The growing wealth gap in many western countries is pushing some to restrict tax and citizenship benefits aimed at expats. So where can they go to protect their assets?
| The UK announced last week that it would scrap its non-domiciled status, which allows people who live there but have permanent residency abroad to avoid taxes on their foreign assets for 15 years. The overhaul of a system that has provided preferential treatment for wealthy foreigners comes as the growing wealth gap in many western countries is pushing some to restrict tax and citizenship benefits aimed at expats.
Portugal last October announced plans to get rid of its non-habitual resident program, a policy that let foreigners pay lower income and pension taxes than locals for 10 years.Since a new tax law was implemented in 2016, residents and non-residents are not taxed on income earned in the country or on their foreign assets. This law has been a major driver for the country’s economy, attracting wealthy investors and boosting the real estate market. There are also no wealth or inheritance taxes in these Caribbean islands.Foreigners can also secure citizenship that promises visa-free travel to Europe for as little as $US100,000 . Antigua and Barbuda citizens can travel to 154 countries without applying for a visa beforehand. Beware that the EU is trying to crack down on this visa-free policy, and putting pressure on it and other Caribbean nations to either shut down their citizenship-by-investment programs or tighten them.Dubai and its fellow emirates have attracted a flood of hedge fund managers and bankers from around the world in the past few years, thanks to its loose tax laws and amenities for the wealthy. The UAE doesn’t tax personal income, capital gains, inheritance, gifts or properties. And it has one of the lowest corporate tax rates in the world, at 9 per cent for companies generating more than 375,000 dirhams in annual profits. The country also recently increased the scope of people who can apply for long-term resident visas, including entrepreneurs and engineers. However, Dubai is becoming unaffordable as its popularity sendsand benefiting from these tax breaks more than doubled in 2021 to a total of more than 1300 people. New residents pay an annual fee of €100,000 and are exempt from paying tax on foreign income. They can also pay no tax on 50 per cent of their Italian income if they’ve not been a resident for the two preceding fiscal years.The recent Milan rush has pushed up real estate prices and contributed to the city’s higher cost of living, stoking tensions among locals. Still, as the UK and Portugal withdraw incentives for foreigners, wealth consultants say Italy stands to be one of the main beneficiaries of global expats – especially from the US and the Middle East – looking to park their cash in a low-tax European country.Singapore is a mixed picture. While it has benefited from China’s clampdown on Hong Kong, last year’s move tofor foreign buyers has made it less advantageous. The personal income tax rate for residents is low, capped at 22 per cent. The standard corporate tax is 17 per cent. Still, to purchase a house worth $US5 million , a foreign buyer will have to pay 65 per cent in taxes in Singapore, including other levies, compared with about 4 per cent in New York, 15 per cent in London and 30 per cent in Hong Kong, according to Savills calculations.Multimillionaires further flock to Monaco to enjoy the city’s casinos, lifestyle and low taxes. A playground for the European elite, the tiny country has no taxes on property, personal income or capital gains. Rental properties are taxed at 1 per cent of the annual rent. Monaco eliminated taxes on dividends paid by local companies and doesn’t charge a general corporate income tax., according to a recent report by wealth consultancy Knight Frank, where $US1 million buys just 172 square feet of property. The country’s residence permit can be obtained by investing over €1 million.France’s income tax goes up to 45 per cent, similar to Japan’s. France charges a 3 per cent surtax on income exceeding €250,000 while capital gains tax is 19 per cent. Denmark’s income taxes go up to 52 per cent. In Belgium, any income over €46,440 is taxed at 50 per cent.
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