The Bill Follows You

Why you should read this. On July 24, Beijing issued rules that treat putting assets into an offshore trust as a sale, tax the trust’s income to the resident who funded it every year (paid out or not), and give families 90 days to pay back tax on trusts funded since January 1, 2023 without the 0.05%-a-day late-payment surcharge. The window closes October 22, 2026. Bloomberg reported on September 27 that the tax authority has formed special teams, some assigned to a single billionaire, and its October 1 newsletter describes “squads targeting individual billionaires” rattling the country’s rich. China is the loudest example of a pattern visible on most continents: governments short of money are reaching for the people who have it, and the new rules follow the taxpayer through residence tests, look-through rules, deemed sales, and automatic data exchange. This alert walks the Chinese rules, tours the world’s new tax bills, and then asks the one question that matters for our clients: when the tax follows the person, which of your people, trusts, and investors is it following? October 22 is three weeks away.

Benjamin Franklin promised death and taxes. He did not promise the taxes would wait for a sale. In 2026 they stopped waiting. Beijing now taxes a resident’s funding of an offshore trust as though the assets had been sold. London taxes carried interest as income and keeps its inheritance tax attached to departing residents for up to ten years. California voters will decide on November 3 whether to take 5% of the net worth of every billionaire who lived there on a date that has already passed. Canberra began charging up to 40% this July on earnings tied to retirement balances above A$3 million. None of these is a classic annual wealth tax, and that is the point.

The fiscal story is familiar. The IMF puts global public debt at just under 94% of GDP in 2025 and on course for 100% by 2029. The OECD reports its members collected a record 34.1% of GDP in tax in 2024, on average. Oxfam, working from Forbes data, counts billionaire wealth at $18.3 trillion, up $2.5 trillion in 2025 alone. The tax story is less familiar: the headline wealth taxes have mostly been losing. France’s National Assembly rejected the 2% “Zucman tax” 228 to 172, and Swiss voters buried a 50% inheritance tax with 78.3% voting no. What passes instead is quieter and, for our clients, harder to plan around. Our thesis: the tax bill has become portable. It follows the person through residence rules, look-through rules, and data exchange, and it reaches backward in time. Planning built around where the money sits answers last decade’s question. This decade’s question is what you can prove: where you live, what you paid for it, and what you have already paid.

Executive summary

• China’s deadline is October 22. MOF/STA Announcement No. 21 of 2026 taxes resident-funded offshore trusts at 20% when they are funded and on their income every year, taxes residents on distributions from nonresident-funded trusts, and looks through companies held under a trust at a 25% control threshold.
• The bill is negotiable, which is not comforting. Bloomberg reports that one Guangzhou controlling shareholder’s initial bill of 100 million yuan fell to 5 million yuan after he threatened to move. Vague rules invite bargaining, and bargaining invites the next audit.
• The motive is largely fiscal. Personal income tax receipts rose 14.5% in the first eight months of 2026 while land-sale revenue fell 28.6%, according to published Ministry of Finance data.
• Europe mostly taxes flows. The UK moved carried interest to an income-tax regime (about 34.1% effective from April 6, 2026); Belgium introduced a 10% capital gains tax; Italy has tripled its flat tax for new residents in two years, to €300,000. The old wealth taxes survive where they already exist; France and Switzerland rejected new ones.
• America is two countries. Federally, the One Big Beautiful Bill Act made the 37% top rate permanent and set the 2026 estate exclusion at $15 million. At the state level, Washington now has a 9.9% capital gains top rate and a 9.9% income tax on income over $1 million from 2028, and California’s Prop 40 asks for a one-time 5% of billionaire net worth.
• Asia-Pacific and the Gulf are joining in. Australia’s Division 296 taxes earnings on large super balances at up to 40% from July 1, 2026; Japan tightens its minimum tax on very high earners from 2027; Oman levies the Gulf’s first personal income tax, 5% above OMR 42,000, from 2028.
• The plumbing is the policy. Automatic exchange covered 171 million accounts worth nearly €13 trillion in 2024, and 47 jurisdictions begin exchanging crypto data in 2027. China built its campaign on that data.
• U.S. families with roots abroad face two tax systems on one trust. China taxes funding; the United States penalizes an unreported foreign-trust distribution at 35% (§6677) and an unreported foreign gift at up to 25% (§6039F), and two 2026 federal district court rulings involving Chinese nationals went the IRS’s way on procedure.
• Leaving has a price tag. The U.S. exit tax under §877A marks a covered expatriate’s assets to market and taxes the gain after a $910,000 exclusion in 2026; Norway’s exit tax no longer lapses after five years; the UK’s inheritance tax follows former residents for up to a decade.

