The abolition of the UK’s ‘resident non-domiciled’ (RND) tax regime marks a significant shift in the landscape for ultra-high-net-worth (UHNW) individuals. As these individuals reassess their residency, several jurisdictions are vying to attract this affluent demographic with competitive tax regimes and high-quality lifestyles. This analysis delves into the intricacies of each popular destination.
Monaco: The Billionaire’s Playground
Monaco continues to epitomise luxury living and fiscal benefits. As one of the most exclusive addresses, it requires an individual to have substantial wealth to be considered wealthy by local standards. Beyond its tax-free income benefits, Monaco offers a stable political environment and a robust economy centred around tourism and finance. The principality’s stringent requirements for residency include secured accommodation and a clean criminal record, ensuring that it remains an enclave for the affluent.
Switzerland: Stability and Scenery
Switzerland’s appeal extends beyond its picturesque landscapes to its favourable tax structure. The federal tax ceiling on income is appealingly low, and there is no inheritance or gift tax at the federal level. The cantonal system allows further financial advantages depending on the specific region. Switzerland’s property market regulations, which restrict foreign ownership to designated tourist zones, preserve exclusivity and maintain high property values. Additionally, the expenditure-based taxation available to foreign nationals without gainful employment offers an attractive tax planning option.
UAE: Strategic Hub for Global Business
The UAE stands out not only for its tax efficiencies—such as no income or wealth taxes—but also for its strategic geographical position, bridging major continents. This makes it an ideal base for international business operations. The recent introduction of corporate and value-added taxes is offset by their relatively low rates and the absence of other significant taxes, ensuring that the UAE remains a top choice for UHNW individuals seeking a favourable tax regime coupled with high-quality urban development and infrastructure.
Italy: Cultural Riches and Tax Incentives
Italy is increasingly recognized for its strategic tax incentives aimed at attracting wealthy expatriates. The option to pay a flat tax on foreign income is particularly appealing for those looking to optimise their tax situation. Italy also offers significant cultural and lifestyle attractions, from its historic cities and cultural heritage to its cuisine and climate, making it a compelling choice for those seeking a blend of lifestyle and financial benefits.
Portugal: Revamped Tax Incentives Under the ITS Programme
Portugal has been carving out a niche as a top destination thanks to its updated Non–Habitual-Resident (NHR) scheme, which has now been enhanced and rebranded as the Incentivised Tax Status (ITS). This regime offers a flat tax rate of 20% on Portuguese-sourced income for eligible professionals, as well as complete tax exemptions on various forms of foreign income, like dividends, royalties, and capital gains. The ITS is designed to attract skilled professionals to Portugal, particularly in high-tech and scientific sectors, by offering a simplified application process and providing these perks for ten years. With a glorious climate, vibrant culture, and good position within Europe, Portugal offers a combination of significant tax advantages and high quality of life, making it an increasingly popular choice for UHNW individuals looking to relocate.
The United Kingdom: Still a Global Draw
Despite the changes to its tax regime, the UK retains significant appeal due to its strong rule of law, cultural tolerance, and high-quality education system. The new four-year tax relief for new residents on offshore assets demonstrates the UK’s ongoing commitment to attracting international wealth. However, the long-term implications of the RND regime’s abolition will require careful financial planning and advisement for those looking to relocate or maintain their residency in the UK.
So, Where Are The Wealth Holders Moving To?
The decision to relocate for tax purposes involves more than just financial considerations; it also encompasses lifestyle, safety, educational opportunities, and cultural offerings. Each jurisdiction highlighted here presents a unique combination of advantages that cater to the diverse needs and preferences of UHNW individuals. As global mobility increases and tax regimes evolve, the landscape for wealth relocation will continue to change, requiring ongoing evaluation and strategic planning.
For comprehensive financial guidance and to explore which relocation options might best suit your personal and financial circumstances, speak to one of our specialists.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.