The Global Movement of Billionaires

The global billionaire cohort is bigger than ever and also richer than ever, worth USD 12.5 trillion in liquid investable wealth as at June 2024, up by USD 0.8 trillion compared to the same time the previous year, according to New World Wealth.¹ According to the wealth intelligence firm, most of the gains come from the USA, now host to more than 800 billionaires, followed by China, which lost almost 10% of its billionaire population, mostly due to weak consumer spending, outward wealth migration, and a real estate bust. India has the third-largest billionaire population of 122.

Country-specific developments such as those described above have fueled the migration of billionaires to other countries, but so have government fiscal policy changes such as the rise in Norway's wealth tax. In addition, the ongoing war between Russia and Ukraine, increased tensions in the Middle East, and a more expansively acting China all cause billionaires to seek places with a safe and stable environment away from these hotspots. This perspective has resulted in countries such as the UAE, the USA, Singapore, Canada, and Australia being the most sought-after immigration countries for billionaires and their family members. In this context, there has also been a general uptick in succession and emergency planning for the families of billionaires.

Mobility restrictions

Given that most billionaires are first-generation entrepreneurs and still closely connected to their business operations, mobility limitations exist that relate less to physical presence and more to the ownership structures and dividend-investment flows to and from their businesses.

For example, imagine that a billionaire who resides in Germany, having built up a multi-national group headquartered there, would like to move to New York in 2025, since her only daughter lives there with her family. The billionaire wants to enjoy the cultural life, as well as finally have more time for her grandchildren. Yet she may find it challenging to relocate from Germany due to the exit taxes that would be triggered or for which she may at least have to provide guarantees. Based on tax legislation, she might be forced to sell part of her business to pay the exit taxes or provide these guarantees or embark on a tax and residence plan that would eventually allow these tax consequences to be deferred, and further mitigate dividend-withholding tax exposures.

Billionaires do not face many legal mobility restrictions — other than the increasing barriers of exit taxes and the like — especially given the budding number of residence and citizenship by investment programs working to attract wealthy individuals or families. (These individuals or families have recently been subject to more supervision by organizations such as the European Union and the OECD to prevent potential loopholes in transparency provisions.) In fact, there are many destinations that offer high-quality infrastructure, including an increasingly important high-level health infrastructure, from which wealthy individuals can pick and choose. As a result, billionaires and their families are increasingly global, with family members often spread around the world. This — together with typically close ties to family businesses — results in them facing a threefold tax challenge.

First, family members residing in several different territories may trigger limited or unlimited tax liabilities in all or some of the respective countries in which they are domiciled. Second, billionaires are often linked to businesses that are also international and therefore also catalyze multiple tax liabilities. Third, transferring assets within the family may initiate inheritance or gift tax consequences, which are less coordinated at an international level than corporate or individual income taxes.

Current challenges

Bearing in mind the strong links billionaires often maintain with their international businesses, corporate tax planning, up to the ultimate beneficial owner, is of paramount interest. In recent years, the international corporate landscape has changed dramatically, culminating in the OECD’s Base Erosion and Profit Shifting project (sometimes known as BEPS), which aims to prevent the shift of profits to low- or non-tax jurisdictions as well as the circumvention of tax rules by multi-national companies. The project has led to several new internationally relevant tax laws coming into effect. While publicly quoted, large, multi-national groups have traditionally had elaborate corporate tax structures that were often the reason for these Base Erosion and Profit Shifting measures, privately held businesses have typically been leaner in their tax structures. With the new legislation, many of these businesses undertook significant corporate restructuring to ensure compliance.

Billionaires, being the ultimate beneficial owners of such businesses, often find themselves faced with a set of new holding requirements that influence the exchange of financial information between different countries, thus care must be taken that no misreporting or double reporting occurs. This is especially true for billionaires and their families who are tied to their businesses through various holding and financing vehicles. In other words, in the past, wealthy families could focus on profitable businesses and did not need to concern themselves much with residence planning, but now both corporate tax laws (through the Base Erosion and Profit Shifting project) and individual tax laws (triggered by the Common Reporting Standard) have led to a ‘perfect storm’ that internationally active billionaires must now weather.

The outlook

Today, the biggest challenges billionaires and their families face are more likely to be of a tax and regulatory nature, and less to do with infrastructure. A growing number of tax questions at both the individual and business level are prompted by billionaires relocating, especially those who have adult children with business interests living in different countries, while studying or temporarily residing in yet other countries.

As a result of the Covid-19 crisis, numbers of countries in financial need will seek to expand their restrictive tax laws, which will also be fueled by high inflation-triggered redistributive tax and regulatory efforts to counter increased inequality and pressure from high food and energy prices. Therefore, a rising number of billionaires will be relocating from countries with limited governance. The combination — of laws designed to ‘tax the rich’ and billionaires moving — is leading to ever more ultra-high-net-worth individuals moving to reliable countries that offer a reasonable tax environment. Long-term sustainable residence planning is crucial in this context as many billionaires anticipate the pressure to tax wealthy individuals will increase, especially through newly introduced wealth or inheritance taxes.

For instance, in 2023 Spain introduced a temporary Solidarity Tax on Large Fortunes that was extended into 2024, former US President Biden’s budget for 2025 proposed a 25% minimum tax on the wealthiest 0.01%, and the UK announced the end of its non-dom regime from April 2025. At the global level, the UN is in the process of developing a new Universal Convention on International Tax Cooperation to ensure that large multi-nationals pay their fair share of taxes, thereby creating additional tax revenues especially in the Global South. One part of this yet-to-be-formulated convention would ensure effective taxation of high-net-worth individuals in their home countries, as recorded in the draft terms of reference. This was approved by majority vote mostly from developing countries, while European Union member states abstained, and the USA, the UK, Japan, and Australia, among other countries, voted against. There will be a three-year drafting period for the convention, after which the UN member states will be able to vote on it in 2027.

In summary, these regulatory and tax changes will require further sophisticated tax and legal planning for billionaires, as has been the case in the past for large multi-national corporates. This planning will not primarily aim to reduce taxes, however, but rather to comply with necessary regulatory requirements to avoid the risk of double or multiple taxation of the billionaires’ income and wealth in a global context, especially for those ultra-wealthy individuals and their families who are moving internationally.

Notes

¹ A. Amoils (Head of Research, New World Wealth), personal communication, 4 September 2024

Dr. Marcel Widrig, Senior Vice President at Freemont International, is a former partner at PwC, based in Zurich, where he led PwC’s private client network and was the global tax leader of ultra-high-net-worth individuals. Dr. Widrig has some 30 years of experience in international tax and legal planning for billionaires and their family offices. He publishes regularly in various media and was a lecturer on tax law at the University of Zurich.