References to “§” are to the Internal Revenue Code of 1986, as amended, and references to “Treas. Reg.” are to the Treasury regulations under the Code, each as in effect on October 1, 2026.

01 What Beijing actually did

Under its Individual Income Tax Law, rewritten in 2018, China taxes residents on worldwide income at a flat 20% on capital gains, dividends, and interest. For years, offshore trusts sat in a fog: was a discretionary trust in the British Virgin Islands a separate taxpayer, a nominee, or nothing at all? On July 24, 2026, the Ministry of Finance and the State Taxation Administration (STA) cleared the fog in a direction their wealthiest taxpayers did not want. Announcement No. 21 and its procedural companion, STA Announcement No. 15, took effect the day they were issued.

The rules look to the resident who contributed, or is deemed to have contributed, property, not to the name on the trust deed. They work through four mechanisms. The trust deed may be offshore; the tax calendar is not.

• Funding is a sale. Contributing property is a deemed disposition at market value; the gain over cost is taxed at 20%, and basis steps up.
• Income is taxed every year. A resident-funded trust’s income is attributed to the resident contributor annually, whether or not it is distributed. Losses do not carry forward, and trust management, legal, and advisory fees are not deductible.
• Distributions are read broadly. For trusts funded by nonresidents, tax falls on distributions to residents, and “distribution” includes loans, guarantees, payment of personal expenses, and below-market use of trust property.
• Holding companies are transparent. Companies under the trust are looked through at 25% control, unless they are regulated financial institutions or show a “reasonable commercial purpose and substantive operations.”

A foreign tax credit is available country by country. Trustees must classify trust income by Chinese tax category, help taxpayers file, and furnish Chinese translations of foreign-language documents, and an intermediary whose misconduct causes underpayment faces penalties of its own. Our description of Announcements No. 21 and No. 15 relies on the English-language summaries by KPMG China and Morgan Lewis and on Xinhua’s report; we have not reviewed the Chinese text, and article references should be confirmed against it.

The October 22 rule. Residents who funded a trust between January 1, 2023 and December 31, 2025, or who hold pre-2026 trust income, must file and pay within 90 days of July 24, 2026. Those who do so by October 22 avoid the late-payment surcharge of 0.05% a day (about 18% a year; the tax authority treats it as uncapped, though some courts have capped it at the tax itself). Morgan Lewis cautions that the window is “not framed as a general amnesty or blanket waiver of tax penalties.” Read the text with PRC counsel before relying on any broader relief.

Where the calculations get vague. Bloomberg’s word, and it fits. The announcement issues no guidance on exchange rates, so a family that funded a trust with Hong Kong shares in 2023 must pick a rate and defend it. The squad will also have picked one; it will not be yours. Proving cost for assets moved offshore a decade ago is often impossible, and Chinese practice allows an “annual net profit” fallback where trade records are missing. The look-back starts in 2023 on paper, but KPMG notes the authorities may reach further for “substantial” amounts, and the Financial Times reported reviews stretching back to 2000. The start date for taxing distributions from nonresident-funded trusts is not stated, and “substantive operations” is undefined. Each gap is a place where a squad and a taxpayer will disagree. Hence the Guangzhou case, as Bloomberg reported it: an initial bill of 100 million yuan, reduced to 5 million yuan after the controlling shareholder threatened to relocate. We have not verified it independently. That is a 95% discount, which in any other market would be called a clearance sale. Nobody should plan on getting it at all.

