The European tax environment is changing fast. With Italy increasing its flat tax threshold to €300,000 and growing interest in Switzerland’s lump-sum taxation system and Cyprus’ Non-Dom regime, tax incentives are becoming a central driver of migration decisions. At the same time, Monaco continues to attract wealthy individuals with its 0% personal income tax and overall tax-friendly environment.
The question now is how these programs are influencing where globally mobile individuals choose to live, invest, and plan for the future. To unpack these trends, we spoke with Diogo Pedro, tax adviser at Global Citizen Solutions.
Why European tax incentives are becoming a magnet for global investors
As European countries refine their tax frameworks, this evolution is happening alongside major changes to investment migration programs. The European Court of Justice has taken a stricter position on citizenship programs, with Portugal removing its real estate Golden Visa route, and Spain suspending its program entirely.
In this context, taxation has become an even more of an important aspect in relocation decisions. From Diogo’s experience of advising international clients, lifestyle and mobility remain crucial, but tax efficiency plays a defining role. As he explains:
“While taxation is not the sole factor driving individuals to relocate and restructure their lives, it is undoubtedly a significant consideration when evaluating a new jurisdiction.”
According to Diogo, wealthy individuals are increasingly looking for more freedom over their time and capital. Since HNWIs are often exposed to heavy taxation under regular progressive regimes, finding a favourable tax status reduces their immediate burden. It supports asset protection, long-term estate planning, and frees up capital for reinvestment and strategic growth.
“At the same time, these programs can create the opportunity to allocate capital strategically, by channelling investment and business into sectors that generate measurable impact and contribute meaningfully to broader societal and economic development.”
Taxes are an intricate part of personal wealth management and a key driver of a country’s economic growth and sustainability. Therefore, countries such as Monaco, Switzerland, and now Italy, all of which have chosen to maintain niche tax regimes rather than overhaul their systems, must keep a careful balance. They need to offer meaningful advantages to high-net-worth individuals while also guaranteeing tangible economic benefits for the state.
As Diogo notes, “predictability and stability are key advantages of these regimes. They allow for broader and more structured tax and estate planning, which is valuable not only financially but also psychologically.”
Tax laws can be very complicated to understand. It can also be very easy to tread on the wrong side of the law.
“For many HNWIs, clarity and legal certainty provide real peace of mind and make it easier to plan long term without constant concern about unexpected tax changes and, more importantly, double-tax concerns,” Diogo adds.
From a nation’s perspective, this predictability draws the kind of high-value residents Diogo describes – people who tend to punch above their weight economically. They invest in property, spend locally, set up private investment vehicles, and establish business and family office structures that rely on domestic professional services. The country gains capital and international visibility, yet keeps its broader tax system intact.
What is the future of targeted tax regimes in Europe?
From a professional’s perspective, effective tax planning comes with long-term benefits, that support both asset protection and peace of mind for current and future generations.
“I strongly believe that competitive tax regimes in Europe are becoming more targeted, even though some exceptions remain in place, such as Monaco or Italy. We are seeing European countries define more clearly the profiles they wish to attract and create regimes that open opportunities for those individuals, whether the objective is capital attraction, business creation, scientific research or long-term investment, as already happens in Portugal and Spain. Even internal rules are becoming more ‘surgical’ in addressing the specific situations legislators aim to promote.”
From Diogo’s perspective, competitive tax incentives in Europe are about looking at the bigger picture for everyone involved. He sees them as part of a long-term goal to build political consensus within a country around attracting foreign nationals and investment. When there is strong internal support for these measures, the special tax regimes are more stable and last longer, key ingredients needed to make these types of schemes a lasting success.
Inside some of Europe’s best tax regimes: Who are they targeting?
Each regime has a specific strategic focus, whether that could be targeting tech entrepreneurs, portfolio-heavy families, or individuals prioritising financial privacy.
Switzerland: Stability and predictability
Switzerland’s residency by lump-sum taxation (Forfait) is aimed at wealthy foreigners who relocate to the country but do not work there. Instead of taxing worldwide income, authorities calculate tax based on annual living expenses, subject to minimum limits. The main advantage is long-term stability. Switzerland is known for tax rulings that function like lifetime agreements, which appeal to the wealthy and families looking for discretion and predictability. Switzerland also ranks in the top three globally on the Residency and Citizenship by Investment Index (RCBI) by the Global Intelligence Unit at Global Citizen Solutions, with a special tax score of 89.58.
Italy: Protection for global wealth
Italy’s Non-Dom Flat Tax, now set at €300,000, clearly targets ultra-high-net-worth individuals. New residents benefit from 0% tax on foreign financial assets and real estate, plus a full exemption from inheritance and gift tax on foreign assets for 15 years. The country’s niche focus on innovation and startup capital positions it as the sixth best-ranked Investor Visa program on the RCBI Index, and it is working its way up the tax optimization rankings with a score of 68.75.
Cyprus: Flexibility for active investors
Cyprus targets internationally mobile entrepreneurs and investors through its 60-Day Rule and Non-Dom regime. By spending just 60 days per year in the country, individuals can secure tax residency and enjoy 0% tax on dividends, interest, and rental income for 17 years. Cyprus also has a flat 8% tax on certain crypto-asset profits, which puts it in a position to provide the much-needed legal clarity that Switzerland and Italy don’t focus on. Cyprus ranks in the top eight globally on the Residency and Citizenship by Investment Index, with a 77.08 score for tax optimisation.
Important tax planning considerations for HNWIs relocating to Europe
Choosing the right tax program or a tax-friendly country is just one part of relocating to Europe. Nevertheless, there are a few important aspects that should be kept in mind, such as tax residency, a full review of assets and timing a transfer from one country to another.
“For HNWIs relocating to Europe, the most important rule is to plan before becoming tax resident. Timing is critical, as many structuring opportunities are limited once residency is established. Proper coordination between the exit from the previous country and entry into the new one helps avoid overlapping residency, unexpected taxation, or reporting issues.”
Diogo also advises carefully reviewing your existing assets and structures before relocating. Things like trusts, holding companies, pension plans, and investment accounts can be treated very differently depending on the country. Estate and inheritance planning should also follow local laws to make sure your wealth is managed efficiently and your family is protected for the long term.
If 2026 has set the trajectory for anything, it is that European investment migration is increasingly encompassing strategic tax positioning, making long-term planning essential. Today, the focus is less on how many residency programs exist and more on choosing one with tax benefits that protect family wealth and help countries attract capital that supports long-term economic growth.