Mahaprasad Nanda

Introduction

Many jurisdictions are actively competing to attract high-net-worth individuals (HNWIs) by offering various incentives. This is not surprising given that the world is becoming increasingly interconnected, leading to a growing trend of HNWIs seeking global mobility. HNWIs are individuals with investable assets of USD 1 million or more. This report explores the factors driving this trend, the popular destinations for HNWIs, the types of visas and residency programs available, the benefits and drawbacks of different global mobility options, and the tax and legal considerations. 

Global Mobility Trends for High-Net-Worth Individuals

Wealth intelligence firm New World Wealth systematically tracks global wealth migration trends between countries and cities. Their data shows that the number of HNWIs relocating to different countries has significantly increased in recent years. In addition to HNWIs, there are also multi-millionaires (net worth over USD 10 million), ultra-HNWIs (net worth over USD 50 million), and centi-millionaires (individuals with liquid investable wealth of USD 100 million or more). This trend is driven by several factors, including: 

• Economic security: HNWIs are seeking stable economies and investment opportunities to protect and grow their wealth. 
• Personal safety: Political instability, social unrest, and high crime rates in some countries are pushing HNWIs to seek safer environments for themselves and their families. 
• Financial diversification: HNWIs are diversifying their assets and investments across different countries and currencies to mitigate risks. 
• Tax optimization: Some HNWIs seek to minimize their tax burden by relocating to jurisdictions with favorable tax regimes. 
• Lifestyle preferences: HNWIs are attracted to countries with a high quality of life, better healthcare, education systems, and cultural experiences. 
• Global connectivity: Improved transportation and communication technologies have made it easier for HNWIs to maintain connections and manage their businesses across borders. 

The COVID-19 pandemic briefly stalled this trend, but it has resumed with renewed vigor. The easing of travel restrictions, global unrest, and economic turbulence are further accelerating the trend. Furthermore, the desire for global mobility has expanded rapidly since the outbreak of the pandemic and now encompasses a wider range of people. For example, 13% of ultra-high-net-worth individuals (UHNWIs) plan to acquire a second identity. The increasing mobility of wealthy individuals is also connected to rising global inequality. Digital transformation is another factor impacting global mobility, enabling remote work and increasing the demand for global mobility programs. 

Popular Destinations for High-Net-Worth Individuals

Several countries have emerged as popular destinations for HNWIs seeking global mobility. These include:

• The USA: The USA remains a top choice due to its large economy, vibrant cultural scene, and strong real estate market. Cities like New York, Miami, and Los Angeles are particularly popular. 
• Singapore: Singapore attracts HNWIs with its global connectivity, sophisticated banking system, stable political environment, and reputation as a safe and business-friendly environment. 
• Canada and Australia: These countries offer a high quality of life, political stability, excellent healthcare and education systems, and attractive immigration programs. 
• European countries: Switzerland, Portugal, Greece, and Italy are popular European destinations, offering a combination of lifestyle, cultural attractions, and favorable tax regimes. For example, Spain offers a Golden Visa program that can lead to citizenship and an EU passport. 
• The UAE: The UAE has become a favorite due to its competitive tax rates, business opportunities, and the Golden Visa program. 
• Israel: Israel attracts HNWIs with its strong economy, innovation, and investment opportunities. 
• Uruguay: Uruguay offers a simple residency process, requiring only a declaration of intent to reside and proof of financial independence. 
• The Caribbean: The Caribbean region offers attractive real estate-linked investment migration options for centi-millionaires. For example, the Grenada Citizenship by Investment Program allows HNWIs to secure citizenship by investing a minimum of USD 270,000 in government-approved real estate projects. 

In addition to long-term relocation, many individuals are seeking "medium-term" solutions, where they may want to spend a few months in a location where they can work remotely and still enjoy the local culture and attractions. The choice of destination ultimately depends on individual needs and preferences, with factors like tax implications, investment opportunities, lifestyle, and family considerations playing a significant role. 

