Migration among millionaires rises as tensions and taxes take their toll
Just over 100k millionaires fled their homelands last year, a 14% rise on the previous year and more than twice the amount than 2013, according to Johannesburg-based New World Wealth. Canada, the US and Australia are the top destinations according to the research firm, with China and Russia being the places millionaires are least likely to migrate to. The UK lost around 3,000 millionaires last year, with Brexit taxation given as the possible cause.
Wealth migration figures show present conditions such as religious tensions, crime and lack of business opportunities, but can also be a key future indicator, reports Andrew Amoils, head of research at New World Wealth.
Amoils said that it can indicate “bad things to come” when high-net-worth individuals are the first to leave their homelands, and that they are able to do so, unlike middle-class folk.
Australia is in the lead as the most attractive place for immigrants because of its reputation of safety, lack of inheritance tax and strong business connections with South Korea, China and Japan. It also comes out on top for its sustained growth, having come out of the financial crises largely intact and avoided any recessions for an impressive 27 years.
The second most popular place in 2018 was the US, with San Francisco, Miami, Los Angeles and New York City the preferred cities to go.
China’s restriction on capital outflow has meant many of the country’s wealthy citizens are under the scrutiny of the taxman, which has led to a movement of people and assets. Some wealthy Asians have also moved to developed countries to seek a more comfortable lifestyle or improve their children’s education.
The migration of wealthy people from India and China is not of particular concern from an economic viewpoint, given the fact that far more new millionaires are being made there than leaving, reports New World Wealth.
Amoils said “Once the standard of living in these countries improves, we expect several wealthy people to move back.”
Unpredictable emerging markets continue to propel movement, with Turkey saying goodbye to 4,000 millionaires in 2018 with a 3-year running streak of losing them. Around 7,000 also left Russia last year as the country dealt with sanctions imposed on its annexation of Crimea.
Rich individuals’ desire for privacy is also a factor involved in their reconsideration of place of residence.
Banks, as well as other financial institutions, are providing data on foreign account holders to their local tax authority, under the Common Reporting Standard (CRS) launched by the Organisation for Economic Co-operation & Development in 2017. Authorities routinely exchange the necessary information with their counterparts overseas on an annual basis, which allows governments to hone in on tax evaders. In excess of 100 jurisdictions have joined CRS, setting a new example for the global exchange of data on offshore assets.
This trend can be seen in the rising demand for second passports and residencies.
Take up for citizenship and residency by investment programs is booming. The industry is currently worth around $2 billion annually and 26% of global millionaires will start planning to emigrate this year, according to Knight Frank’s 2019 wealth report.
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