THE United Kingdom (UK) announced Wednesday that it would scrap its non-dom status, which allows people who live there but have permanent residency abroad to avoid taxes on their foreign assets for 15 years.
The overhaul of a system that has provided preferential treatment for wealthy foreigners comes as the growing wealth gap in many western countries is pushing some to restrict tax and citizenship benefits aimed at expats. Portugal last October announced plans to get rid of its non-habitual resident program, a policy that let foreigners pay lower income and pension taxes than locals for 10 years.
So where can expats from the UK and other places go to protect their assets? Here are five countries around the world that offer benefits for foreigners.
ANTIGUA AND BARBUDA
Since a new tax law was implemented in 2016, residents and non-residents are not taxed on income earned in the country or on their foreign assets. This law has been a major driver for the country’s economy, attracting wealthy investors and boosting the real estate market. There are also no wealth or inheritance taxes in these tropical islands.
Foreigners can also secure citizenship that promises visa-free travel to Europe for as little as $100,000. Antigua and Barbuda citizens can travel to 154 countries without applying for a visa beforehand. Beware that the European Union (EU) is trying to crack down on this visa-free policy, and putting pressure on it and other Caribbean nations to either shut down their citizenship-by-investment programs or tighten them.
UNITED ARAB EMIRATES (UAE)
Dubai and its fellow emirates have attracted a flood of hedge fund managers and bankers from around the world in the past few years, thanks to its loose tax laws and amenities for the wealthy. The UAE doesn’t tax personal income, capital gains, inheritance, gifts or properties. And it has one of the lowest corporate tax rates in the world, at 9% for companies generating more than 375,000 dirhams ($102,000) in annual profits.
The country also recently increased the scope of people who can apply for long-term resident visas, including entrepreneurs and engineers. However, Dubai is becoming unaffordable as its popularity sends real estate prices rocketing. Waiting lists for international schools and private clubs are running pretty long.
ITALY
Italy’s generous tax system for foreigners established in 2017 has been very effective at attracting expats. The number of people moving to Milan and benefiting from these tax breaks more than doubled in 2021 to a total of more than 1,300 people. New residents pay an annual fee of €100,000 ($109,000) and are exempt from paying tax on foreign income. They can also pay no tax on 50% of their Italian income if they’ve not been a resident for the two preceding fiscal years.
The recent Milan rush has pushed up real estate prices and contributed to the city’s higher cost of living, stoking tensions among locals. Still, as the UK and Portugal withdraw incentives for foreigners, wealth consultants say Italy stands to be one of the main beneficiaries of global expats — especially from America and the Middle East — looking to park their cash in a low-tax European country.
SINGAPORE
Singapore is a mixed picture. While the Asian city-state has benefited from China’s clampdown on Hong Kong, last year’s move to raise its property tax to 60% for foreign buyers has made it less advantageous. The personal income tax rate for residents is low, capped at 22%. The standard corporate tax is 17%.
Still, to purchase a house worth $5 million, a foreign buyer will have to pay 65% in taxes in Singapore, including other levies, compared with about 4% in New York, 15% in London and 30% in Hong Kong, according to Savills calculations.
MONACO
Multi-millionaires have continued to flock to Monaco to enjoy the city’s casinos, glitzy lifestyle and low taxes. A playground for the European elite, the tiny country has no taxes on property, personal income or capital gains. Rental properties are taxed at 1% of the annual rent. Monaco eliminated taxes on dividends paid by local companies and doesn’t charge a general corporate income tax.
The European country has the most expensive real estate in the world, according to a recent report by wealth consultancy Knight Frank, where $1 million buys just 172 square feet of property. The country’s residence permit can be obtained by investing over €1 million ($1.1 million).
HIGHEST TAX BANDS
If you are curious about countries that tax more but also offer a good quality of life and public services, France, Belgium, Denmark and Japan have some of the world’s highest tax bands.
France’s income tax goes up to 45%, similar to Japan. France charges a 3% surtax on income exceeding €250,000 ($273,000) while capital gains tax is 19%. Denmark’s income taxes go up to 52%. In Belgium, any income over €46,440 is taxed at 50%. — Bloomberg