Swiss Tax – The One Pager

What changes and new rules will apply?

The remittance basis will be abolished on 6 April 2025, with the 2024/25 tax year being the last year for exemption requests. Transitional rules will apply to income earned up to this date. Transfers from so-called “Foreign Income and Gains” (FIG) will be taxed at a reduced rate of 12% in the tax years 2025/26 and 2026/27. In contrast to the old “non-dom regime”, there is no possibility of extending this status beyond four years. After the deadline has expired, the individuals concerned will be treated the same as all other UK taxpayers and will have to pay tax on their worldwide income.

The UK government has also introduced a new program that grants new residents a full tax exemption on foreign income and profits for the first four years. This is intended to further enhance the UK's attractiveness for high-net-worth individuals. It is advantageous that income can be distributed tax-free to the UK (this is not possible under the current “non-dom status”). Foreign capital gains are subject to the taxation rules for persons who no longer meet the requirements of the new system. In addition, inheritance tax will be converted to a residence-based system and, in the event of emigration, will include a 10-year right of subsequent taxation.

Under the new system, “Overseas Workday Relief” (OWR) will be available for up to four years from the date of taking up residence for income earned from work carried out abroad. The amount of OWR will be limited to 30% of the qualifying work income or to GBP 300’000 per tax year, whichever is lower.

What are the consequences of the reform for “non-doms”?

People who have so far been able to benefit from the “non-dom status” will lose the corresponding advantages. Switzerland is becoming more attractive due to its high quality of life, economic stability, and favorable tax system. The Swiss lump-sum taxation regime enables a low tax burden on foreign income, while the ordinary tax system scores with low income and wealth tax rates at some locations and tax exemption on capital gains realized on privately owned movable assets. In addition, gifts and inheritances to spouses or direct descendants are in general tax-free in Switzerland.

Key take aways

• The UK tax system for “non-doms” ends on 6 April 2025, although transitional arrangements apply.
• From this date, the FIG system will be introduced for individuals who have not been domiciled in the UK for the previous ten years.
• Switzerland continues to gain in attractiveness due to its political and economic stability and moderate taxation.