A wave of taxation came with the new government – cranking them up by £40billion.

It was part of a promise laid out by Sir Keir Starmer, and his Chancellor Rachel Reeves, to set into motion what they said will help the country grow.

There would have been a sigh of relief nationwide when personal tax increases were left out of the Budget.

Yet, concerns over an ‘income stealth tax‘, an increase in taxes paid by employers, new taxes owed when individuals sell shares and the air passenger duty on private jets, as well as VAT being added to private school fees will have left some feeling on edge.

Amid rising scrutiny over tax regimes in Europe, a report by the EU Tax Observatory has revealed a growing trend of preferential systems targeting wealthy foreigners. These regimes are designed to attract affluent expats while maintaining high statutory tax rates for residents—a strategy that has shifted since the 2008 financial crisis.

Tailored ‘Tax Havens’

The appeal of a tax haven depends on individual circumstances, such as the source of wealth. “For someone with significant capital gains, a regime offering 0% tax on remittance capital gains is far more appealing than one designed for active income earners,” Jason Piper, head of Tax and Business Law at the Association of Chartered Certified Accountants, told EuroNews.

This diversity in tax systems has made countries like Italy, Switzerland, and Portugal attractive for high-net-worth individuals seeking to reduce their tax burden.

Italy

Italy has emerged as a favoured destination, combining its cultural allure with significant tax incentives. Among these is a flat tax regime introduced for foreign income, allowing wealthy individuals to pay an annual lump sum of €200,000 (£169,000) regardless of earnings.

The scheme offers a 15-year tenure and is open to those who haven’t been Italian tax residents for at least nine out of the last ten years. Tax expert David Lesperance highlights its cost-efficiency: “For ultra-wealthy individuals, the flat tax often costs less than their annual tax planning compliance fees.”

Switzerland

Switzerland’s “forfait fiscal” program bases tax liability on expenses rather than income. While available to wealthy foreigners, it is subject to minimum levies, such as seven times the annual rental value of the primary residence or CHF 429,100 (€455,000; £384,604).

Eligibility is limited to non-citizens relocating for the first time or returning after a decade. However, recipients must abstain from employment or business activities within the country, targeting those with passive income streams.

Portugal

Portugal’s tax incentives for expats, once criticised for fueling local housing crises, are undergoing recalibration. The Non-Habitual Resident (NHR) regime previously allowed retirees to avoid taxes on foreign pensions for up to a decade. However, after pressure from Nordic countries, Portugal now focuses on attracting skilled professionals who contribute to its economy.

Portugal’s Finance Minister Joaquim Miranda Sarmento announced earlier this year that new tax breaks would prioritize salaries and professional income while excluding pensions, dividends, and capital gains.

Corporate Loopholes

Wealthy individuals in Britain can also upsticks and leave and exploit holding companies to shelter assets in foreign lands. These entities enable owners to classify personal revenue as corporate income, taxed at lower rates. Countries like Hungary (9%), Bulgaria (10%), and Ireland (12.5%) are attractive for their low corporate tax rates.

While the OECD’s global minimum corporate tax rate of 15% aims to curb such practices, it currently applies only to firms earning over €750million (£633million) annually. Implementation remains uneven across the 140 signatory countries.