Special tax regimes in Europe are becoming increasingly attractive to high-net-worth individuals and entrepreneurs. International tax relocation for high-net-worth individuals can be an appealing strategy. However, relocating to countries like Spain, Italy, the UK, Ireland, Malta, Switzerland, Cyprus, or Portugal for tax reasons involves significant legal and tax complexities — especially from the perspective of German tax law.
As a tax advisor in Germany specialized in international tax law, I will guide you through the main tax models in these countries, highlight their advantages — and unveil the hidden risks that may arise from a German tax perspective.
🇪🇸 Spain – Lex Beckham: Tax exemption for foreign income
Spain’s Lex Beckham regime grants newcomers a full exemption on foreign-sourced income for six years. Only Spanish-source income is taxed at a flat rate of 24% (up to €600,000) and 47% (above).
Caution: Opting for Lex Beckham means you are not considered a Spanish tax resident under the Germany–Spain Double Tax Treaty (DTT). As a result, Germany retains taxing rights, and the exit taxation (§ 6 AStG) applies in full for capital shareholdings left behind.
Advisor Tip: Lex Beckham offers tax benefits, but poses serious risks for clients with German corporate holdings.
🇮🇹 Italy – Flat tax on foreign income
Italy allows eligible newcomers to pay €100,000 annually on all foreign income — regardless of the amount — for up to 15 years.
While German-source income may be excluded from this flat-tax regime, this can preserve DTT residency in Italy. However, Germany may still assert extended limited tax liability (§ 2 AStG) if significant economic ties remain.
🇬🇧 United Kingdom – Remittance Basis and FIG Regime (from 2025)
Until April 2025:
Non-Domiciled Residents (Non-Doms) in the UK are taxed only on foreign income that is remitted to the UK. A Remittance Basis Charge applies after several years.
From April 2025:
The new Foreign Income and Gains (FIG) regime will grant four years of full exemption for foreign income and capital gains — regardless of remittance.
Important for German taxpayers:
The Germany–UK DTT includes a remittance clause, meaning Germany can tax income not taxed in the UK — thus, no DTT protection applies for non-remitted income.
🇮🇪 Ireland – Unlimited Remittance Basis
Ireland applies the Remittance Basis for Non-Doms without time limits or annual fees. Foreign income remains untaxed unless remitted to Ireland.
Again, the Germany–Ireland DTT includes a remittance clause, so Germany may tax non-remitted income left untaxed in Ireland.
🇲🇹 Malta – Remittance Basis with minimum tax
Malta applies a 15% tax rate on remitted foreign income and imposes a minimum tax of €20,000 per year.
The Germany–Malta DTT excludes individuals under special tax treatment. Thus, Germany retains full taxing rights — no DTT relief applies.
🇨🇭 Switzerland – Expenditure-based taxation
Switzerland offers taxation based on living expenses rather than income. This can effectively exempt most foreign income.
However, under Article 4(6) of the Germany–Switzerland DTT, such taxpayers are not treated as Swiss residents for treaty purposes — meaning Germany may continue to tax worldwide income.
🇨🇾 Cyprus & 🇵🇹 Portugal – Former tax havens with tightened rules
Both countries were known for generous regimes (e.g., Portugal’s Non-Habitual Residency). But:
- Portugal: From 2024 onward, benefits apply only to specific professional groups (e.g., academia, innovation).
- Cyprus: No current treaty exclusion, but the remittance model remains attractive.
In both cases, DTT protection may still apply, depending on the individual structure.
Conclusion: Tax-driven relocation? Only with expert advice!
While special tax regimes seem highly beneficial at first glance, the reality is more complex:
- Loss of DTT residency,
- Treaty override clauses,
- Remittance limitations — all can lead to Germany retaining full taxing rights, especially on foreign-sourced income and corporate shareholdings.
As a German tax advisor specializing in international tax law, I support you in designing a legally secure and tax-optimized relocation strategy – with a sharp focus on exit taxation, inheritance tax, and DTT implications. Check out: https://www.stb-thalmeir.de/exit-tax-germany-what-you-need-to-know-before-moving-abroad/