02 Why now: the arithmetic of a property bust

For two decades, China’s local governments paid their bills by selling land. Land-sale revenue peaked near 8.7 trillion yuan in 2021 and had fallen to about 4.15 trillion yuan by 2025, and the slide continues. When STA head Hu Jinglin promised “a new era of taxation” at the January 2026 national tax conference, he was describing a revenue base that has to change shape. Personal income tax is growing about two and a half times as fast as general revenue; land is in free fall. Victor Shih of UC San Diego told the FT the motive is “clearly a fiscal one.” The target is large: Reuters puts the offshore wealth of mainland ultra-high-net-worth families at up to $1.2 trillion, and Bloomberg reports that the squads are focused on $1.7 trillion held by Chinese residents in Hong Kong. Spending demands are not shrinking either: Bloomberg reported in June that Beijing is weighing a roughly 2 trillion yuan (about $295 billion) national data-center buildout.

The campaign did not start in July. In 2025, tax bureaus in Beijing, Shanghai, Zhejiang, Hubei, and Shandong sent residents letters asking them to self-report overseas gains for 2022 through 2024, drawing on data China has received under the Common Reporting Standard (CRS) since 2018. In January 2026 the STA called for a national self-review. By August, the FT reported that banks had been told to examine affluent clients’ overseas investments and freeze accounts until they paid, and Reuters reported that Beijing and Hangzhou had begun taxing returns on offshore insurance policies. Gavekal’s Christopher Beddor summed it up: “The enforcement campaign is unprecedented and appears here to stay.”

Markets have noticed. In September a Haidilao co-founder sold HK$2.75 billion of shares, and BofA warned of “event risks on single stocks” in Hong Kong- and U.S.-listed private companies whose founders may need cash. Reuters did not link the sale to tax, and neither do we; BofA’s point is about the market, and it stands on its own. Reuters reports families unwinding trusts ahead of IPOs, selling A-shares, and borrowing against real estate. A government that cannot sell land will sell certainty instead, at a price.

03 The global ledger

China is the sharpest case, not the only one. The table below lists the measures we think matter most to our clients, with their status as of October 1, 2026. Read it for direction rather than completeness.

Swipe sideways for the other columns.

Exhibit. The world’s new tax bills, as of October 1, 2026. Status reflects enacted law unless noted; ballot and pending items may change.

Europe: the UK writes the template. Since April 6, 2025, the UK has replaced domicile with residence across income tax, capital gains, and inheritance tax. Arrivals who were not UK resident in any of the previous ten tax years get four years of exemption on foreign income and gains; after that, the world is in scope. Inheritance tax now reaches anyone resident for 10 of the previous 20 years and stays attached for three to ten years after departure. Carried interest moved into the income tax system on April 6, 2026, at an effective rate of about 34.1%, with no grandfathering and with non-residents taxed on UK workdays. A new prime minister, Andy Burnham, took office on July 20, and Chancellor John Healey delivers his first Budget on October 28; Grant Thornton sees capital gains tax as the most likely target. Across the Channel, the theme repeats with local accents. France extended its 20% minimum tax on high incomes until the deficit falls below 3% of GDP and added a 20% tax on luxury and personal-use assets parked in holding companies. Belgium introduced its first general capital gains tax. Italy raised the price of its new-resident regime to €300,000 a year. Norway kept its wealth tax, lost roughly 300 very wealthy residents to Switzerland, and still collected more. The Netherlands wants to tax actual returns, unrealized gains included, at about 36% from 2028; its Senate has put the vote off.

