of legacy.

I’ll be back with my usual updates next quarter, but for now, enjoy this editorial and let’s hope the sunshine continues.

Contents

• UK and India strike new Free Trade Agreement (FTA), promising boon to UK trade
• Taxes, impostos and impuestos! New taxation agreements signed!
• Selling assets whilst overseas? Make sure you are not caught – temporary non-UK resident rules!
• German property taxes, something for the UK?
• Reform! Not the party, reform of transfer pricing, permanent establishments and diverted profits tax
• Relocation and retirement in Cyprus – Tax overview by Kinanis

UK and India strike new Free Trade Agreement (FTA), promising boon to UK trade

On 6 May 2025, the UK entered into a new free-trade deal with the most populous country in the world, India. Indian PM Modi and UK PM Keir Starmer, along with their respective trade ministers reached the momentous deal which has secured a number of benefits for the UK and India, which should spur growth and trade between the two historic nations.

The deal is expecting to increase UK GDP by £4.8 billion in the long term and will allow for businesses of the two nations to trade with greater confidence going forward. India is one of the fasting growing economies and has the highest growth rate in the G20, and the deal removes some previously imposed tariffs that were restrictive to inter-country trade and business.

Key highlights include significant tariff reductions on iconic UK goods such as whiskies and gin, greater access for UK service sectors to the Indian market, including equal treatment for financial service companies, and all-round enhanced market access for UK businesses, particularly SMEs.

This is a highly significant trade deal for the UK, expected to increase revenue and support the government’s fiscal position through higher tax receipts from increased trade activity.

Taxes, impostos and impuestos! New taxation agreements signed!

The UK has a long list of Double Taxation Agreements (DTA) with multiple jurisdictions across the world, so much so that you could throw a dart at a map and it would likely land on such a country!

Recently, two more countries have been added to the list: the small multilingual principality of Andorra nestled between France and Spain, and the home of the Incas and Pisco Sours, Peru. Neither states have had a treaty with the UK before and have signed such agreements on 20 February 2025 and 20 March 2025 respectively.

The DTAs will bring a lot of clarity for nationals residing in the other state, which will dictate where income from various sources should be taxed in the first instance. As the UK begins to trade in a post Brexit world, more such agreements will be necessary to entice and improve trade relations between countries. The agreements are not in force as of yet, but would normally take 9-12 months to be implemented – watch this space.

Selling assets whilst overseas? Make sure you are not caught – temporary non-UK resident rules

The general position of UK Capital Gains Tax (CGT) is that non-UK residents are only subject to CGT on the disposal of UK land and property. For example, the sale of shares whether in a UK company or Singaporean would not attract a UK tax charge if you were resident outside of the UK.

As always, there is always a caveat to such rules and these apply to previous UK residents. If you were previously resident in the UK, and later return – any disposals may become taxable on your return if you satisfy the following conditions:

• You were UK resident for four of the seven years prior to your departure.
• Your period of non-residence was for five years or less.
• You held the sold assets at the date of departure (assets bought and sold whilst overseas are not caught).

The above is based on tax years, and with split-year rules applying this can create a rather tricky situation where without careful consideration there will be unnecessary tax charges. If you are considering a return to the UK, or even a departure please do get in touch, and we can assist in your tax planning.

German property taxes, something for the UK?

From 1 January 2025, the German state will impose a new property tax, Grundsteuer, on property. The new type of tax will in essence raise revenue for the German government based on the value of property held and takes into account the average and statistical data of property.

The UK has long used Council Tax, based on values of property at 1991 to levy annual rates on property held. There have long been calls for this to change, as wealthy postcodes such as Westminster pay less than others. A change to such system, that taxes occupants rather than owners, is often brought up with a tax based on a percentage of the value of the property and would replace SDLT and Council Tax.

A change to such a tax is a hard point for the UK, with the Poll Tax riots of 1990 being a memory for many I’m sure.

Reform! Not the party, reform of transfer pricing, permanent establishments and diverted profits tax

The UK government is currently looking to make a number of reforms to several key aspects of International Taxation, being Transfer Pricing, Permanent Establishments and Diverted Profits Tax, but what are they?

Transfer pricing (TP): Sets prices for transactions between connected parties using the internationally recognised arm’s length principle, ensuring profits are taxed where the trade occurs. The proposed changes included UK:UK transactions and a raft of other changes to TP.

Corporation Tax (CT):  Applies to the global profits of UK-resident companies and the UK-related profits of non-resident companies through a permanent establishment in the UK. The Government is proposing to update the definition of a permanent establishment to align UK law with the latest international consensus, and to amend previous legislation accordingly.

Diverted profits tax (DPT): Introduced in 2015, targets artificial arrangements aimed at avoiding UK taxation. It operates independently but draws on TP and permanent establishment rules, applying a higher tax rate and giving HMRC stronger tools to address profit diversion. The new legislation looks to bring DPT within the CT charge and no longer have a separate tax for this.

The government currently has a consultation open on these changes which closes on 7 July 2025, it will be interesting to see what changes are eventually brought in!

Relocation and retirement in Cyprus – Tax overview

Cyprus presents an appealing destination for individuals seeking to relocate or retire, combining a strategic location, Mediterranean lifestyle, and a highly advantageous tax regime. The country offers generous tax incentives for new residents, especially those classified as non-domiciled for Cyprus tax purposes.

Key Tax Benefits:

Non-domicile status: Individuals who become Cyprus tax residents but are not domiciled in Cyprus are exempt from Special Defence Contribution (SDC) on dividends, interest, and rental income for a period of 17 years, making it highly attractive for wealth and investment income planning.

Personal Income Tax regime:

• Income up to €19,500 annually is tax-free.
• A flat 5% tax rate applies to foreign pension income exceeding €3,420 per year (instead of the progressive tax rates).
• High earners may benefit from a 50% income tax exemption if annual employment income exceeds €55,000, available for up to 17 years

Additional Advantages:

• No inheritance, gift, or wealth tax.
• Access to an extensive network of double tax treaties, minimising the risk of double taxation.
• Flexible residency rules allow individuals to qualify for tax residency under either the 183-day or the 60-day rule, provided certain conditions are met.

Combined, these benefits make Cyprus one of the most attractive EU jurisdictions for individuals considering relocation for retirement or remote work.

For more information, please contact Marios Palesis at marios.palesis@kinanis.com