The 2001 tax treaty between the United Kingdom and the United States runs to Article 30. From 24 they are: relief from double taxation, non-discrimination, mutual agreement procedure, exchange of information and administrative assistance, diplomatic agents and consular officers, entry into force, termination. Nothing in that list gives either country a general power to collect the other's tax.
That absence is the mobility objection in its concrete form. The objection usually arrives dressed as economics: capital moves, people move, so a national wealth tax is a tax on whoever cannot afford to leave. Underneath it is a question about enforcement, and enforcement is written down. It sits in statutes, in treaties and in the manuals tax authorities publish for their own staff, all of which can be read.
What leaving actually means
The UK's connecting factor for tax is residence. HMRC guidance states the consequence plainly: residents normally pay UK tax on all their income, whether it comes from the UK or from abroad, while non-residents pay UK tax on their UK income alone.
Residence is set by a statutory test, and its automatic limbs turn on days. Someone who spent 183 or more days in the UK in the tax year is automatically resident. So is someone whose only home was in the UK for 91 days or more in a row, if they used it for at least 30 days of that year. Fewer than 16 days makes a person automatically non-resident. Full-time work counts too, in both directions, and someone who fails all the automatic tests can still be resident on a smaller number of days through the sufficient ties test. Nationality appears nowhere in the sequence.
So the exit is real and it is available to anyone who can rearrange where they live. The question is what follows.
The best British measurement comes from the 2017 non-dom reform. Advani, Burgherr and Summers found that it cut the affected group's net-of-tax rate by 18.9 per cent, and 4.9 per cent of them ceased to be UK tax resident over the following five years. The rise in departures was temporary; the rate then reverted to where it had been before the reform. That is a real behavioural response at a small fraction of the size the public argument assumes.
Charging is settled law
Whether a country can still charge someone who has gone is one question. Whether it can collect what it charges is another. They have different answers, and the mobility objection depends on hearing them as a single one.
Germany taxes a deemed disposal of shares when a shareholder departs. Section 6 of the Aussensteuergesetz reaches an individual who holds at least 1 per cent of a corporation and who was subject to unlimited German tax liability for at least seven of the twelve years before the departure. Both conditions decide who the rule actually catches.
Norway charges exit tax on latent gains on shares and related assets when a person ceases to be tax resident. For moves on or after 20 March 2024 the tax must be paid within twelve years whether or not the shares are ever sold, unless the person returns to Norway first, and the taxpayer chooses between paying immediately, paying in instalments across the period, and paying in full at the end of it. A basic deduction of three million kroner applies, so only gain above that is charged. Death triggers payment unless the asset passes to heirs resident in Norway.
The Norwegian design also decides what happens in the years after someone has gone. The charge is calculated only on value that accumulated while the person was tax resident there, and it is no longer adjusted for value movements after departure or for tax paid abroad, so the amount is fixed at the border rather than tracked across it. Since 7 October 2024, 70 per cent of any dividend received while the claim is outstanding must go towards repaying it. That is a country legislating for a person it no longer has.
Neither regime needed another country's consent to impose the charge, though Germany's deferral terms were reset by its 2022 implementation of an EU directive. Each was legislated domestically, and each takes effect while the taxpayer is still in the country.
Collection is the weaker half
HMRC recovers tax debts abroad by two routes. The first is the Council of Europe and OECD Convention on Mutual Administrative Assistance in Tax Matters, which HMRC's own manual records as the basis for the agreement; it was implemented for the UK by statutory instrument and took effect on 1 May 2008. The second is a double taxation agreement with the country concerned, where that agreement carries debt-recovery provisions. A third route has largely closed. Council Directive 2010/24/EU on mutual assistance for the recovery of claims now reaches the UK only in defined residual cases, broadly debts that fell due before 1 January 2021 or that arose later from transactions before that date.
Which returns to the article list at the top. The UK/USA Convention contains no article equivalent to OECD Model Article 27 on assistance in the collection of taxes. It has an Article 27 of its own, titled exchange of information and administrative assistance. Its one collection undertaking runs to the amounts needed to stop treaty relief reaching people not entitled to it. For the tax debt itself, what the article supplies is information.
The Council of Europe and OECD Convention route is not unconditional either. Assistance applies only to tax claims that form the subject of an instrument permitting enforcement in the country asking and, unless the parties agree otherwise, that are not contested; where the person is not resident in the country asking, only where the claim may no longer be contested at all. There is an outer time limit: no State is obliged to act on a request submitted more than fifteen years after the original enforcement instrument. And a requested State need not take measures at variance with its own laws or administrative practice.
Those conditions describe the case a wealth charge is most likely to produce. A disputed valuation of an unlisted holding is the obvious candidate for a claim that is still being argued about, though whether a UK valuation appeal would count as contested for the purposes of Article 11(2) has not been tested against case law and is not settled here. The residual EU route is narrower again, since National Insurance contributions, student loans, tax credits, criminal penalties and contractual debts fall outside it altogether.
