Beyond the breaks

By the time of the first edition of The Wealth Report came out in 2007, the UK’s non-dom regime had already been a thorn in the side of the then Chancellor Gordon Brown for several years.

Little had come of Brown’s pledges to reform the system, which he believed was an unfair loophole. In April 2007 he was pressed by parliament on whether the businessman Sir Ronald Cohen, his most senior City adviser, had claimed non-dom tax status, only a week after the IMF published a working paper ranking Britain alongside the likes of Bermuda and the Cayman Islands in its list of offshore financial centres. “The development will be hugely embarrassing to Brown,” The Guardian wrote at the time.

Years of sabre rattling from Brown, alongside mounting pressure from OECD countries over the refusal of established tax havens to cooperate on transparency initiatives, had stirred unease among both domiciled and non-domiciled HNWIs. “The impact of tax is probably the single most important feature concerning the future outlook for the location of primary residence,” we wrote back in 2007. Demand for property in tax havens would “grow exponentially over the short to medium term ... these locations will outperform steadily in the future”.

Reaping the rewards

On the face of it, we were right. Average prime property values in Monaco have surged by 230% since 2007, Zurich, Geneva and Jersey climbed 116%, 103% and 89% respectively, compared with a more pedestrian 26% in London and 15% in New York.

But the traditional tax havens haven’t emerged unchallenged. The US’s FATCA (2010) and the OECD’s Common Reporting Standard (2014) marked a shift from fragmented treaties to a more unified global transparency regime. More than 100 jurisdictions – including traditional havens like Switzerland, Luxembourg and the British Virgin Islands – signed up to the measures, bringing secrecy under multilateral scrutiny.

Secrecy became unwieldy and expensive – particularly for Europeans – just as countries were stepping up competition for highly mobile, affluent residents. The UAE, long a 0% personal income tax jurisdiction, began reaping the rewards of its repositioning as a business and lifestyle hub from the mid-2010s. Meanwhile, countries with progressive tax systems like Italy, Greece and Portugal introduced preferential regimes for wealthy newcomers – a phenomenon some experts describe as the rise of “hybrid havens”.

Migratory responses

By 2020, mobile wealthy individuals had more low-tax options than ever, and the pandemic supercharged mobility. Greater flexibility around where people worked led many to seek sunnier climes and more flexible lifestyles.

Since then, though, the story has shifted again. Many Western governments have raised taxes on the wealthy to cover record pandemic-era borrowing, reigniting debate over whether tax or lifestyle factors drive the mobility of the rich. Gordon Brown got his way in the end; reforms to the non-dom regime that he initiated in 2008 were furthered by the Conservatives in the 2010s and culminated in a comprehensive overhaul by the current Labour government in 2025. “Hybrid havens” tightened their offers; Portugal withdrew its generous tax treatment for foreign pensioners, while Italy raised its flat tax on wealthy residents.

The impact of these moves is hotly debated. Only a small proportion of wealthy individuals will relocate purely for tax reasons, and media coverage often exaggerates the scale of change by focusing on a handful of high-profile moves, says Sarah Godar, a researcher at the EU Tax Observatory. What’s clear is that, while established wealth hubs like London face growing competition from lower-tax alternatives, both traditional havens and emerging hybrids often fall short when it comes to delivering the lifestyle, infrastructure and real estate quality the wealthiest now demand.

“We regularly sit down with clients and ask: ‘what do you actually want?’” says Alasdair Pritchard of Knight Frank’s Private Office. “Often the answer isn’t just tax – it’s space, schools, lifestyle, design. The slow response of the younger wealth hubs is actually reminding people why they chose to live in London or New York in the first place. To put it another way, tax may still be the starting point – but it’s definitely not the final word.”