The Americas: Washington cuts, the states and Brazil add. The federal story runs the other way. The One Big Beautiful Bill Act, signed July 4, 2025, made the 37% top rate permanent and set the 2026 estate and gift exclusion at $15 million. The offsets that touch high earners are narrow: a cap that limits itemized deductions to 35 cents on the dollar, a phase-down of the new $40,000 SALT cap above $500,000 of income, and tiered taxes on large university endowments. CBO reported an FY2026 deficit of $2 trillion after eleven months, with corporate receipts down 25%. The states are filling the gap their own way. Washington built its brand on having no income tax; it now has one at 9.9% on income over $1 million from 2028, plus a constitutional challenge and a repeal initiative on the November ballot. California’s Prop 40 would take 5% of the net worth, measured at the end of 2026, of billionaires resident on January 1, 2026; a September PPIC poll had it ahead 52–46, but two competing measures could block it. Massachusetts’s 4% millionaire surtax brought in $3.38 billion in FY2026, about $1 billion above the budget estimate. New York chose a pied-à-terre tax on $5 million-plus homes over Mayor Mamdani’s proposed 2% city millionaire tax. Brazil ended three decades of tax-free dividends on January 1, 2026, with 10% withholding above R$50,000 a month and a minimum tax of up to 10% on income above R$1.2 million. Canada and Chile are cutting, and Argentina proposes to.

Asia-Pacific and the Gulf: no region is exempt. Australia’s Division 296 took effect on July 1, 2026, after a redesign that limited it to realized earnings: 30% on earnings attributable to super balances between A$3 million and A$10 million, and 40% above that. Japan will tighten its minimum tax on very high earners from 2027, raising the rate to 30% and halving the deduction. Thailand still taxes foreign income when it is brought into the country. Even the Gulf is changing: the UAE applies a 15% domestic minimum top-up tax to large multinationals, and Oman will levy the region’s first personal income tax in 2028. The Gulf still wins the migration contest, but it no longer wins it on the promise of zero.

04 What fails and what passes

Lay the ledger flat and a pattern appears. New taxes on the stock of wealth have mostly lost. France rejected Zucman. The Swiss rejected the inheritance tax by more than three to one. Colombia’s Constitutional Court voided the economic emergency under which the government had raised its wealth tax to 5%. Spain’s proposed 100% tax on non-EU homebuyers has stalled. Germany’s inheritance tax debate is still a debate.

What passes is narrower and more durable. Governments tax income and flows (dividends, carry, gains) at higher rates. They redefine who is a resident and stretch residence into a tail that outlasts the move. They treat events that are not sales as sales: funding a trust in China, leaving the country in Norway or the United States, a residence snapshot in California. And they build the data pipes first, so that the rules have something to bite on.

THE PATTERN

New wealth taxes have mostly lost when put to a vote; residence rules, deemed sales, and data exchange keep winning in finance ministries. The new measures attach to the person and follow the person across borders and back through time. California will test the first half on November 3. Plan for the second kind; the first kind mostly makes headlines.

05 The plumbing is the policy

China’s campaign did not need informants. It needed CRS. The OECD’s Global Forum reported in December 2025 that automatic exchange covered 171 million accounts worth nearly €13 trillion in 2024. The plumbing is boring. That is why it works. The EU’s DAC8 crypto reporting began collecting data on January 1, 2026, and under the OECD’s Crypto-Asset Reporting Framework, 47 jurisdictions begin exchanging crypto data in 2027 and 28 more in 2028. The UN is drafting a framework tax convention, with its next session in Nairobi from November 30 to December 11, without the United States, which walked out in February 2025.

The United States is the great asymmetry. It collects data from the world under FATCA, shares only limited deposit data back under a handful of reciprocal agreements, stays out of CRS, and is not scheduled to join crypto exchanges until 2029. To a home tax authority, a U.S. account is harder to see than a Hong Kong or Swiss one. Expect that authority to tax the person directly instead.

