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Conflict in Middle East drives Dubai expatriates to Swiss tax hub of Zug

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Expatriates and investors based in Dubai are increasingly relocating to the small Swiss city of Zug and its surrounding canton as conflict in the Middle East and the Persian Gulf reshapes global wealth migration, the Financial Times reported.

The region, which has a population of 135,000, has emerged as a primary destination for expatriates departing the Middle East due to regional instability. According to expert assessments cited in the report, the surge in demand is being driven primarily by wealthy individuals, family offices, and firms operating within the commodity and finance sectors.

Heinz Tännler, the Finance Director of the Canton of Zug, told the Financial Times that authorities have recorded a marked increase in relocation requests since the onset of hostilities in the Middle East.

“We are seeing an increase in the number of applications,” Tännler stated. “We are, of course, saddened by the circumstances that led to this situation, but the reality is that Zug is benefiting from this process.”

Located in central Switzerland between Zurich and Lucerne, Zug is a German-speaking canton centered on its namesake capital on the shores of Lake Zug. The jurisdiction is renowned for offering one of the lowest tax burdens in the country for both corporations and wealthy residents.

Due to these fiscal advantages, the canton serves as a global hub for international headquarters and offices, particularly in commodity trading, finance, and information technology. Zug is also widely recognized as “Crypto Valley,” a premier global cluster for blockchain technology and the digital asset industry. The region is further characterized by high income levels and significant housing costs.

Swiss bankers and wealth managers noted that clients are increasingly seeking a stable base within Europe. Pierre Gabris, head of Alpen Partners, a firm that has facilitated moves for numerous clients from the Middle East, observed that “the first request from clients is almost always Zug.”

This concentrated demand has intensified pressure on the Zug housing market. According to Financial Times data, the supply of rental properties in the canton remains severely limited, with available units being leased almost immediately as market competition sharpens.

Residency requirements also remain a significant hurdle. While European Union citizens can relocate under bilateral agreements, residency rights for third-country nationals are largely contingent upon securing employment, establishing a company, or entering into lump-sum tax agreements that require approval from cantonal authorities.

Due to the housing shortage and high level of competition, a portion of the demand is reportedly shifting to other regions. Local real estate agents indicate an uptick in applications for the city of Lugano in the canton of Ticino, where approximately 300 suitable properties are currently available and where residency permits and tax arrangements can often be organized more expeditiously.

The migration follows a sharp escalation in military and political tensions. At the end of February, the US and Israel launched military operations against Iran. The Tehran administration responded to these operations with intensive strikes targeting Israeli territory and US military bases across the Middle East.

In an assessment published at the end of March, the Financial Times noted that the UAE had become the most frequently targeted state in the Persian Gulf.

Meanwhile, The Guardian previously reported that wealthy British nationals who had moved to Dubai en masse are now increasingly favoring Milan. Since 2017, Italy has offered a “flat tax” regime for new residents who have not been tax residents in the country for at least nine of the previous ten years.

Under this system, individuals pay a fixed annual tax of €300,000 on all foreign-sourced income. They are subject to standard taxation only on income generated within Italy and on investment gains realized within the first five years of entering the scheme.

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EU states hold talks with Taliban in Brussels on Afghan returns

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Representatives from 15 European Union member states met with the Taliban in Brussels on June 23 to discuss the return of Afghan nationals to Afghanistan.

A European Commission spokesperson said on Tuesday that the meeting was co-chaired with Sweden. Belgium and the Netherlands also took part.

The Commission stressed that the discussions primarily focused on the return of Afghan citizens with criminal records or those considered security threats.

Talks covered a wide range of issues, including the identification of returnees, the issuance of travel documents and procedures related to their repatriation.

However, Johannes Luchner, a senior European Commission official who travelled to Kabul in January, had previously indicated that the scope could extend beyond convicted individuals.

Addressing European lawmakers at the end of January, he said: “Our primary concern is the return of criminals, but the number of non-criminal Afghans who have received return orders is also increasing.”

Another EU source has now expressed a similar view. Speaking to EUobserver on Tuesday ahead of the meeting, the source said the discussions would also cover the return of asylum seekers whose applications had been rejected.

Earlier in the day, the Commission declined to provide details about the meeting.

As a result, questions remained unanswered regarding who covered the Taliban delegation’s travel expenses, where the meeting would take place, whether women would participate and what the Taliban expected in return for assisting the EU with deportations of Afghan nationals.

The EU and its member states have not recognised the Taliban government since it returned to power five years ago.

