London, Luxembourg and Liechtenstein

London after the non-domiciled regime

London remains the second centre in the GFCI and the largest European market for international finance, law and wealth advice.¹ For Lugano it has been a competitor and a source of business at the same time. Many Italian families held trusts and companies administered in London or in the Crown Dependencies, used English law for their shareholder agreements and sent their children to work in the City. Wealthy Italians and other Europeans lived in London under the regime for non-domiciled residents, which taxed foreign income and gains only when they were remitted to the United Kingdom. That regime ended on 6 April 2025. It was replaced by a four-year exemption for foreign income and gains of new arrivals and by an inheritance tax based on residence, which applies to worldwide assets once a person has been resident for ten of the previous twenty tax years.² The reform was announced by the Conservative government in March 2024 and implemented, with modifications, by the Labour government that took office in July 2024.

The abolition of the regime produced the largest movement of wealthy individuals in Europe in recent years. Henley & Partners estimated a net outflow of 16,500 millionaires from the United Kingdom in 2025, more than twice the figure for China, the next largest source of emigration.³ The destinations named in the press and in the reports of advisers were Milan, Dubai, Switzerland, Monaco and southern Europe. Italy's flat tax, which still cost EUR 100,000 when the British reform was announced, attracted many of these individuals to Milan. Switzerland received others. For Lugano, the departure of wealthy residents from London is an opportunity that the Italian regime appears to have captured more effectively, for two reasons. Milan is a larger city with an international labour market and schools, and the Italian flat tax was known in London's advisory community as a simple product, while Swiss lump-sum taxation varies from canton to canton.

Since 1 January 2026 the relationship between Swiss and British providers has been governed by the Berne Financial Services Agreement, discussed in a later section of this chapter. The agreement allows Swiss banks and asset managers to serve high-net-worth individuals resident in the United Kingdom without a British licence, subject to conditions. A London-based client of a Lugano bank may therefore be served actively from Switzerland, which is not possible for a Milan-based client.

Luxembourg: the European platform

Luxembourg ranked sixteenth in the GFCI of March 2026, two places ahead of Geneva.⁴ It is the largest centre for investment funds in Europe and the European base of many international private banks, among them several Swiss groups. Its importance for Lugano lies in a single legal fact: a bank or investment firm authorized in Luxembourg is an institution of a Member State of the European Union and may provide services in Italy under the freedom to provide services or through a branch, after notification under Articles 34 and 35 of the Markets in Financial Instruments Directive (MiFID II, Directive 2014/65/EU) and the corresponding provisions of the Capital Requirements Directive.⁵ A Luxembourg subsidiary of a Swiss group can therefore serve Italian clients actively, while its Swiss parent may serve them only at their own initiative.

Three Luxembourg products have long been part of the Italian private banking market. Funds established in Luxembourg as undertakings for collective investment in transferable securities (UCITS) can be distributed to Italian retail investors under the passport of the UCITS Directive, which is why many Lugano banks offer their Italian clients Luxembourg funds and not Swiss ones, as Chapter E.IV has noted. Unit-linked life insurance policies issued by Luxembourg insurers have been used by Italian families as wrappers for their portfolios, with the protection of the Luxembourg "triangle of security" and the deferral of Italian taxation until surrender or death.⁶ Luxembourg holding and fund structures, finally, serve Italian families as vehicles for investments in private equity and real estate. In each case the Swiss bank or asset manager may remain involved as custodian, investment manager or adviser, but the regulated product and the client contract are European.

Notes

1. GFCI 39 (above), Table 1. ↩
2. HM Treasury and HM Revenue & Customs, "Changes to the taxation of non-UK domiciled individuals" (above), technical note, https://www.gov.uk/government/publications/changes-to-the-taxation-of-non-uk-domiciled-individuals/technical-note-changes-to-the-taxation-of-non-uk-domiciled-individuals; HM Revenue & Customs, "Tax changes for non-UK domiciled individuals", policy paper, 30 October 2024, https://www.gov.uk/government/publications/tax-changes-for-non-uk-domiciled-individuals (four-year regime for foreign income and gains for new arrivals not resident in the previous ten years, Temporary Repatriation Facility and residence-based inheritance tax as set out in the Autumn Budget 2024). ↩
3. Henley & Partners (above). ↩
4. GFCI 39 (above), Table 1. ↩
5. On the Italian implementation see Chapter E.IV. Directive 2014/65/EU, Arts. 34 and 35; Directive 2013/36/EU (CRD), Arts. 35 to 39. ↩
6. See Chapters E.IV and G.IV. Segregation of policyholders' assets with an approved custodian under the supervision of the Commissariat aux Assurances. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.