In mid October, Switzerland moved one step closer to abolishing the favourable tax regime it offers to wealthy foreigners. A petition was filed with the federal tax authorities which appears to have 100,000 signatures, the number required to force a national referendum which could see the regime withdrawn in all parts of Switzerland within the next few years.

Opponents of the “lump sum” or “forfeit” arrangements have been increasingly vocal in recent years. As a result, of the 26 Swiss cantons, five (notably Zurich and Basel City) have abolished the regime, five have tightened the conditions for eligibility and the regime faces continued pressure in several others, including Geneva. Active opposition has also lead to the regime being tightened at a federal level, with an increase in the minimum income required to access the regime (to CHF400,000 or 7 times the rental value of the individual’s residence). The OECD has also asked Switzerland to abolish the lump sum tax system which is reported to benefit approximately 5,500 individuals.

Similarly, the chill of austere times (and changing governments) is being felt across the Channel. Although France does not offer an equivalent lump sum tax regime, it has recently introduced sharp increases in tax rates and withdrew various tax reliefs. The effects of these changes are likely to fall mostly on the rich. Boris Johnson is not the only one thinking that “not since 1789 has there been such tyranny in France” – these changes have prompted many wealthy French residents to consider migration.

In contrast, the UK continues to offer a warm welcome to wealthy foreigners. By comparison with the Swiss lump sum system, the UK’s “non-dom” regime: (a) has fewer conditions (no restrictions on working in the UK or having been resident in the UK in recent years); (b) is automatically available (rather than dependent on negotiations with the tax authorities on arrival) and (c) is likely to be cheaper (no charge for the first seven years, relatively low fixed charges thereafter irrespective of wealth or income/gains, and non-doms are not generally liable to gift taxes (i.e. IHT)).

It is true that the non-dom system has faced sharp criticism in the UK and that tax planning (both at a corporate and individual level) continues to receive significant media attention . This may have contributed to the non-dom system being tightened up in 2008. However, the Chancellor has promised not to introduce any further major changes for the rest of this parliament (i.e. before 2015) and recent changes have largely been taxpayer-friendly (e.g. the introduction of new reliefs for investment by non-doms into UK businesses, a residence test offering greater certainty and a fast-track process for obtaining a UK passport) with one notable exception (the new taxes imposed on residential property with a value in excess of £2 million which, although not branded as a “non-dom tax”, will affect many UK resident non-doms).

Despite this and the occasionally vocal criticism directed at non-doms, the UK is very much “open for business” when it comes to attracting wealthy immigrants. Unlike the Swiss situation, there is no indication that the non-dom regime will be withdrawn any time soon and the appeal of the UK as a residence of choice for high net worth individuals seems to increase each year, particularly in comparison to its close neighbours (merci, M. Hollande).

This could change on Wednesday (5 December 2012) when the Chancellor delivers his Autumn statement but we expect that it will not.