Inside the United States, enforcement capacity is falling. The IRS’s own budget request projects audit starts on high-income individuals falling from 6,786 in FY2025 to 2,264 in FY2026; Senate Democrats put the loss of enforcement staff above 30%; and TIGTA found about 39,000 high-income nonfiler cases, worth some $15.7 billion, sitting stalled. Do not mistake that for safety. Information-return penalties are largely automatic. The IRS has fewer auditors; the computer that mails penalty notices did not take the deferred-resignation offer.

06 The U.S. seats

For our clients, the question is not what China or the UK does in the abstract. It is which of your people, trusts, and investors sit in the path. Six seats come up most often.

The cross-border family. A trust funded by a parent in Shenzhen for a daughter in New York is now, from Beijing’s side, a resident-funded offshore trust whose income is taxed to the parent every year. From Washington’s side, it is most likely a foreign trust, and whether it is a grantor trust turns on §672(f), which generally limits foreign-grantor treatment to trusts that the grantor alone can revoke or that can pay only the grantor and spouse during the grantor’s life. If a parent funds a trust and then becomes a U.S. resident within five years, §679(a)(4) treats the funding as happening on the day U.S. residence begins, and a trust with a U.S. beneficiary is then the parent’s grantor trust. A U.S. person who funds a foreign non-grantor trust with appreciated property faces §684, which treats the transfer as a sale.

The reporting traps sit on the child’s side. A U.S. person who receives more than $100,000 in a year in gifts from a nonresident alien (counting gifts from related persons together) must report them on Form 3520; failing to do so costs 5% a month, up to 25% of the gift, under §6039F. A U.S. beneficiary who fails to report a distribution from a foreign trust faces the greater of $10,000 or 35% of the gross distribution under §6677. In two 2026 rulings styled Zhang v. IRS, the Northern District of California dealt with Chinese nationals living in the United States who received family gifts and filed Form 3520 late or not at all. In the first, involving a $71,777 penalty on $287,108 of wedding gifts (cut to $57,422 by IRS Appeals), the court held that the IRS had authority to assess the penalty and threw out the taxpayer’s Administrative Procedure Act and Excessive Fines claims; her reasonable-cause claim goes on. In the second, involving $723,993 of penalties, the court held that a refund suit or a collection due process hearing, and not the APA, is the way to contest it. Both cases turned on a missed form, not unpaid tax. The gift was cheap; the form was expensive.

Swipe sideways for the other columns.

Exhibit. Who sits where, and what the new rules can cost them. Dollar figures are illustrative.

The fund and the family office. Fund managers will feel this through their investors. Chinese LPs in offshore feeders, UK-resident partners in U.S. funds, and European family offices now need look-through data to satisfy their own tax authorities. Expect more requests for underlying holdings, more questions about whether a feeder counts as a trust-like arrangement, and more side-letter asks for tax reporting. PFIC annual information statements, CRS self-certifications, and clean K-1 footnotes are no longer back-office details; they are what keeps an LP from paying 20% on a number the tax bureau picks for it.

07 A worked example: the Oakridge Trust

The figures below are rounded and hypothetical; Oakridge, Harbor Partners, and the people named are fictional, and the example is a template for discussion, not advice. Mr. Lin, a resident of Shenzhen, is the founder behind Oakridge Family Holdings. In March 2023 he moved Hong Kong-listed shares into a BVI discretionary trust that he alone can revoke. His daughter, Grace, is a U.S. citizen who lives in New York and works at Harbor Partners. We translate yuan amounts at a single assumed rate, because the rules give no guidance on which rate to use.

Exhibit. The Oakridge Trust: inputs. Hypothetical; figures rounded.

