UK tax attack leads to wealthy families seeking ‘La Dolce Vita’

With the abolition of the UK’s long-standing non-dom regime and introduction of a residence-based tax system from April 6 2025, international competition to attract wealthy individuals has intensified.

Across Europe and beyond, jurisdictions are unveiling or enhancing bespoke tax regimes. These include Switzerland’s lump sum or forfeit model, the flat tax schemes of Italy and Greece, and modernised remittance-based system of Malta. All are seeking to capitalise on the UK’s shifting tax landscape.

Lifestyle factors

A decision for wealthy families to relocate based on tax alone would be ill-advised. One of the key reasons for the UK’s historic success in attracting non-doms was never solely about tax, but its appeal as a place to live, offering stability, quality education, strong infrastructure and cultural access. So, where might those leaving the UK go that does not compromise these lifestyle factors?

Switzerland’s forfeit regime is long established, dating back to 1862 and focused on attracting wealthy and retired foreign nationals. It is not based on worldwide income and instead allows eligible individuals to pay a lump sum based on a pre-agreed amount (based on annual living expenses).

This offers a simplified tax assessment and potentially lower tax rates. That said, there are significant restrictions — the taxpayer is not permitted to physically work in Switzerland or have Swiss citizenship or have been resident in Switzerland in the last 10 years.

Furthermore, Swiss residence is not always straightforward and, for non-EU citizens, this hurdle may be unattractive compared to the ease of obtaining investment visas in some other countries. Additionally, the political support for the regime varies regionally, the trend has been to abolish in its German speaking canton while it is retained in the French speaking ones.

Italian appeal

In contrast, Italy welcomes both foreign and Italian nationals under its flat rate tax scheme, which is one of the most compelling alternatives. This is a straightforward regime with only two requirements: a transfer of residence to Italy and a 10-year period of Italian non-residency prior to the relocation. Individuals can pay a flat rate of €200,000 ($230,000) annually on all foreign-sourced income, regardless of the amount.

Applications have grown steadily, from 363 in 2019 to 1,242 in 2023, demonstrating both its popularity and stability. It is also possible to ‘cherry pick’ different aspects of the regime to apply, and, in contrast to other countries, it is possible to request a tax ruling before arriving in the country.

Moreover, Italy is not putting all its eggs in one basket. It also offers the Impatriates Regime — a tax incentive for individuals moving to Italy, offering a 50 per cent tax exemption of Italian sourced income for five years — as well as a 7 per cent flat tax for foreign pensioners, subject to certain qualifying conditions as to geographic relocation. Interestingly, the Impatriates Regime attracts significantly more applicants than the flat tax scheme, reflecting both its broader applicability and appeal to mobile professionals.

Spain’s ‘Beckham Law’ and Portugal’s reformed tax regime are designed to attract individuals actively contributing to the local economy via employment, innovation, or entrepreneurship, rather than merely importing. Portugal’s original, popular non-habitual tax resident scheme was a victim of its own success, scrapped by the then centre left government from January 1 2024 and replaced with a new scheme with a particular focus on those working in scientific research and innovation creating a more limited pool of eligible applicants.

Greece has followed Italy’s lead with its own flat tax regime (with a smaller €100,000 annual charge, and 7 per cent pensioner tax option, aimed at drawing foreign wealth into a more affordable, sun-drenched environment. The lower cost of living is a clear advantage. However, compared to Italy, Greece’s infrastructure, healthcare system and administrative processes remain less reliable.

For those willing to forgo a European lifestyle and focus purely on tax neutrality, the UAE may be a clear winner. With no personal income tax, no capital gains tax, no inheritance tax, and no wealth tax, it is a blank slate for global wealth planning. Residency is accessible via investment or employment and the UAE’s growing financial and commercial hubs offer modern infrastructure and luxury living.

The UK’s new Foreign Income and Gains (FIG) regime, offering just a four-year relief window, pales in comparison to its European counterparts. Italy offers 15 years of relief, Switzerland’s forfeit regime is unlimited, and Portugal and Greece provide 10 years of tax incentives. This short timeframe undermines the UK’s ability to attract and retain globally mobile individuals seeking long-term certainty.

As the UK changes take effect, many wealthy families and individuals are facing a difficult decision. While no decision should be made on tax alone, those seeking a balance between lifestyle and tax efficiency will find Italy uniquely positioned to absorb the fallout of the UK’s changes and continue to attract global wealth in the years ahead.

Clare Pooley, private client and tax associate, Boodle Hatfield