The so-called non-dom regime is being abolished in Great Britain. Capital and people often migrate to Switzerland, Spain, Italy, Portugal, Cyprus for this and other reasons. What is appealing there? Which ones could be the best tax regimes in Europe?

Switzerland

PIT

Some cantons offer a flat PIT rate for people who do not work in Switzerland and are not Swiss citizens, without applying PIT on capital gains. PIT in this regime is applied as a % of shared expenses. For example, if the canton estimates that a person’s lifestyle in Switzerland involves spending EUR 1m per year and the average such PIT is 20%, then the person will pay 200k. Typically, the lifestyle calculation includes: housing expenses, transport, clothing, food, insurance and health services, education and childcare, travel and entertainment, including hobbies and restaurants, etc. daily expenses. The canton compiles information from interviews, bank statements and market estimates.

Wealth tax

In addition, wealth tax must be paid. Its amount is 0.5%, and its base is 20x the person’s lifestyle. In our example – 0.5% of 20x 1m = 100k.

Social

Additionally, social security contributions must be paid – around EUR 25k francs per year.

Summary

Then the total tax payment would be around 325k francs. If income outside Switzerland is significant, but lifestyle expenses are reasonable, this could be an interesting option.

Italy

Some time ago, the Italians came to the conclusion that their tax regime was inefficient and the tax burden was high. Wealthy people, ideas and investors did not come, and young entrepreneurs left. At that moment, politicians decided that more wealthy people should come to the country, which, in turn, would stimulate the economy with demand for real estate, design, gastronomy, etc. Therefore, a regime has been created in Italy, according to which wealthy and economically active people who move to this country are essentially exempt from Italian taxes for 15 years. Such people are subject to an annual payment of around EUR 100k per year, while the rest of their income is taxed according to the rules of the country where the income originates. This is a classic territorial regime. Of course, there are additional rules to prevent abuse that you should pay attention to before settling happily in Italy. The regime has proven so popular in recent years that in professional conferences many joke that Milan cannot accept new residents.

Read the full story by tax expert Jānis Taukačs here.