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Italy -

Italy appeals to expats not only for its lifestyle but also its unique tax breaks, particularly designed to attract high-net-worth individuals seeking fiscal advantages.

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A surface of high taxes -

Italy may appear to have high personal and corporate tax rates, but it conceals significant incentives for foreigners willing to move and invest in the country.

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The flat tax regime -

Italy’s flat tax regime allows wealthy newcomers to pay a fixed annual fee on foreign income, regardless of the amount, making it ideal for very high earners.

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The price tag -

The flat tax was recently raised to €200,000 (about US$215,000) annually, doubling the previous fee, yet remains attractive due to the simplicity and potential tax savings involved. 

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Fifteen-year time frame -

The flat tax regime lasts for up to 15 years and applies only to those who haven't been Italian tax residents for nine out of the past 10 years.

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Exclusively for the wealthy -

Given the steep cost, this tax scheme is only beneficial for ultra-wealthy individuals seeking to avoid regular income tax on significant foreign earnings.

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No compliance headaches -

The lump sum tax replaces traditional planning costs, making it especially attractive to those who already spend heavily on accounting services.

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Switzerland -

Switzerland offers a lump-sum tax model, known as forfait fiscal, where taxes are based on expenditures, not income, targeting wealthy expatriates with passive income.

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Rare but real -

Fewer than 0.1% of Swiss taxpayers use this scheme, as eligibility and benefits are tightly controlled by the government and vary by canton.

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Expense-based calculations -

Instead of taxing wealth or income, certain Swiss cantons calculate taxes based on a person’s living expenses, such as rent or property value.

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Minimum contribution required -

The tax base must exceed either seven times annual rent or CHF 429,100 (about US$490,000), whichever is higher, ensuring only the rich benefit.

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Cantonal flexibility -

Although the federal government sets a base threshold, individual Swiss regions can raise the minimum further, depending on local financial goals and demographics.

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Who qualifies in Switzerland? -

Applicants must not be Swiss citizens and should either be first-time residents or returning after being away for at least a decade.

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No jobs allowed -

To qualify, you can’t work or run a business in Switzerland; the scheme is for those with passive income, not active earners.

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Portugal -

Tax breaks in Portugal, once a key draw for retirees and wealthy foreigners, have sparked criticism amid rising living costs and housing pressures.

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The original NHR scheme -

The Non-Habitual Residency (NHR) program allowed foreigners to live in Portugal for 10 years with very limited tax on foreign-sourced income, including pensions.

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Tax-free pensions -

Under the old NHR system, many retirees paid no tax on their foreign pension income, making Portugal a favorite for wealthy northern Europeans.

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Tax for professionals set at a flat rate of 20% -

Professionals working in Portugal under specific “high value” activities benefited from a flat 20% income tax rate, further increasing the program's appeal.

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International backlash -

Countries like Finland and Sweden protested, as they saw an outflow of pensioners taking advantage of Portuguese tax exemptions.

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Treaty tweaks requested -

These Nordic nations requested treaty changes with Portugal, allowing them to tax the foreign pensions of expats now living on Portuguese soil.

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NHR 2.0 emerges -

Portugal has now restructured its tax breaks under the NHR 2.0 plan, narrowing benefits to educated professionals contributing economically to the country.

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Still a 10-year offer -

Qualified individuals can still enjoy a 20% tax rate for up to 10 years, but the definition of who qualifies has tightened significantly.

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No more pension perks -

Foreign pension income is no longer exempt under NHR 2.0 and is now taxed under standard Portuguese income tax rules, curbing retiree incentives.

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Shell companies and loopholes -

The EU Tax Observatory highlights how shell companies are used by the rich to legally reduce their income tax burden through corporate structures.

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Corporate shelter strategy -

By moving income into a company they control, wealthy individuals delay personal taxes, especially useful in low-corporate-tax countries like Ireland, Hungary, Bulgaria, and Cyprus.

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Limited global enforcement -

The OECD’s push for a 15% minimum global corporate tax only applies to companies earning over €750 million (about US$830 million), leaving smaller shell setups largely unaffected.

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More than just tax rates -

Experts warn that tax planning is complex; personal income, capital gains, wealth, and inheritance taxes must all be considered, not just headline income rates.

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Other fiscally friendly spots -

Countries like Malta, Monaco, and even Belgium can be surprisingly tax-friendly, depending on how one earns, holds, and spends their wealth.

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The great fiscal debate -

Despite controversy, many governments argue that the economic benefits from attracting wealthy residents outweigh the cost of tax breaks—a political debate that's far from over.

Sources: (Euronews) (The Guardian) 

See also: The best European countries for work-life balance in 2025

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