Wealthy individuals often seek jurisdictions with favourable tax regimes to optimise their financial affairs. This article compares the tax regimes in Italy, Switzerland, Greece, Hong Kong, Singapore, Dubai, and Uruguay, focusing on visa requirements, taxes applied to worldwide income and wealth, legal requirements to acquire and maintain tax domicile, and inheritance and gift tax regimes.
Visa requirements to become residents
Italy
- EU Citizens: EU citizens can reside in Italy without a visa but must register with local authorities if staying longer than three months.
- Non-EU Citizens: Non-EU citizens need a visa to enter Italy and must apply for a residence permit within eight days of arrival or before entering the country at the Consulate of their domicile. The elective residence visa requires proof of sufficient income and accommodation.
Switzerland
- EU Citizens: EU citizens can enter Switzerland without a visa and apply for a residence permit if staying longer than three months.
- Non-EU Citizens: Non-EU citizens must apply for a residence permit. For younger retirees (under 55),the visa can be granted based on a 'preponderant cantonal interest,' which typically involves an annual minimum tax burden between CHF 250,000 and CHF 1million. For individuals above 55, close ties to Switzerland, transfer of centre of vital interest to Switzerland, no gainful activity, and financial self-sufficiency are required.
Greece
- EU Citizens: EU citizens can reside in Greece without a visa but must register with local authorities if staying longer than three months.
- Non-EU Citizens: Non-EU citizens need a visa to enter Greece and can apply for a Golden Visa, which grants residency through investment in real estate or other assets. The minimum investment is €250,000 in real estate, increased to €500,000 in certain areas like Athens, Thessaloniki, and Santorini.
Hong Kong
- All Nationalities: Hong Kong offers various visa options, including the Capital Investment Entrant Scheme, which requires a significant investment in permissible assets.
Singapore
- All Nationalities: Singapore offers the Global Investor Program, which requires substantial investment in a business or fund.
Uruguay
- Uruguay offers a temporary residency visa (for work, study, etc.) and a Permanent residency visa. Both categories require a minimum proof of income or financial stability.
- MERCOSUR citizens have special advantages which facilitate the procedure.
Taxes levied on wealthy individuals
- Italy: Italy recently amended its tax regime for wealthy individuals. The neo-domiciled tax regime allows new residents to pay a flat tax of EUR 200,000 on all foreign-sourced income. Italian-sourced income is taxed under normal regulations. Capital gains on foreign participation exceeding 25% are taxed under normal regulations, but a tax ruling can include it in the forfait taxation of foreign-sourced income under specific circumstances.
- Switzerland: Switzerland offers the forfaitaire tax regime, taxing individuals based on their living expenses rather than worldwide income. Each canton sets its own minimum taxable amount, and tax rates can be negotiated. No gainful activity can be exercised within Switzerland. Swiss-sourced income and wealth must be considered for the calculation of the taxable amount.
- Greece: The Golden Visa itself does not automatically qualify the holder for the non-dom tax regime. However, if the investment criteria for the non-dom regime are met (minimum investment of EUR 500,000 and not having been a Greek tax resident for seven out of the last eight years), the individual can benefit from the flat tax rate on foreign-sourced income. This regime imposes a flat tax of €100,000 per year on foreign-sourced income for up to 15 years.
- Hong Kong: Hong Kong has a territorial tax system, taxing only income sourced within Hong Kong. There are no capital gains or inheritance taxes.
- Singapore: Singapore has a territorial tax system, taxing only income sourced within Singapore. There are no capital gains or inheritance taxes
- Uruguay: Uruguay operates primarily under a territorial tax system, taxing only income sourced within Uruguay and certain income generated outside of Uruguay (interests or dividends from foreign entities). However new residents are granted an 11-year tax exemption on their foreign sourced income. Thereafter foreign sourced will be taxed at a rate of 12%. New residents can also choose to opt out the 11-year tax holiday and choose to pay a flat 7% tax on their foreign source indefinitely.
Legal requirements to acquire and maintain tax domicile
- Italy: To be considered a tax resident, individuals must have their residence or domicile in Italy for more than 183 days. Recent reforms prioritize personal and family relationships over economic interests. Registration in the resident population is a presumption that admits contrary evidence.
- Switzerland: To be considered a tax resident in Switzerland, an individual must either stay for a minimum number of days or demonstrate an intention to stay permanently through their centre of vital interests and registration with local authorities. The choice of canton of residence should be carefully planned, as taxation differs across cantons.
- Greece: Residency can be maintained with minimal or no physical presence in Greece. There is no specific requirement to spend 183 days in Greece to benefit from the non-dom tax regime. The primary requirement is the investment and transfer of tax residence.
- Hong Kong: Tax residency in Hong Kong is based on physical presence (at least 180 days during a year of assessment and not less than 300 days in a year of assessment and the year immediately before or after). and the source of income.
- Singapore: Tax residency in Singapore requires spending more than 183 days in the country or having a permanent home in Singapore.
- Uruguay: Tax residency in Uruguay requires spending more than 183 days in the calendar year, or carrying out activities in Uruguay or having economic or vital interests in Uruguay (Tax residency by economic interests will be considered acquired by making an investment of more than USD 500,000 in real estate located in Uruguay.
Inheritance and Gift Tax Regime for Resident Non-Domiciled Wealthy Individuals
- Italy: Under the Resident Non-Domiciled (RND) regime, individuals are exempt from paying inheritance and gift taxes on assets located abroad.
- Switzerland: Switzerland has no federal inheritance tax, but some cantons impose their own inheritance taxes. For forfaitaire residents, cantonal inheritance and gift tax applies on a worldwide basis, so the choice of canton should consider this aspect.
- Greece: The Greek non-dom tax regime exempts foreign assets from inheritance and gift taxes.
- Hong Kong: Hong Kong has no inheritance or gift taxes.
- Singapore: Singapore also has no inheritance or gift taxes.
- Uruguay: Uruguay does not impose inheritance and gift taxes on assets located abroad. A 3% Transfer Tax applies to inherited real estate located in Uruguay.
Wealthy individuals seeking to optimise their financial affairs will benefit from understanding the tax regimes offered by various jurisdictions. Whether considering the forfaitaire tax regime in Switzerland, Italy’s flat tax on foreign income, or Greece’s attractive non-dom tax regime, each country offers unique advantages for both tax efficiency and lifestyle benefits.
It is crucial for individuals to assess both their financial goals and personal circumstances to determine the most suitable jurisdiction. Consulting with an Alpdis expert can help tailor a strategy that aligns with long-term wealth preservation and tax planning objectives.
