Where rich Brits, French might go to escape higher taxes
THE prospect of higher taxes on the wealthy in the United Kingdom and France has led some to consider moving abroad.
In the UK, Prime Minister Keir Starmer’s Labour government is planning to scrap preferential tax treatment for rich foreign residents – so-called non-doms – including on assets they hold in overseas trusts. A move by Chancellor of the Exchequer Rachel Reeves to raise taxes on capital gains or inheritance is also widely believed to be in the cards.
Across the English Channel in France, the political opposition to President Emmanuel Macron is threatening to upend years of pro-business taxation. The election resulted in a hung parliament and no government so far, but during the campaign, the leftist alliance vowed to tax billionaires more and went on to win the most seats. Budgetary constraints may pressure any incoming coalition to raise levies, possibly on the wealthy or inheritance.
“There’s nothing like an election to focus the mind,” said David Lesperance, a Poland-based tax and immigration adviser to the wealthy.
Relocations can take years of planning, and the destinations depend heavily on financial and personal considerations, including schools, safety, weather and lifestyle. The United Arab Emirates is forecast to attract the most global millionaires this year followed by the US and Singapore, according to a report by Henley & Partners, which advises on setting up residence and gaining passports in countries through investment.
French nationals wanting to explore alternative places to live made a record number of inquiries in the second quarter, Henley said. Applications by UK clients to investment migration programmes also reached unprecedented levels, while requests for information quadrupled from the previous three months, the company said.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The UK and France have the most US dollar millionaires – about three million each – after the US and China, according to UBS Group’s Global Wealth Report 2024, so the potential for migration is significant. Their billionaire citizens make up 27 of the 500 richest people on the Bloomberg Billionaires Index, including Bernard Arnault, founder of luxury empire LVMH, and vacuum cleaner tycoon James Dyson.
Close to home
For UK and France residents looking for a friendlier tax environment that’s close to home, here are popular destinations in Europe, according to wealth advisers:
The buzz around Italy is growing louder, with Milan as the mecca. Tax lawyers have been fielding an increasing number of inquiries from wealthy Londoners considering a move.
The draw is a 2017 provision that exempts foreign income, gifts and inheritance from Italian tax for 15 years in exchange for a lump sum payment of 100,000 euros (S$144,532) a year. Family members can be added for a 25,000 euros fee, while any income, gain, gift or inheritance sourced in Italy would be taxed.
“There is considerable financial incentive for high-net-worth individuals to relocate” to Italy, Nomad Capitalist, a firm that advises on tax reduction and passports, said.
On the other side of the Alpine border, Switzerland has long attracted the global wealthy due to a tradition of banking privacy and discretion as well as stable politics and favourable taxes. Rich Norwegians seeking to escape their home country’s higher wealth and dividend taxes are among the most recent emigres to arrive.
Tax rates vary by canton and are generally lowest in Swiss-German speaking areas such as Schwyz and Zug, compared with the more cosmopolitan city of Geneva, according to KPMG. Some cantons have lump-sum options favourable to wealthy foreign residents who do not work in Switzerland.
Belgium has been a magnet for wealthy French because of more favourable tax rules, as well as geographic and cultural affinity. A little over a decade ago, Arnault, the world’s third-richest individual, applied and then withdrew a bid to gain Belgian citizenship, saying the move was related to succession.
“Belgium is a mini tax haven for high-net-worth individuals,” said Denis-Emmanuel Philippe, a Brussels-based co-founder and partner at Bloom law firm. The country retains its allure partly because of the exemption of capital gains on shares, the absence of a wealth tax other than a levy on securities accounts, and low gift and inheritance taxes, he said.
The principality of Monaco, which has no income or capital gains taxes, is already home to the highest concentration of millionaires and billionaires in the world. It’s an option for the UK wealthy such as Jim Ratcliffe, founder of chemicals giant Ineos who moved there around 2018, but less so for the French. Since a 1962 tax war, any French citizen who moves there is still bound by France’s fiscal regime.
The enthusiasm for Monaco could be dampened by its recent inclusion on an international “grey list” for not doing enough to tackle illicit flows of money. The designation, which the United Arab Emirates just shook off, could hamper capital inflows.
Another deterrent could be eye-popping real estate prices. Monaco is smaller than New York’s Central Park and ranks as the world’s most expensive property market, according to Knight Frank. New apartments sold for an average of 37 million euros last year, Monaco data show.
Further afield
For those who are willing to go further afield to take advantage of incentives meant to attract the rich, here are the most likely spots in the Middle East and Asia:
Abu Dhabi and Dubai in the UAE, which do not tax salaries or dividends, have both created sophisticated financial markets to entice global firms and family offices to set up shop.
The richest man in crypto, Changpeng “CZ” Zhao, India’s Adani family and hedge fund billionaire Ray Dalio are among the high-net-worth individuals who have set up special-purpose vehicles in Abu Dhabi. The movement of capital, however, does not mean they are living in the UAE, wealth advisers say. Deterrents to locating permanently include extreme summer heat, speech and Internet restrictions and the overall political environment.
Singapore’s tax exemptions and other incentives have attracted hundreds of family offices in recent years along with wealthy Asians, Europeans and Americans, turning it into a top wealth-management hub. Like the UAE, the projected influx of millionaires could reflect the arrival of bankers and lawyers working in the financial services industry. A possible downside is a series of scandals that have led to closer scrutiny of foreign capital inflows.
Familiar ground
For those who want to stick with a familiar culture and language, here are the most popular destinations in North America and the Commonwealth,
“There has been an increase in European immigration to Miami,” said Samy Dwek, chief executive officer of the Family Office Doctor. He relocated to Florida about a decade ago from Switzerland and said the US is attracting rich newcomers from France and the UK, especially to places such as Florida and New York, where education and living standards are among the draws. He pointed to business investment visas as good options for foreign nationals to gain a foothold.
Though considered high-tax countries, Australia and Canada remain attractive options for wealthy individuals because they do not have estate, wealth or gift taxes. The possibility of gaining residency and citizenship through investment have long drawn in Europeans and Asians. While Australia’s weather attracts UK nationals, the province of Quebec is drawing increasing numbers of French, who made up 13 per cent of landed immigrants last year, the highest proportion of any country.
“In addition to wanting to optimise their wealth, some French are now even looking into taking out a second citizenship,” said Amine El Ouarzazi, an adviser at Henley, pointing to factors such as a perceived increase in anti-Semitic and anti-Muslim rhetoric during the French election campaign. Options for citizenship include places such as Antigua and Barbuda, Saint Lucia and Malta.
“It’s an insurance policy against something bad happening in the future,” El Ouarzazi said. BLOOMBERG
Share with us your feedback on BT's products and services
