Stricter tax regulations are sending super-rich Europeans on the move. However, low-tax countries such as Switzerland, Cyprus and Malta are facing competition from the Emirates in the fight for rich foreigners.
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The competition between low-tax countries for super-rich emigrants is intensifying. While Great Britain, for example, has abolished a tax break that was popular with foreigners, other countries continue to want to specifically attract millionaires and billionaires.
Cyprus, Greece, Italy, Malta, Portugal and Spain in particular have been competing with the tax haven of Switzerland for some time. Nevertheless, the United Arab Emirates are now more attractive for many.
Europe still offers tax advantages
In Great Britain, the new Labour government, which has been in office since July, has abolished a tax rule that primarily benefited wealthy foreigners. The so-called “non-dom” has been in place since 1799 and meant that only money earned in Great Britain is taxed. In the past, this benefited nobles, who thus avoided taxes on their colonial possessions. Since the change, global income has been taxed. However, temporary relief applies to new arrivals. And yet a flood of relocations has been reported, reports the British “Financial Times”. Great Britain is just one example among many: Since Norway changed its wealth and capital gains tax system in 2022, super-rich people have been steadily migrating to Switzerland. In France, too, many are said to have made emergency plans should the new alliance of left-wing parties in parliament tax wealth more heavily again.
Wealthy people want to avoid higher expenses by emigrating. Tax advantages are therefore a key factor when it comes to attracting rich foreigners who consume significantly more expensive goods locally than the average citizen.
Switzerland continues to be seen as a pioneer. Wealthy individuals there make individual agreements with local authorities on their tax rates. But Switzerland is not the only country vying for favor: Cyprus and Malta do not tax foreign dividends. Greece and Italy have maximum flat tax rates of 100,000 euros and 200,000 euros per year. However, Italy recently doubled the annual flat tax on the foreign income of new residents as if out of nowhere – also to appease locals’ displeasure at the benefits.
“Exodus” of the super-rich intensifies
However, this increase was not well received, as wealthy emigrants value stability above all else – politically, economically and in terms of their own taxes. Experts point out that changes in the international financial landscape over the past decade have encouraged many to protect their assets.
“People used to stay in their own country and hide their money in tax havens abroad,” Pascal Saint-Amans, former head of the OECD’s tax department, told the Financial Times. “But the end of banking secrecy and the increasing exchange of information have led to people leaving a country if they don’t want to pay taxes there.”
Anthony Richardson, a lawyer at Church Court Chambers in London, is therefore observing an increased “exodus” of millionaires and billionaires from the UK and other countries. This is also due to the massive indebtedness of many countries during the pandemic, he told the Financial Times. “They see the danger that their assets will be seen as easily available cash.”
Super-rich people from Europe are therefore increasingly moving to the United Arab Emirates, particularly Dubai, according to surveys by Henley & Partners, an investment migration consultancy. Dubai does not levy any income or capital taxes on individuals.
Source: Stern
