Whilst the news is filled with more and more excitement about the new film Oppenheimer (2023), many of us here in the Xeinadin tax team are still focused on another Oppenheimer – Jonathan Oppenheimer, who last year won his dispute with HMRC over his tax residence, when the First-Tier Tribunal (FTT) ruled that Mr Oppenheimer was a ‘treaty resident’ in South Africa (RSA) despite his long-term residence and business commitments in the UK, resulting in £20m of funds transferred to the UK not being ‘remittances’ and such not subject to UK tax.
Where an individual is a resident under domestic legislation in more than one state, they are potentially a resident of both for the purpose of the double taxation between these nations. In this case, the provisions on the double tax agreement are established through the Organisation for Economic Cooperation and Development (OECD) model, which provides that tiebreakers appear in the following order:
- Permanent Home
- Centre of Vital Interests
- Habitual Abode
- Nationality
- If the tax authorities agree to the residence status of the individual.
The FTT found that Mr Oppenheimer was a resident of both contracting states and had a permanent home available to him in each. They also considered the centre of vital interests and decided on this point that his centre of vital interests was, in fact, in South Africa. This was on the basis that although the appellant spent less time in RSA than the UK, had grown up and studied in the UK these factors proved to be of no significance, as most of his family and friends lived in South Africa and he had voted in South Africa. In addition, a lot of his activities based in RSA also signified a strong link to the country over the UK.
Finally, the FTT also went on to consider that the appellant had a habitual abode in RSA as Mr Oppenheimer had a complex yet regular order of life which outside of school had no settled routine and the fact that he worked in multiple other nations like USA, Ireland, Luxembourg etc.
In considering this they determined his trips back to RSA were of sufficient frequency and duration to constitute a habitual abode. As a result, they determined Mr Oppenheimer to be a treaty resident in South Africa.
If you find yourself in a similar situation to Mr Oppenheimer, Jonathan not Robert, and need to have your residence position reviewed please get in touch with the Xeinadin Tax Team.
