An Overview of Special Tax Regimes in Europe

Europe offers a surprisingly wide range of special tax regimes for internationally mobile individuals — but they are often misunderstood.

Some countries operate broadly worldwide taxation. Others use territorial principles. Some offer targeted regimes for new residents, while a smaller number provide lump-sum or flat-tax systems designed specifically to attract high-net-worth individuals.

The key is understanding what each regime actually exempts, who qualifies, how long it lasts, and what conditions come with it.

1. Three broad models

At a high level, European tax systems can be grouped into three models.

Worldwide taxation

Under a worldwide system, tax residence can bring foreign income and gains into the domestic tax net.

The United States is an unusual outlier because U.S. citizens can remain subject to U.S. federal income-tax rules on worldwide income even when they live abroad, subject to available exclusions, credits and other rules.

Territorial taxation

Territorial systems generally focus taxation on income connected with the country, although the definition of territoriality varies considerably.

That does not necessarily mean that a resident can hold unlimited foreign wealth without tax consequences.

Special regimes

The third category is particularly relevant to internationally mobile individuals.

These regimes can provide preferential treatment for:

• foreign income;
• foreign gains;
• employment income;
• investment income;
• new residents;
• or, in some cases, a broad annual substitute tax.

But the details vary dramatically.

2. Non-dom and remittance-style regimes

Historically, several European jurisdictions attracted internationally mobile individuals through systems that distinguished between domestic and foreign income or between residence and domicile.

Examples include Malta, Ireland, Greece, Cyprus and Gibraltar, although the rules and eligibility conditions differ substantially.

The important lesson is that “non-dom” does not describe one universal tax regime.

Each jurisdiction has its own:

• residence rules;
• source rules;
• remittance provisions;
• exemptions;
• minimum-tax requirements;
• duration limits;
• and anti-avoidance provisions.

The UK provides the clearest example of why historical comparisons can become misleading.

3. The UK: from remittance basis to FIG

The UK fundamentally changed its system from 6 April 2025.

The traditional remittance basis was abolished. UK tax residents are now generally taxed on the arising basis on worldwide income and gains.

It was replaced by the Foreign Income and Gains — or FIG — regime.

Qualifying new UK residents can claim relief on qualifying foreign income and gains for their first four years of UK residence, provided they satisfy the relevant conditions, including having been non-UK resident for at least 10 consecutive tax years before becoming resident.

This is therefore not simply the old non-dom regime with a new name.

The underlying architecture has changed.

4. Italy: a lump-sum model

Italy takes a different approach.

Its special regime for certain new tax residents allows eligible individuals to pay a fixed annual substitute tax on qualifying foreign income instead of applying the ordinary Italian taxation rules to that foreign income.

For new entrants, the annual substitute tax is currently €200,000, subject to the statutory conditions and exclusions. The regime can apply for up to 15 tax years.

This makes Italy fundamentally different from a conventional remittance-based system.

The question is not simply:

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