Beijing’s bill. The contribution is a deemed sale: ($110.0 million − $10.0 million) × 20% = $20.0 million. The dividends are taxed to Mr. Lin whether or not the trust paid them out: $10.0 million × 20% = $2.0 million. Hong Kong does not withhold tax on dividends, so there is no foreign tax to credit. On these simplifying assumptions, Mr. Lin owes $22.0 million, payable by October 22 to avoid the surcharge. If he misses the window, the surcharge runs at 0.05% a day, or $11,000 a day on $22.0 million; measured from an assumed June 30, 2024 filing date for 2023 income, it would reach about 42% of the $20.0 million funding tax, or $8.4 million, by October 22, before any penalty under China’s general tax collection law. A $22.0 million bill becomes a $30 million problem by waiting.

Washington’s questions. Assuming the deed gives Mr. Lin alone a power to revest the trust property in himself, exercisable for at least 183 days of the year, the trust is a foreign grantor trust under §672(f)(2)(A)(i). If the trustee gives Grace a Foreign Grantor Trust Beneficiary Statement, she can treat the $3.0 million as though it came straight from her father, as a gift, and owe no income tax on it. She still reports the payment as a foreign-trust distribution in Part III of Form 3520. Miss that, and §6677 imposes the greater of $10,000 or 35%: $1.05 million on a payment that owed no tax at all.

Four years later. Mr. Lin dies in 2030. The trust becomes a foreign non-grantor trust, and the rules change for everyone. If the trustee accumulates income for four years and then distributes the $12.0 million to Grace, the throwback rules spread it back over the years it was accumulated and tax it at Grace’s own average top rate, and §668 adds an interest charge. If Grace is in the 37% bracket, the tax is about $4.4 million (more if the 3.8% net investment income tax applies); a rough interest charge, using today’s 7% underpayment rate over an average of two and a half years, adds about $0.8 million. Accumulated capital gains generally lose their character in the throwback computation, so a gain taxed at 20% if distributed currently can come out as ordinary income later. On the Chinese side, distributions to Mr. Lin’s widow, who remains a PRC resident, would, on our reading of the summaries, be taxed at 20% as she receives them.

Exhibit. Illustrative dollar summary of the Oakridge example. Rounded; not advice.

The fix in this example is ordinary planning done early. Distribute income each year so that none accumulates. If the trust is to move onshore, move it before income piles up, because a trust that was ever foreign carries its accumulated income, and the throwback charge, with it (§665(c)). Check the basis position at Mr. Lin’s death: Hong Kong shares held by a nonresident sit outside the U.S. gross estate, so a step-up generally depends on the deed fitting §1014(b)(2) or (3), which look for a trust that pays the grantor its income for life; a purely discretionary trust may not qualify. And keep both governments’ records in one file. Two governments are reading the same trust. The expensive mistake is keeping only one set of records.

08 How to read the evidence

Every tax increase arrives with a forecast of mass departure, and every forecast arrives with a chart. Handle the most quoted one with gloves. Henley & Partners sells residence and citizenship programs, so taking its migration forecast at face value is a little like asking a lifeboat company for the weather. Dan Neidle of Tax Policy Associates published a detailed critique of its 2025 report, and the Tax Justice Network pressed the point; in June 2026 Henley dropped its headline count of migrating millionaires and its named author.

The harder data tell a different story. HMRC figures released on July 30, 2026 show the number of UK non-dom claimants fell only 0.5% in 2024–25, to 73,400, while the tax paid by non-doms and deemed-domiciled taxpayers rose 9% to £13.6 billion. Norway lost about 300 very wealthy residents to Switzerland, yet wealth-tax revenue rose from NOK 27 billion in 2022 to an estimated NOK 34 billion in 2025. Massachusetts’s surtax beat its estimate by about $1 billion. Some people leave; many more stay and pay. Four cautions apply to any study a client puts in front of you:

• Selection. Leavers are the most visible taxpayers and the least typical. A famous founder moving to Miami tells you little about the thousand partners who did not.
• Timing. Departures cluster before an effective date and revenue lags by years. The UK’s 2025–26 data will not arrive until mid-2027.
• Who is counting. A migration consultancy, an advocacy group, and a finance ministry each have reasons to see what they see. Name the source; do not average them.
• What moved. Count the tax, not the moving vans. The person may move while the tax does not. Residence tails, exit taxes, and snapshots like California’s are designed so that leaving is not the same as escaping.

