Tax Emigration: Should You Stay or Should You Go?

2024 has already been a frenetic year in terms of elections and changes in governments, and hence policies, and the big one in the USA in early November is yet to come. Although numerous themes are emerging in the global mobility tax space, it’s difficult to draw too many conclusions at this stage as to where it’s all heading, suffice to say that it’s causing significant jitters among the wealthy almost everywhere, who are migrating in unprecedented numbers across the globe. 

While the Labour Party’s victory in the UK was widely anticipated, the last-minute jump to the left in France and the big step to the right in the European Parliamentary elections were less predictable. No matter who won the UK elections in early July, it was a given that the non-dom regime and rules would be changed — and that more inheritance taxes are on their way. It’s less certain what will happen in France, with the current stalemate between the three groupings that took the most seats but failed to secure a parliamentary majority. If the leftwing alliance dominates, it will likely herald an era of higher taxes on the wealthy, including higher inheritance taxes. 

Multi-millionaires and entrepreneurs in neighboring Switzerland are considering their options because of an inheritance tax proposal submitted by the Young Socialists (JUSO). Swiss cantons fear that even if the referendum has little chance of succeeding, the prospect of it being voted on is enough reason for many wealthy people to think of moving away.

An era of exponential change

Political change, regardless of whether it lurches to the left or right, means things will be done differently. One of the main levers governments often pull to drive change is taxation, and one of the common justifications for pulling that lever is ‘fairness’.  

Political instability and economic policy upheavals have always been key drivers for those considering investment migration, but rarely have we witnessed a period of such dramatic, hasty and widespread change, which makes deciding where to go more complicated, as once safe havens suddenly look like they may have risks of their own.  

If yes, where to?

Once the decision on where to relocate has been made, the next thing to look at is how much it is likely to cost. And the variations can be huge in terms of tax costs as well as in real estate and living expenses.

Beyond the existing differences in a stable environment, the globally connected news cycle is rife with comment and speculation. It’s common to hear what potentially incoming governments ‘will’ do with taxes, even if the speculation goes beyond what has explicitly been promised. In such cases, those who anticipate being asked to redistribute some of their gains or wealth can’t afford to wait and are looking where to go to wait out the changes.

Where to go depends very much on your personal situation and family profile. For working individuals who are supporting their families, it’s important to have access to top-tier educational institutions or be situated close to their school- or university-aged children. Furthermore, business connections need to be maintained, and after years of screen-based meetings, face to face is back in vogue so ease of travel is an important box to tick.

Hence, the continuing popularity of tax systems that enable investors to bring their wealth and capital into the host country, generating a significant tax payment but also making this the base for their spending, fueling further economic activity.

Greece and Italy on the rise

For those still heavily active economically in Europe, the popularity of Greece and Italy with their EUR 100,000 maximum tax rates and attractive residence by investment programs is bringing a new cadre of investors into their economies — often at the expense of older centers such as London and now, potentially, Paris. And, yes, that is countries benefiting at the expense of individual cities.  

For those with investment income, Cyprus has a well-established non-domicile regime where investment income from abroad has a low tax rate, as well as having a benign climate. The UAE also continues to attract both types of investors, particularly where its geographical convenience at the crossroad between Africa, Asia, and Europe is relevant for dispersed families.

The Americas and Asia deliver on choice

For Americas-based investors the territorial-based tax systems of Costa Rica and Panama attract, as does the Caribbean, which offers the lure of citizenship of a stable country such as Antigua and Barbuda or St. Kitts and Nevis (among others) not just the right residence, and a completely income tax-free environment.  

In Asia, considering the same split between good places for those still working (Singapore), or those potentially retiring (Thailand or Malaysia), there are plenty of options still, and those work equally well in reverse — we see Singapore being considered as a retirement destination because of its attractive tax treatment of investment income, and Thailand as a working destination, again because of a remittance-based taxation system. 

So, in a year when more millionaires than ever are on the move, and many more making ‘just in case’ preparations to be able to go if things change for the worse, the tax aspect is just one of many considerations in a life-changing relocation. There remain plenty of excellent destinations for investors as long as taxation is considered in advance. And the best prepared are always ready to pivot the end location, as the next round of changes may mean that their final choice is not so final.