‘Non-domiciled' or ‘non-dom' refers to a historic British tax regime that permitted UK tax residents to benefit from not paying tax on their foreign income and gains, provided that these income and gains were not repatriated (remittance basis).
This status was based on the legal concept of domicile, which differs from tax residence. Therefore, a person could reside in the United Kingdom while still being regarded as having a ‘domicile of origin' in another country.
This system provides:
- Taxation based on repatriation means that nondomiciled individuals only paid British taxes on income and gains effectively brought to the United Kingdom. Income maintained abroad was not subject to taxation.
- An exemption from inheritance tax applies to foreign assets. Therefore, assets that non-doms hold outside the UK are exempt from IHT, even if the taxpayer dies1.
The United Kingdom announced the elimination of the non-domiciled tax status in the Spring Budget 2024 and the Autumn Budget 2024.
This change, effective April 2025, replaces the domicile-based system with a tax. Beginning on April 6, 2025, UK tax residents will be taxed on their worldwide income and gains. The remittance basis will require non-doms to declare only the income that has been transferred to the UK.
However, individuals relocating to the UK after a 10-year absence will benefit from a transitional Foreign Income and Gains Regime, which will be in effect for 4 years.
During this time, the foreign income and gains of eligible individuals will be completely exempt, even if they are repatriated2.
A Temporary Repatriation Facility will allow former non-doms to repatriate income and gains before 2025 at reduced rates of 12% for the period from 2025 to 2027, and 15% for the period from 2027 to 20283.
In certain jurisdictions, including Italy and the United Arab Emirates where Eptalex operates, there are comparable tax schemes that provide various advantages.
I. Italy
- Regime for international retirees
In Italy, foreign pensioners enjoy a uniquely favorable tax regime. A flat rate of 7% is imposed on income from foreign sources.
To be eligible, the pensioner must:
- originate from a country that has an administrative cooperation agreement with Italy,
- reside in a municipality with fewer than 20,000 inhabitants in the southern part of the country,
- and not have been a tax resident in Italy for at least five years before the application.
This flat tax on income earned abroad is an Italian tax system designed for individuals who relocate their residence to Italy. This system permits the payment of a fixed annual tax on foreign income, serving as a substitute for ordinary taxation (IRPEF) and regional and municipal taxes.
Income generated in Italy is still subject to ordinary tax rates.
The fixed tax amount is determined by the date of residence transfer. If the residence is transferred before August 10, 2024, the fixed tax is 100,000 euros per year.
Certain exclusions and limitations apply
- Regime for inpatriate
The ‘impatriati' tax regime for inpatriate workers applies to individuals transferring their tax residence to Italy starting in 2024. It permits a 50% reduction in the taxation of income comparable to that of salaried employment and income generated from professional activities conducted in Italy, with an annual limit of € 600,000.
This scheme is subject to several conditions:
- Workers must commit to being residents in Italy for tax purposes for at least four years They must not have been residents in Italy for tax purposes during the three years prior to their transfer
- They should primarily conduct their activities in Italy
And they must have high or specialized qualifications.
The regime would apply for the year of the transfer as well as the subsequent four years.
However, if tax residence in Italy is not maintained for a minimum of four years, the benefits are revoked and recovered with interest.
This scheme is compatible with other tax benefits, enabling the accumulation of multiple schemes as long as their conditions are met. An additional reduction is available for workers with minor children. Their income is taxed at 40% if the transfer to Italy included a minor child or if a child was born or adopted during the application period of the scheme.
The child must live in Italy during this time to benefit from the enhanced advantage4.
- Regime for neo-domiciled individuals
Italy provides an appealing tax regime for affluent individuals who relocate their tax residence to the country. Introduced in 2017 under Article 24-bis of the TUIR (Consolidated Income Tax Act), this regime aims to attract high-income earners and encourage foreign investments in Italy.
To qualify, applicants must meet several conditions. They must not have been tax residents in Italy for at least nine of the ten years preceding their transfer. Additionally, they must establish residency in Italy, which involves fulfilling the criteria for tax residency as defined by Italian law, including spending a minimum of 183 days per year in the country.
This regime allows new residents to benefit from a flat tax of 100,000 euros annually on their foreign-sourced income, regardless of the total sum. This option can also be extended to family members for an additional fee of 25,000 euros per member. The maximum duration of this regime is 15 years, offering long-term tax stability. Moreover, beneficiaries of this regime are only liable for inheritance and gift tax on assets situated within Italian territory5.
- Policy for educators and researchers
Italy provides a favorable tax regime for teachers and researchers who move their tax residence to the country. This regime, established under Article 44 of Legislative Decree No. 78/2010, aims to promote the return or relocation of academic talent to Italy as part of the "brain gain" initiative.
To qualify, teachers and researchers must meet several conditions:
- They need to hold a university degree or an equivalent qualification, recognized in Italy through a "declaration of value" issued by Italian consular authorities.
- Furthermore, they must have been tax residents abroad on a non-occasional basis for at least two consecutive years.
- Additionally, they should have carried out documented teaching or research activities abroad for at least two consecutive years in public or private research centers or universities.
- Once in Italy, they must engage in similar activities and obtain tax residency in the country, which they must maintain for the entire duration of the regime.
This tax regime offers a 90% exemption on income derived from teaching or research activities. The initial duration of this exemption is six years, including the year of transfer. However, this period can be extended up to 13 years depending on certain conditions, such as the number of dependent children or the purchase of a primary residence in Italy6.
II. United Arab Emirates
The United Arab Emirates continues to rank as one of the most attractive destinations for companies and foreign investors.
- Full ownership of companies by foreign investors
Foreign investors are authorized to hold the entire share capital of entities established in the United Arab Emirates, excluding a few specific cases.
- Advantageous taxation
Although the country recently introduced a corporate tax effective June 1, 2023, the tax system remains highly competitive, featuring some of the lowest rates globally.
The tax rate of 9% above the threshold of AED 375,000 (approximately CHF 90,170) remains advantageous compared to international standards.
The tax system also provides numerous exemptions. Individuals are not taxed on their salaries, bank interest income, or personal real estate investments. Dividends and capital gains earned by foreign investors are also exempt. Companies operating in free zones continue to benefit from appealing tax incentives, if they comply with regulatory requirements7.
- Prevention of double taxation
The United Arab Emirates has concluded more than 142 international agreements, particularly to avoid double taxation of foreign investors.
In addition, 111 treaties signed by the Emirates with the aim of encouraging and protecting investments can benefit foreign investors.
Footnotes
1. Gov.uk « Tax on foreign income ».
2. HM Revenue & Customs « Reforming the taxation of non-UK domiciled individuals”, published 30 October 2024.
3. LexisNexis « Temporary repatriation facility », updated 21 March 2025.
4. Ministero dell'Economia e delle finanze « Lavoratori impatriati – nuovo regime (dal periodo d'imposta 2024) - Che cos'è » updated 11 March 2025.
5. Ministero dell'Economia e delle finanze “Tax regime for new residents”.
6. Agenzia delle entrate “tax incentives for attracting human capital in Italy”, published February 2018.
7. U.AE « Corporate tax (CT) » updated 6 June 2024.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