What we would require.

• A two-country trust map for every structure with a PRC-resident funder or beneficiary: who contributed, who is deemed to have contributed, U.S. classification under §§672(f) and 679, and Form 3520 and 3520-A positions. Ideally before October 22.
• A basis file for every asset contributed to an offshore trust since 2023, with the exchange rate used and why. The family that can prove cost pays tax on gain; the family that cannot pays on whatever the squad decides.
• A residence file for each principal: days, homes, family, and where economic interests sit. For California clients, a January 1, 2026 snapshot; for UK clients, the 10-of-20-year count.
• A foreign tax credit model wherever China’s 20% falls in a different year or on a different taxpayer than the U.S. tax. Credits that land in the wrong year often are not credits.
• A fund-side protocol: refreshed CRS and CARF self-certifications, PFIC annual information statements on request, and a standard answer to LP look-through questions.
• An exit memo before any renunciation, green-card surrender, or move: §877A, §2801, the departing country’s exit or tail rules, and the arriving country’s.

What we would watch next.

1. October 22, 2026. China’s trust window closes. Watch for an extension, published case examples, or an exchange-rate notice.
2. October 28, 2026. Chancellor Healey’s first UK Budget; capital gains tax is the most-discussed target.
3. November 3, 2026. California Props 40, 41, and 42; Washington’s I-645; U.S. midterms.
4. November 30 – December 11, 2026. UN tax convention negotiating session in Nairobi.
5. 1. First crypto data exchanges under CARF; Japan’s tighter minimum tax; Australia’s first Division 296 assessments for 2026–27.
6. June 15, 2027. Due date for Form 708 returns reporting 2025 gifts and bequests from covered expatriates under §2801.
7. Pending. The Dutch Senate vote on Box 3; Germany’s inheritance tax reform and Constitutional Court ruling; any Treasury guidance under new §951B.

Our take

Myron Scholes and his co-authors taught a generation of us that the taxing authority is an uninvited party to all contracts. This year the uninvited party started reading the trust deeds, too. It is tempting to read China’s crackdown as a Chinese story about a Chinese property bust. It is that. It is also the most aggressive version of something happening almost everywhere our clients do business: governments that cannot or will not tax wealth directly are taxing the people who hold it, at the moments when those people can be seen.

The tools are converging. Outside the United States, which still taxes by passport, residence is displacing domicile as the hook. Deemed sales replace realization as the trigger. Look-through rules replace entity boundaries. And automatic exchange replaces the tax inspector’s guesswork with the bank’s own records. Each tool is defensible on its own. Together they make the tax bill portable. A family can move the assets, change the trustee, or change the passport, and the bill still knows where to find them.

That changes what good advice looks like. The last generation of cross-border planning was about location: which island, which treaty, which wrapper. The next generation is about proof: records of cost, records of residence, records of tax already paid, kept to a standard that two governments will accept at once. The families who come through this well will not be the ones with the cleverest structures. They will be the ones who can answer an audit in both languages.

The market is asking, “Where should we go?” The harder question is, “What can we prove, to every government that now has the data, about where we live, what we paid, and what we have already paid?” A trust can move. A passport can change. The data got there first.

