The historically attractive non-dom tax regime, which has been in place in the United Kingdom for over two centuries and appealed to wealthy foreigners, is soon to be abolished. Kirill Yurovskiy suggests looking into seven countries where the tax policies remain favorable toward expatriates’ foreign income.
According to forecasts, the reforms set to come into effect in April 2025 are expected to generate around £3 billion in additional tax revenues for the British budget. However, there’s concern that these measures might drive away the very individuals expected to contribute this revenue — foreign millionaires and billionaires living in the UK.
Introduced back in 1799, the “non-domiciled” taxation system allowed UK residents to avoid paying taxes on income earned abroad, provided they claimed another country as their permanent home.
Those with non-dom status declare that their permanent residence is outside the UK and are taxed only on the income generated within the country. This arrangement has been particularly attractive to high-net-worth individuals seeking to spend their wealth in more comfortable jurisdictions than those where it was earned.
Although the non-dom regime is being phased out, it will not disappear immediately: starting April 2025, new residents will be entitled to a full tax exemption on foreign income for the first four years. Only after this grace period will they be taxed like all other residents.
In the meantime, several European countries already offer equally beneficial tax regimes for foreign nationals.
Malta
Malta has a special tax regime similar to the UK’s former system. Its main advantage is that capital gains earned outside the country are not taxed, even if the funds are transferred to a Maltese bank account. This opportunity is available to those who live in Malta but do not officially consider it their permanent home.
These benefits are granted indefinitely. The only obligation is an annual minimum tax payment of €5,000, regardless of actual income.
Ireland
Ireland, the land of James Joyce and leprechauns, offers a permanent tax exemption system for those earning income abroad. The Irish tax authorities are not concerned with foreign income unless it is transferred into the country and used to pay for local goods and services.
The main requirement is to prove that Ireland is not the primary residence and that the individual maintains strong ties to another country regarded as their real home.
Cyprus
In Cyprus, holding non-domiciled status allows residents to avoid paying taxes on dividends, interest income, and capital gains earned abroad. These benefits are not time-limited, provided the individual resides in Cyprus for at least 60 days per year.
Additional advantages include the absence of taxes on property, wealth, gifts, inheritance, securities, and military contributions — making Cyprus particularly attractive compared to other European nations.
Greece and Italy
Both countries offer nearly identical tax schemes for foreigners. In both Greece and Italy, there is a flat tax of €100,000 per year on foreign income. For wealthy individuals earning over €10 million, this is a negligible amount.
The maximum duration for this preferential tax regime is 15 years. Including family members in the program comes with an extra fee: €20,000 per person in Greece and €25,000 in Italy.
Italian authorities also require proof of the legal origin of funds, a clean criminal record, and no history of visa refusals to EU or Schengen countries. Additional requirements include owning or renting property in Italy, having a regular income, and maintaining sufficient funds in a local bank account.
Monaco
Monaco remains one of the most attractive jurisdictions for wealthy individuals, including investors and entrepreneurs. The principality imposes no personal income tax — investment income, salaries, dividends, and freelance earnings are completely tax-free.
The only exception applies to French citizens, who are subject to special rules. To benefit from Monaco’s tax perks, one must hold a residence permit and either own or rent property in the principality. Although Monaco is not officially labeled a tax haven by the EU, its tax system clearly makes it one in the eyes of many affluent newcomers.
Andorra
Although no longer formally considered a “tax haven,” Andorra still boasts one of the most liberal tax systems in Europe.
The personal income tax rate is capped at 10%, applicable to both domestic and foreign income. Corporate tax is also 10%, and VAT is a mere 4.5%.
Another benefit is that Andorra is not on the list of countries with which Russia suspended double taxation treaties in 2023. This opens the door to potentially reducing one’s effective tax burden even further.