Types of Visas and Residency Programs

HNWIs have various visa and residency options, including:

Benefits and Drawbacks of Global Mobility Options

Global mobility offers numerous benefits to HNWIs, including:

Benefits

• Enhanced global mobility: Visa-free travel, ease of relocation, and the ability to live and work in multiple countries. 
• Tax optimization: Potentially lower tax burdens and access to tax-efficient investment structures. 
• Diversification of assets: Spreading investments across different countries and currencies to reduce risk. Wealth increases when it earns a positive return (flow of income) from investments in the capital market, real estate, art work or productive enterprise. 
• Improved lifestyle: Access to better healthcare, education, and a higher quality of life. 
• Business opportunities: Access to new markets and investment opportunities. 
• Plan B: A safe haven in case of political or economic instability in their home country. 

Drawbacks

• Cost: Investment migration programs often require significant financial investments. 
• Complexity: Navigating the legal and tax implications of global mobility can be complex and require professional advice. 
• Security risks: HNWIs may face increased security risks when traveling or residing in unfamiliar environments. 
• Family considerations: Relocating can disrupt family life and require adjustments for children and spouses. 
• Emotional challenges: Adapting to a new culture and environment can be challenging. 
• Short-term assignments: While potentially less costly, short-term assignments may not provide enough time to settle in, develop relationships, and accomplish all objectives. There can also be unexpected cost increases related to per diems and expense reimbursements. 
• Global mobility programs: Challenges include technology, legal compliance, ensuring continuity, and support for families and dependents. 

Tax Implications of Global Mobility

Tax implications are a crucial consideration for HNWIs seeking global mobility. Some key considerations include:

• Tax residency: Establishing tax residency in a new country can significantly impact tax liabilities. For example, Portugal offers a beneficial tax regime for HNWIs, including a 20% flat tax on specific foreign income types and tax exemptions on certain foreign incomes. Italy also has a beneficial tax regime for HNWIs, including a €100k flat tax on foreign income. 
• Tax on worldwide income: Some countries tax their residents on their worldwide income, regardless of where it is earned. 
• Double taxation: HNWIs may face double taxation if their income is taxed in both their home country and their new country of residence. 
• Tax treaties: Tax treaties between countries can help mitigate double taxation. 
• Exit taxes: Some countries impose exit taxes on individuals who relinquish their tax residency. 
• Reporting requirements: HNWIs may have complex reporting requirements in both their home country and their new country of residence. 

Careful tax planning is essential to minimize tax liabilities and ensure compliance with tax laws in all relevant jurisdictions.

Legal and Financial Considerations

In addition to tax implications, HNWIs must consider various legal and financial aspects of global mobility:

• Immigration laws: Each country has specific immigration laws and requirements for residency and citizenship. The wealthy face critical decisions in a volatile world, including where to reside, where to place their assets, and how to allocate their wealth among different assets. 
• Visa applications: HNWIs need to meet the eligibility criteria and fulfill the application requirements for the chosen visa or residency program. For example, the UK's investor visa requires applicants to demonstrate the source of their funds and obtain a criminal record certificate for all countries where they have resided for 12 months or more in the previous 10 years. 
• Property ownership: Laws regarding property ownership and inheritance can vary significantly between countries. 
• Estate planning: HNWIs need to review their estate plans to ensure they are aligned with the laws of their new country of residence. Pre-migration planning is crucial, as transitioning from one's domicile or tax residence can have repercussions on existing trust arrangements and the applicable legal framework. 
• Financial regulations: Understanding the financial regulations and banking systems in the new country is crucial. 
• Investment options: Exploring investment opportunities and structuring investments in a tax-efficient manner. 
• Currency exchange: Managing currency exchange risks and optimizing international money transfers. 
• Asset location: Strategic financial planning should consider asset location and global mobility. For example, Dubai, Hong Kong, and Singapore offer different advantages for HNWIs seeking to optimize their wealth structuring. 
• Changing financial landscape: A changing financial landscape and the global pandemic have led wealthy individuals to review succession, purpose, tax, and global mobility. 

In Summery

Global mobility offers significant opportunities for HNWIs to enhance their lives, protect their wealth, and create a more secure future. However, it also presents complex challenges that require careful planning and professional advice. By understanding the trends, options, benefits, drawbacks, and legal and financial considerations, HNWIs can make informed decisions and navigate the complexities of global mobility successfully. Building a resilient portfolio of residences and citizenships is becoming increasingly important in a volatile world. Global mobility trends are constantly evolving, and HNWIs need to stay informed about the latest developments to make the most of the opportunities available. Seeking professional advice from qualified advisors is highly recommended to navigate the complexities of global mobility effectively and achieve optimal outcomes.

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