Moving country as a founder: residency, split years, exit taxes and your company

Founders move for many reasons: family, quality of life, a new market, sometimes tax. Whatever the reason, the tax consequences depend on dates and facts: how many days you spend where, where your home is, where you work, and where your company's decisions are made. Getting these right is mostly a matter of planning the sequence before the move, and keeping records afterwards.

How the UK decides whether you have left

The UK uses the statutory residence test, applied for each tax year from 6 April to 5 April. It works in three stages.

• Automatic overseas tests. You are non-resident if, for example, you were UK resident in one or more of the previous three tax years and spend fewer than 16 days in the UK, or you work full-time abroad and stay within the limits on UK days and UK working days.
• Automatic UK tests. You are resident if, for example, you spend 183 days or more in the UK, or you have a home in the UK and no home overseas (or very little time spent at it) for a qualifying period.
• Sufficient ties test. If neither set of automatic tests settles it, the number of UK days you can spend depends on your ties: family in the UK, accessible accommodation, substantive work in the UK, more than 90 days in either of the previous two years, and, for leavers, spending more time in the UK than in any other single country.

A tax year is normally all or nothing. Split year treatment can divide the year of departure into a UK part and an overseas part, but only if you fit one of the specified cases, such as starting full-time work abroad or leaving your UK home to live abroad. The conditions are specific, and the date you are treated as leaving may differ from the date you actually fly.

Exit taxes and the country you arrive in

The UK has no general exit tax for individuals; the temporary non-residence rule does a similar job. Several European countries, including Germany, France, the Netherlands and Spain, do tax unrealised gains on substantial shareholdings when a resident leaves, often with the option of deferral. The new country matters too: it may tax you from arrival, may give newcomers a special regime, or, like the UAE, may not levy personal income tax on most income while still setting its own conditions for a tax residence certificate. UK inheritance tax now follows long-term residence rather than domicile, and can continue to apply for several years after departure.

Your company can move with you

A UK-incorporated company stays UK resident wherever its directors live. But if the board's real decisions start being made in your new country, that country may argue the company is resident there too, or that it has a permanent establishment there. The result can be a dual-resident company taxed in two places until a treaty tie-breaker resolves it. The practical answer is governance: where board meetings take place, who else sits on the board, where contracts are negotiated and signed, and records that show it.

One exception needs a mention. United States citizens are taxed on their worldwide income wherever they live, so for them a move changes the credits and exclusions available rather than removing US tax. Giving up citizenship has its own tax consequences.

Before you sign

• Before signing a lease or employment contract abroad, plan the departure date against the tax year and the split year conditions.
• Decide what happens to your UK home, and count the days you will realistically spend in the UK.
• Time any share sale, dividend or bonus around the move, and understand the five-year rule.
• Set out where your company will be managed, and adjust the board if needed.
• Keep a day-count diary and evidence of your new home from the first day.

If you are about to move country, call us before you sign the lease. The first 30-minute consultation is free, and every request is answered within 24 hours.

General information, not advice. Tax rules change and depend on your facts. Greyridge Global coordinates and delivers cross-border tax and corporate work through appropriately licensed professionals in each jurisdiction. Legal, tax, immigration, fiduciary, and regulated services are provided by qualified advisors engaged for your matter. Nothing on this page is tax or legal advice.