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

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.