Recent statistics demonstrate that wealth individuals from such developing nations as Russia and China now more than ever before are taking out their capital and moving. One possible reason for this, despite the officially announced economic recession, is that the developed nations have always enjoyed a reputation of more politically and economically stable nations, whereas, such countries as Russia are severely impacted by political changes. It may be said that in the eyes of the world’s wealthy the developing countries have become a place to earn the money whereas more developed nations have become the place to live. Majority of Western nations have been undertaking measures to raise their profile and their “popularity” with the wealthy by introducing various tax and immigration advantages to relocation to such countries.
Ireland, Portugal, Jersey, Latvia and Andorra, just to name a few, have been trying to raise their global profile and attract wealthy immigrants by recently introducing various investor programs, which in a lot of cases are also combined with certain tax advantages. For example, Ireland has introduced new investor and entrepreneur programs, allowing, through investment of between €400,000 and €2,000,000, for the immigrant and their entire family to receive a multi-entry visa for 5 years, with the possibility to apply for an Irish passport upon the expiration of this period.
Jersey has implemented a more attractive immigration program, under which no actual investment needs to be made into the economy, the individual us required to demonstrate that his worldwide income is above £625,000. Once the individual relocated, the income up to £625,000 will taxed at the rate of 20% and any income above £625,000 will be taxed at the rate of 1%.
United Kingdom has been steadily gaining popularity as an immigration destination among the ultra-wealthy. The country has been a popular destination for the ultra-wealthy to send their children to study and to own real estate. In fact, in the past couple of years majority of high-value residential properties in London and the surrounding areas have been purchased by non-UK nationals. The growing popularity of the United Kingdom as a relocation destination can also be attributed to the efforts of the government, which introduced recently new investor visa category and has been working on amending taxation laws.
By way of a general overview of the investor visa requirements, in order to obtain an investor visa, the individual has to invest £1,000,000 in the UK economy, which can either be via an investment into government bonds or by way of a loan to a UK trading entity. The investment cannot be solely into real estate, however, 25% of the total investment amount, i.e., £250,000, may be used to purchase real estate. The investment of this amount would lead to a permanent residency in 5 years. For those investors who have additional capital to bring, the government is prepared to grant a permanent residency faster – for investments of £5,000,000 the permanent residency will be granted after 3 years of living in the UK and for investments of £10,000,000 the permanent residency may be received within 2 years. A great many individuals find the option of an investment visa extremely attractive, since the applicant is not required to know English language and the application process is relatively straightforward. It is necessary to keep in mind that there are certain restrictions on the amount of days that the immigrant can spend outside the United Kingdom and all those issues should be discussed in detail with your immigration advisor.
Despite the fact that UK has high level of taxation, when compared to Russia, for example, the ultra-wealthy coming to live in the UK (and even after having lived in the UK for a number of years) would not necessarily be subject to taxation here. With adequate pre-immigration planning the capital earned prior to the individual moving to the UK would not be subject to taxation in the UK, even if it is brought into the UK and is used for living expenses. Furthermore, any income received outside the UK while the individual is residing in the UK may be taxed (if so chosen) only once it is brought in the UK – this is known as remittance based taxation. If such earning are, however, reinvested outside of the UK, then such income will never be brought into ambit of the UK taxation. The above gives a very general outline of the taxation regime of the United Kingdom and all individual circumstances shall be taken into consideration when considering a move to the United Kingdom.
However, recently other immigration options have been gaining popularity, in particular, the sole representative visa and entrepreneur visa options. Both of those opportunities would allow the high-value migrant to avail themselves of the potential tax planning opportunities which may be achieved by having a UK-registered company and to also be able to obtain a residency permit in the UK based on the existence of such company. The sole representative visa offers unique benefits to the migrant as it does not put any restrictions on the amount of time that the migrant can spend outside of the United Kingdom (although, restrictions on the amount of absences from the UK imposed in order to obtain British citizenship would still apply). However, in order to be eligible for this type of visa the individual and the company which employs the individual would have to meet certain criteria.
Finally, despite the overall economic crisis United Kingdom remains an attractive immigration option for high-net worth individuals and their families, not only due to its cultural, education and property investment opportunities but also because of attractive settlement and taxation planning options. However, all circumstances should be considered individually prior to undertaking any actions to relocate to the United Kingdom, whether personally or by relocating a business.
Yuliya Andresyuk, LLM
Oracle Family Office,
a Network partner of Oracle Capital Group
Article from RBCC Bulletin,
September 2012