What the evidence here does not cover
Whether a particular debt is recoverable depends on which instrument covers the country the person moved to, and the published manual does not set that coverage out. The Convention's party list was not checked for this article, and neither was the number of UK agreements that carry recovery provisions.
The migration figures above measure the 2017 reform. No study estimates the response to a 2 per cent annual charge on wealth above 10 million pounds, which is the proposal this series argues for.
Norway is also where the migration evidence runs hardest against this argument, which is a separate question from whether its charge works.
The instruments already exist, and each has a price
An exit charge fixes the liability while the person is still inside the jurisdiction. That is the design point, and it is what Germany and Norway both do. Timing takes over part of the work a collection treaty would otherwise have to do, but not all of it: Norway lets the whole charge sit unpaid for twelve years after departure, and generally requires security over the claim before it will allow that. The cost is that the charge falls due at a moment when nothing has been sold, which is the liquidity problem those regimes then spend their remaining paragraphs answering.
UK land and buildings stay where they are whatever their owner does. An immobile base stays inside domestic enforcement whoever owns it, and it can carry a higher rate when it is held from abroad. What it cannot do is reach the wealth that is genuinely portable, which is most of the wealth in question.
The OECD's guidance on the design of net wealth taxes lists enforcement and appeal rights alongside high exemption thresholds, a broad base, consistent valuation, limited exemptions and liquidity provisions.
That has a practical consequence. If a charge is designed first and enforced afterwards, every mobile asset becomes a hole to be patched by whatever treaty happens to exist with whatever country the owner chose. If enforcement is decided at the same time, the base and the timing can do the work, and the treaty network becomes a fallback. The choice in front of Britain is between those two sequences. Whether people can move is already settled.
What a country can tax
None of this makes unilateral action easy. The obstacle is one of drafting. Germany reaches a departing shareholder because section 6 says so. Britain does not reach one, because nothing in its law says so. Both are written.
What a country can tax is set by its statute book and its treaties. Governments write both.
The exit charge is the instrument carrying most of this argument, and it has working examples abroad and a set of British design questions of its own. That is the next thing to read.
Sources and evidence status
HM Government, Tax on foreign income: UK residence and tax, for the residence basis and the day-count tests (KB-107). Advani, Burgherr and Summers, Taxation and Migration by the Super-Rich, with the HMRC evaluation of 30 October 2024, for the 2017 reform figures (KB-041). Aussensteuergesetz section 6, official consolidated text, for the German charge (KB-095). Skatteetaten, Exit tax, for the Norwegian regime as tightened from March 2024 (KB-097). HMRC Debt Management and Banking Manual DMBM560205 and DMBM560015 for the recovery routes (KB-111). Council of Europe and OECD, Convention on Mutual Administrative Assistance in Tax Matters, Articles 11, 14 and 21, for the limits on assistance (KB-112). The 2001 UK/USA Double Taxation Convention as amended by the 2002 protocol, article list from 24 to 30 (KB-110). OECD, The Role and Design of Net Wealth Taxes in the OECD, 2018, for the design guidance (KB-016). Blandhol, Curbing Tax Flight?, Princeton working paper, for the Norwegian migration evidence (KB-055).
Norway appears here as an enforcement design and the same country supplies the hardest evidence against the wider argument, so it is set out in full. Out-migration among affected households rose from 0.2 per cent to over 2 per cent in the reform year of 2022; 40 per cent of those who left were firm owners, and their firms recorded revenues around 12.6 per cent lower than comparable firms. The modelled long-run output effect of minus 1.3 per cent from the same paper is contested and is not relied on. The result is confounded by a simultaneous dividend tax rise, and the Norwegian threshold of roughly 1.7 million kroner is around eighty times lower than the one this series proposes, so it is not a forecast for a British charge.
The German and Norwegian statements are limited to what the official texts record. The instalment mechanism under section 6 AStG is not stated here, because the statutory wording behind it has not been read directly. The Norwegian rate is not quoted, because the tax authority page does not carry it.
Three statements were added at round-one review from primary sources the register does not yet record: the collection undertaking in Article 27(5) of the UK/USA Convention, the absence of any country-by-country coverage schedule from the published DMBM560205, and the security Norway generally requires before it will defer the charge. Each was verified against the source text in review and each is queued for a knowledge-base row; KB-110's own summary is incomplete on Article 27(5) and is queued for amendment.
The 18.9 and 4.9 per cent figures are evidence about the 2017 non-dom reform and about no other policy. Our register holds no estimate of the migration response to the charge this series proposes, and none is implied by using the 2017 result.
Collection coverage is stated within limits set in the text: the Convention's party list was not checked, nor was the number of UK agreements carrying recovery provisions. Whether a UK valuation appeal would make a claim contested for the purposes of Article 11(2) is a question for a lawyer and is not asserted here.
0 comments