Andorra, Switzerland, Italy, Portugal, or UAE? Comparison and alternatives in 2025

Global tax competitiveness and alternatives for HNWIs and entrepreneurs.

The landscape of global tax competitiveness is constantly evolving, driven by regulatory changes, political adjustments, and an increasing tax exodus from countries like the United Kingdom. This trend particularly impacts High Net Worth Individuals (HNWIs) and entrepreneurs, who are seeking more favorable jurisdictions to protect and maximize their wealth. Against this backdrop, destinations such as Andorra, Switzerland, Italy, Portugal, and the United Arab Emirates (UAE) emerge as standout options for wealth planning.

Tax competitiveness: the global context and the UK exodus

In recent months, the UK has witnessed a significant fiscal exodus. Changes to tax regulations and the taxation of resident non-domiciled individuals ("non-doms"), replacing the concept of domicile with a residency-based tax system under the new "Foreign Income and Gains (FIG)" model, have driven many HNWIs and entrepreneurs to seek alternatives in jurisdictions with more competitive tax frameworks. The need to preserve wealth and optimize tax burdens has prompted these individuals to consider relocation as a key strategy.

It is worth noting that moving to a new country requires careful and advanced planning, especially to anticipate the legal and tax consequences of such a move and avoid predictable risks.

Notable relocation options in 2025

Andorra: a fiscally competitive destination

Andorra positions itself as one of the most attractive options in Europe for HNWIs and entrepreneurs, particularly those operating in the digital realm. Its tax system includes a personal income tax (IRPF) with a maximum rate of 10%, where the first €24,000 is exempt, between €24,001 and €40,000 a 50% rebate is applied, resulting in taxation of 5%, from €40,000 onwards the applicable tax rate is 10%. In addition, dividends from Andorran sources and certain capital gains are exempt.

Corporations are taxed at a 10% corporate tax rate, with exemptions for dividends and capital gains under certain conditions, as well as specific exemptions under the "Holding" regime. The absence of wealth, inheritance, and gift taxes further enhances its appeal.

It is important to highlight that, although Andorra does not have an airport or direct trains, its proximity to major airports in Spain (Barcelona) and France (Toulouse) greatly mitigates this logistical challenge. Likewise, Andorra's network of double taxation treaties (DTT) is expanding and already covers most European countries. In addition, Andorra's internal regulations allow the application of tax credits to avoid double taxation in cases where there is no DTT, thus offering a practical and effective solution to optimize the tax burden.

Switzerland: financial and political stability

Switzerland is renowned for its financial and political stability, solid banking infrastructure, and a network of international treaties to avoid double taxation, making it an attractive destination for wealthy individuals.

In addition to the ordinary tax regime, which applies progressive income and wealth taxes worldwide, Switzerland offers the “lump sum taxation” system for foreigners relocating to the country without engaging in lucrative activities. This system calculates taxes based on living expenses rather than actual income and wealth.

However, depending on the canton of residence, income taxes can reach up to 40%, while corporate tax rates range between 12% and 22%. Moreover, Switzerland applies wealth taxes as well as inheritance and gift taxes (which vary significantly by canton), potentially increasing the overall tax burden on substantial wealth.

Portugal: limited tax incentives

The new RNH 2.0 tax regime

Portugal's Non-Habitual Resident (RNH) regime, once a key attraction for expatriates with significant wealth, was abolished on January 1, 2024, and replaced by a new tax regime known as RNH 2.0 or the tax incentive for scientific research and innovation (IFICI). This regime has a narrower focus, offering tax incentives only to individuals engaged in activities related to innovation, scientific research, or technology. General tax exemptions and reduced rates on high-value-added income have been eliminated, significantly reducing its attractiveness for individuals with diverse income streams or substantial wealth.

Portugal remains known for its pleasant climate, moderate cost of living, and safe environment. However, recent changes in its tax policy may limit its appeal for those seeking a fully stable environment without significant tax planning challenges.

United Arab Emirates: attractive taxation with cultural challenges

Since June 2023, the UAE has introduced a corporate tax with a general rate of 9%, applicable only to taxable income exceeding AED 375,000 (approximately €98,000). Companies with lower incomes are exempt from this tax. Additionally, businesses located in free zones benefit from tax exemptions, provided they do not operate directly in the UAE's local market.

Unlike many jurisdictions, the UAE does not levy personal income taxes, representing a key advantage. It also has a 5% VAT, introduced in 2018, which applies to most goods and services.

These features make the UAE an attractive jurisdiction for companies and individuals seeking to optimize their tax burdens. However, cultural and legal differences can pose challenges, especially for those aiming to integrate into the local business and social environment.

Italy: limited tax attractiveness for new residents

Italy offers a "substitute tax" of €200,000 annually on foreign income for new residents (with an additional €25,000 for each family member relocating to the country).

This regime is particularly appealing to those looking to minimize their tax burden on foreign income and assets. Beneficiaries of this regime are exempt from paying IVAFE (tax on foreign financial assets) and IVIE (tax on foreign real estate), as well as other tax obligations related to assets or income located abroad.

However, any income generated or assets located within Italy are subject to the ordinary tax regime. This includes progressive income tax rates of up to 43% and a property tax on real estate in Italy, calculated at varying rates depending on the municipality. In terms of inheritance and gift taxes, this regime only subjects assets located in Italy to these taxes, with rates ranging from 4% to 8% based on the relationship between the deceased and the beneficiaries. A €1 million exemption applies for spouses and children on inheritances and gifts.

While the substitute tax regime provides favorable treatment for foreign income and assets, the attractiveness of a local tax system depends not only on internal rules but also on its interaction with international tax treaties. It is therefore crucial to verify the applicability of these treaties to properly assess the tax benefits and implications of relocation.

Why is Andorra now a standout relocation option?

Although Andorra has historically been an unknown destination for HNWIs and entrepreneurs, its combination of tax benefits, economic stability, and accessible administrative processes, now positions it as an increasingly relevant option in the global tax competitiveness landscape. Compared to traditional jurisdictions like Switzerland or Portugal, Andorra offers a competitive tax framework, along with the absence of wealth and inheritance taxes, in a stable economic environment.

If you are considering relocating, our team of specialized advisors can guide you through every step of the process, providing the necessary support to evaluate Andorra's advantages and ensure a smooth and efficient transition.

Contact us to explore Andorra's tax benefits and discover how we can facilitate your relocation and wealth planning. We are here to help you make informed decisions and ensure the success of your relocation.