Publication:

Special tax regimes to attract individuals and their interaction with treaty law: entitlement issues

Mobility of individuals is increasing exponentially in recent times, and this is mainly caused by economic and developing imbalances between countries. In fact, as long as these imbalances persist (or even increase), the movement of people will not cease, but rather the contrary will occur. Moreover, it is clear that technological advances are leading to what might be called a kind of ¿new nomadic way of life¿. In this context, some countries try, on the one hand, to avoid the ¿brain drain¿ (i.e. income and investment drain), and on the other hand, to compete to attract ¿brain gain¿ (i.e. income and investment gain). Some of the measures used for this purpose are of a tax nature. Among the tax measures adopted in this respect, a distinction can be drawn between (i) defensive fiscal measures, aimed at preventing the flight of talent and income and investment by taxing individuals who move abroad (such as exit taxes, extensionbased residence, the Bhagwati tax, etc.); and (ii) offensive tax measures, aimed at attracting and retaining highly skilled workers and income and investment. In this chapter, the author focuses on the second group of tax measures. In order to do so, the different types of offensive measures adopted by states will be briefly outlined (section 7.2.), separately analysing those aimed at retaining certain types of individuals (section 7.2.1.) and those aimed at attracting certain types of individuals (section 7.2.2.), while paying special attention to how both types of measure interact with tax treaties and, more specifically, entitlement issues and (double) non-taxation situations. The chapter ends with the conclusions (section 7.3.).