Brussels defended its decision to maintain limited contacts with Afghanistan’s “de facto authorities,” arguing that such engagement is necessary to facilitate the deportation of rejected asylum seekers who have committed crimes or are considered dangerous.

A European Commission spokesperson said officials from the Commission and 15 EU member states attended the Brussels meeting, which followed a previous gathering held in Kabul in January.

“The Commission services and Sweden today co-chaired a technical-level meeting in Brussels together with technical-level representatives of Afghanistan’s de facto authorities responsible for return and readmission matters,” the spokesperson said.

A spokesperson for Afghanistan’s Foreign Ministry said the agenda was broader and included the possibility of a future consular presence in the EU, the resumption of consular services for Afghans living there and “the need for confidence-building measures.”

Spokesperson Abdul Qahar Balkhi added that the meeting raised hopes of creating “positive momentum to safeguard the consular rights of Afghans residing abroad.”

According to a European Commission letter addressed to Balkhi and reviewed by Reuters, the discussions would focus on “the return and readmission of Afghan nationals without a right to reside in the EU.”

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EU defence chief calls for integration of Ukraine’s military into European defence architecture

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The European Union’s Defence Commissioner, Andrius Kubilius, said the bloc should integrate Ukraine into a future European defence union, speaking at the European Defence and Security Summit in Brussels.

According to remarks reported by Reuters, Kubilius said: “It would be difficult to make sense of things if we did not regard the integration of Ukraine’s armed forces into our defence architecture in Europe as a vital issue.”

Kubilius stressed that Ukraine currently holds a dominant position on the battlefield thanks to the transformation of its military doctrine.

Calling for the integration of Europe’s defence industry and Ukraine’s manufacturing facilities into a single military structure, Kubilius said Ukraine should be fully integrated into the EU’s military market.

He added that the European Commission could present a detailed analysis of the defence market and initial proposals for next steps as early as next week.

At a later stage, the commissioner said, the Commission would propose changes to defence procurement rules and other market regulations.

Kubilius also outlined a strategic objective for the European Union.

He argued that EU member states should spend around €7 trillion on arms production over the next decade in order to surpass Russia in military strength and weapons stockpiles. According to Kubilius, such spending would be consistent with commitments under NATO to raise defence budgets to 5% of gross domestic product.

Urging Europeans to be prepared to bear the cost, Kubilius described it as “the price of peace.”

At the same time, he suggested moving away from the production of highly sophisticated weapons that are difficult to manufacture in large quantities. Instead, citing the example of drones used in Ukraine, he called for a focus on producing “enormous quantities of satisfactory weapons.”

The EU Defence Commissioner also underscored the need to integrate Ukraine’s innovative defence industry into Europe’s broader defence and technological base.

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Hungary blocks joint EU letter backing Ukraine and Moldova accession process

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Hungary has refused to endorse a joint letter intended to be sent on behalf of all 27 European Union member states to the European Council and the European Commission in support of Ukraine’s and Moldova’s accession to the bloc.

According to Politico, citing sources familiar with the matter, the letter is required for Kyiv’s and Chisinau’s membership applications to advance to the next stage of the accession process.

The sources said Hungary was the only member state that declined to back the document. Because approval requires the consent of all 27 member states, the issue is expected to be revisited next week.

Hungary, which previously blocked Ukraine’s accession negotiations for an extended period, was led at the time by Prime Minister Viktor Orban. His successor, Prime Minister Peter Magyar, has not opposed the launch of the negotiation process but has insisted on removing the phrase “as soon as possible” from the draft letter’s reference to Ukraine’s accession.

Magyar said Hungary does not support opening all negotiating chapters simultaneously in an effort to accelerate Ukraine’s membership bid.

Explaining the government’s position, he said: “Partly because the ink on the documents relating to the first chapter has barely dried, and partly because this would send the wrong message to Western Balkan countries such as Serbia, Albania, Montenegro and North Macedonia, which have been working for years to become members of the European Union.”

The European Union formally opened the first chapter of accession negotiations with Ukraine and Moldova in June. The process was launched during a ceremony in Luxembourg attended by the foreign ministers of member states and is divided into six thematic clusters covering different areas of legislation and policy.

The opening of the first cluster, which covers core issues including the rule of law, the functioning of democratic institutions and public administration, marks the transition from the preparatory phase to practical work on meeting accession requirements.

The EU’s ambassador to Ukraine, Katarina Mathernova, has said Kyiv could join the bloc by 2030, although the final timeline will depend on how quickly the Ukrainian authorities complete the required legal and institutional reforms.

Mathernova also said she hoped all 33 negotiating chapters could be opened by the end of the summer.

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