A quarter of UHNWIs worldwide plan to acquire a ‘second citizenship’
Despite a reduced desire to travel, nearly a quarter of ultra-high-net-worth individuals (UHNWIs) are currently planning to apply for a second passport or citizenship – representing a substantial 50% jump in a year – according to a survey published by international real estate consultants Knight Frank.
Mobility is the key driver of investment migration, said the ‘Attitudes Survey 2021’, and “nothing quite reveals the true power of a passport like the inability to travel”. With the Covid-19 pandemic in full swing, many found their plans during 2020 restricted in ways never experienced before.
“Mobility, both in the present and as a future hedge, is a strong driver of demand for citizenship-by-investment programmes, followed closely by business advantages,” said Professor Kristin Surak of the London School of Economics. “Often it is privileges in third countries – not the place granting the citizenship – that are sought. In light of the Covid-19 pandemic, people are rethinking where they want to be for the medium term and where has good healthcare even more.”
The ‘Attitudes Survey 2021’ was based on responses provided by over 600 private bankers, wealth advisors, intermediaries and family offices that manage a combined US$3.3 trillion of wealth for UHNWI (defined as having a net worth of at least US$30 million) clients.
Broken down by region the responses were as follows:
What percentage of your clients are planning to apply for a second passport or citizenship?
As can be seen, the regions that are equal to or significantly above the average are Africa, Asia, Europe, Latin America, the Middle East and Russia & CIS.
It should be noted that it may not be necessary or advisable for all such clients to obtain a second citizenship; they may achieve the same or better results through a suitable residency and/or tax residency programme.
Why are we experiencing an increase in demand?
The way we live, work and interact has changed significantly for many of us over the past 12 months. The Covid pandemic has provided a very practical demonstration that it is not only possible, but often equally or more productive, to work remotely. This in turn has led many individuals and families, not just UHNW’s, to reassess and plan changes to their lifestyle – to move to a new country in search of a more comfortable living and working environment, better healthcare, educational and business opportunities as well as enhanced tax efficiency.
Increased awareness
In recent years residency and citizenship planning has been more prominently discussed within the wealth management industry and mainstream media. This has resulted in increased awareness amongst professionals and their clients of the opportunities and benefits to be gained when creating and implementing considered and compliant residency and citizenship planning strategies.
The survey also reveals that, in addition to the ongoing disruption created by the pandemic, advisers listed ‘Domestic Government Policy’ and ‘Tax Issues’ as the second and third issues of concern to their clients.
What are the three biggest issues affecting their wealth that will most worry your clients in 2021?
Domestic Government Policy
Tax Issues
As can be seen, the regions where concerns about ‘Domestic Government Policy’ are significantly above the average are Africa and Latin America, while for ‘Tax issues’ it is Europe, Latin America, North America and the UK. These issues are clearly at the forefront of clients’ minds and will play an important part in determining the best country in which to establish a new residency, tax residency and/or citizenship.
Significant opportunities and benefits
Residency and citizenship-based government programmes can offer a wide range of opportunities and benefits, which are summarised below:
A wide range of solutions
Sovereign’s extensive network of offices and professional service partners ensure that we are well placed to assist in determining the most suitable strategy for our clients’ needs. Solutions can be subdivided into three main categories:
- Residency
- Citizenship
- Tax Residency
Each of these categories can be implemented independently or they can be combined to adapt to a client’s personal requirements. These can further be broken down into the following countries and programmes:
Via the Sovereign Group
* After five years of residency, applicants may then qualify for citizenship
Via external partners of the Sovereign Group
Comprehensive tax efficient solutions
Sovereign will work closely with applicants during each stage of the planning and implementation process. When combined and managed correctly, the following Sovereign Group products and services will enable families to develop and implement a comprehensive, flexible and tax efficient strategy:
- International residency and citizenship programmes
- Tax residency
- Trusts and foundations
- Estate and succession planning
- International retirement plans
- Wealth management
- Corporate structures and banking
- International life and medical insurances.
Contact us
If you have any questions or would like to discuss how you and your family could benefit through the creation and implementation of an international residency and citizenship-based strategy, please contact Ceri Pratley below.
Data for this article was taken for the Knight Frank ‘Wealth Report 2021’, which can be accessed at: Knight Frank ‘Wealth Report 2021’
https://content.knightfrank.com/research/83/documents/en/the-wealth-report-2021-7865.pdf
