UK is Abolishing the Non-Dom Tax Regime: Where to Go?

Date

Jul 9, 2024

min read

The recent announcement by the Labour Party to abolish the UK’s non-domiciled (non-dom) tax regime has sent shockwaves through the community of wealthy foreign nationals residing in the UK. This regime, which allowed non-doms to pay tax only on their UK income, has been a cornerstone for many high-net-worth individuals' tax planning strategies. With its impending abolition, it is crucial to explore alternative jurisdictions that offer favorable tax regimes.

Here are some of the best options to consider.

1. Italy: €100,000 Annual Lump Sum Tax

Italy offers an attractive tax regime for new residents. Under this system, foreign income is taxed at a flat rate of €100,000 per year, regardless of the amount. This regime can be enjoyed for up to 15 years, making it an excellent option for those with substantial foreign income.

Benefits:

Simple and predictable tax liability on foreign income.
No wealth tax, gift tax, or inheritance tax on assets outside Italy.
Favorable tax treatment can extend to family members for an additional €25,000 per person per year.

Please contact Move To Dolce Vita, our Italian partner dedicated to Italian tax and legal assistance.

2. Malta: A Similar Non-Dom Syste

Malta's tax regime closely resembles the UK's former non-dom system. Residents who are not domiciled in Malta are taxed only on income and capital gains arising in Malta and on foreign income remitted to Malta. Foreign capital gains are not taxed even if remitted.

Benefits:

Attractive for those who have substantial unremitted foreign income or capital gains.
Double tax treaties with over 70 countries.
Residence permits through investment programs.

3. Cyprus: Strategic Non-Domicile Tax Regime

Cyprus offers a highly favorable non-dom tax regime lasting up to 17 years. Non-doms are exempt from several taxes, including income tax on dividends and interest, and special defence contributions on worldwide income.

Benefits:

17-year exemption period on various taxes.
Low personal income tax rates and no inheritance or wealth taxes.
Ideal for individuals with significant dividend or interest income from abroad.

4. Dubai: Zero Tax System

Dubai stands out with its zero tax system. There are no income taxes on individual earnings, making it an attractive destination for those seeking complete tax freedom.

Benefits:

No personal income tax, no capital gains tax, and no inheritance tax.
High quality of life and modern infrastructure.
Stable economy with a focus on business and finance.

5. Singapore: Territorial Tax System

Singapore operates on a territorial tax system under which only income earned within Singapore is subject to tax. Foreign income is not taxable if it is not remitted to Singapore.

Benefits:

Tax exemption on foreign-sourced income not remitted to Singapore.
Low tax rates on local income.
Strategic location with strong financial services sector.

Conclusion

The abolition of the UK's non-dom tax regime necessitates a strategic reevaluation of one's residency and tax planning. Italy, Malta, Cyprus, Dubai, and Singapore each offer unique advantages for wealthy individuals seeking favorable tax conditions. Whether it’s the flat tax in Italy, the familiar system in Malta, the extended non-dom benefits in Cyprus, the zero-tax environment in Dubai, or the territorial system in Singapore, there are viable options to consider. Consulting with tax professionals to navigate these changes and explore the best jurisdictions is essential for safeguarding wealth and optimizing tax liabilities.

For personalized advice on navigating these changes and choosing the best tax-friendly jurisdiction, contact our experts at Travels & Savings, The Tax Firm for Global Citizens. We are here to help you make informed decisions and secure your financial future.

‍