Selected research and primary authorities

1. Myron S. Scholes, Mark A. Wolfson, Merle Erickson, Michelle Hanlon, Edward L. Maydew, and Terry Shevlin, Taxes and Business Strategy: A Planning Approach, 5th ed. (Pearson, Global Edition, 2015), ch. 1, p. 20.
2. Bloomberg, “China’s Tax Crackdown Squeezes Billionaires Harder Than Ever” (Sept. 27, 2026), and Bloomberg newsletter, “China’s wealthy are scrambling” (Oct. 1, 2026), read through The Standard (Hong Kong, Sept. 28, 2026) and Bloomberg Tax.
3. Morgan Lewis, “China Establishes New Individual Income Tax Rules for Offshore Trusts” (July 2026).
4. KPMG China, China Tax Alert, Issue 5 (July 2026).
5. Xinhua, report on MOF/STA Announcement No. 21 of 2026 (July 24, 2026).
6. Reuters, analysis of China’s offshore trust crackdown (Aug. 20–21, 2026) and BofA single-stock risk note (Sept. 22, 2026).
7. Financial Times, report on China’s hunt for unpaid overseas taxes (Aug. 2026), via Private Banker International.
8. HM Treasury and HMRC, Autumn Budget 2025 (Nov. 26, 2025) and statistics on non-domiciled taxpayers (July 30, 2026); Mayer Brown, UK carried interest reforms (Feb. 2026); Grant Thornton UK, Budget 2026 predictions.
9. Congressional Budget Office, Monthly Budget Review (Sept. 2026); Ballotpedia, LAist, and PPIC, California Prop 40 (June–Sept. 2026); Bloomberg Government and CPA Practice Advisor, Washington’s income tax (Mar.–May 2026); WBUR, Massachusetts surtax (July 22, 2026).
10. Federal Register of Legislation (Australia), Act No. 8 of 2026 (Division 296); Japan Ministry of Finance and BDO, 2026 tax reform; KPMG Oman and Gulf News, Oman personal income tax.
11. OECD, Revenue Statistics 2025 (Dec. 11, 2025) and Global Forum on Transparency, New Delhi plenary (Dec. 2025); IMF, Fiscal Monitor (Apr. 2026); Oxfam, “Resisting the Rule of the Rich” (Jan. 20, 2026).
12. Henley & Partners, Private Wealth Migration Reports 2025 and 2026; Tax Policy Associates (Dan Neidle), analysis of the Henley report (July 27, 2025); Tax Justice Network (2026).
13. 26 U.S.C. §§665, 666, 667, 668, 672(f), 679, 684, 877A, 1014, 2801, 6039F, 6048, 6621, 6677, read on law.cornell.edu (Oct. 1, 2026); Treas. Reg. §§1.672(f)-1, 1.672(f)-3, 1.1411-3; Rev. Proc. 2025-32 (2026 inflation adjustments).
14. Zhang v. IRS (N.D. Cal. May 4, 2026), via Miller & Chevalier; Zhang v. IRS, No. 26-cv-00525-VKD (N.D. Cal. July 30, 2026), via Current Federal Tax Developments and Bloomberg Tax; TIGTA, Report 2026-308-047 on high-income nonfilers (Sept. 2026).

Important notes

This alert discusses U.S. federal tax law and, for context, foreign and state law as reported by the sources listed. La Presa Partners does not practice Chinese, UK, or other non-U.S. law; the descriptions of foreign rules rely on the English-language summaries named above, and readers should confirm them with local counsel. The Oakridge Trust example is hypothetical, uses rounded figures and a simplified interest computation, and assumes facts (including the surcharge start date) that an actual engagement would test; it is a template for discussion, not advice. Market and migration estimates differ by source, and we have named the source rather than reconcile them. Ballot measures, pending legislation, and court challenges noted here may change after October 1, 2026.

This client alert is for general information only. It is not tax, legal, investment, or accounting advice. Consult your own advisers about your particular circumstances before acting on any matter discussed here. Questions: Carlos Schmidt, CPA, La Presa Partners LLC, carlos@lapresallc.com, (917) 558-6393.

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This alert is for general information only and is not tax, legal, investment, or accounting advice. Consult your own advisers before acting. Carlos A. Schmidt, MBT, MBA, CPA · Managing Member · carlos@lapresallc.com · (917) 558-6393.