Global Cities Compete to Attract Top Investors via Residence-by-Investment – and Tax Incentives Could Hold the Key
Despite much of the world still facing restrictions on mobility, the world’s top cities are actively vying to attract international capital and talent to boost their future prospects.
The recently launched Best Residence-by-Investment Cities for Business Index ranks the leading 25 cities that are offering competitive incentives to attract the world’s wealth and business. The index is an interactive tool, developed by Henley & Partners in partnership with Deep Knowledge Analytics, that draws on multiple datasets to make strategic relocation decisions easier to navigate. Consideration parameters can be adjusted to create an individualised index to rank the most attractive cities in countries with residence-by-investment programs (also known as golden visa programs) across five regions, and according to what matters most to you and your family.
London still reigns supreme
Topping the overall index as the most desirable city by a significant margin is London, the UK’s key financial hub, which boasts more of Europe’s top 500 companies than any other city. A business based in London benefits from the cosmopolitan city’s stability, infrastructure and talented, multi-lingual workforce, making it a perennial global city favorite. The UK Investor Immigration Program is one of the most established residence-by-investment options, providing access to a dynamic business environment and world-class education in return for a minimum investment of GBP 2 million. The other top metropolises in the overall index are New York, Sydney, Singapore, and Zurich, each a regional economic hub boasting favorable business and lifestyle conditions and incentives to attract foreign investors.
The Henley & Partners Best Residence-by-Investment Cities for Business Index uses over 1,000 data points to score and compare the world-class cities, with 40 different parameters and 10 main categories that represent the significant relocation or expansion considerations. Aside from each country’s investment migration offerings, the other variable factors are stability, infrastructure, education, security, healthcare, real estate, lifestyle, Covid safety — and increasingly, tax.
Tax challenges on the rise for the world’s wealthy
Tax considerations are a burning issue at the moment as the rules governing cross-border taxation of multinationals are currently undergoing a major global overhaul, with 130 countries backing the OECD’s plans for setting a global minimum corporate income tax of at least 15%. The new minimum tax rate would apply to companies with turnovers above a threshold of EUR750 million and is set to take effect in 2023.
As the adult children of wealthy families are often spread across the globe, seeking education, lifestyle and business opportunities, increased ease of mobility through residence- and citizenship-by-investment programs has become a vital consideration for high-net-worth-individuals. The biggest challenges facing wealthy businesspeople and their families are no longer only infrastructural but extend to include the potential tax and regulatory consequences at play.
Dubai leading the way in encouraging foreign investment
Using the Henley & Partners digital index to compare residence-by-investment program scores with each city’s tax score introduces a different set of top relocation candidates, with Dubai leading the pack. The Middle Eastern emirate is a recognised frontrunner for companies looking to expand thanks to its stable economy, high standard of living, and significant tax benefits — exemption from personal, corporate, and capital gains tax for locals and foreigners alike. The city markets itself as the start-up capital of the world, and its zero corporate tax makes it an attractive choice for investors. Dubai offers a growing number of options for investors seeking permanent residence, with a minimum investment requirement of AED 5 million.
Europe dominates the Top 5 best residence-by-investment cities for tax
The other cities making up the top five residence-by-investment destinations with favorable tax jurisdictions are Monaco, Hong Kong, Vienna, and Valletta. The principality of Monaco offers an absence of income or capital gains tax as well as an unrivaled standard of living to those able to afford the premium Riviera lifestyle. To become a resident, you must demonstrate the means to afford the lifestyle and, in particular, be able to afford to rent or purchase real estate, the cost of which in Monaco is comparable to large capital cities.
The Hong Kong Special Administrative Region offers several residence-by-investment programs. Hong Kong’s Visa Programs are points based and provide access to one of the world’s most business-friendly cities and an important international finance and trade center with a free market and low taxation.
Austria and Malta’s respective capitals, Vienna and Valletta, offer individuals looking at relocation options access to the high standards of living in Europe, with ease of regional travel and the advantages of the Euro currency. An Austrian residence permit allows visa-free access to Europe’s Schengen Area. After ten years of legal residence, or, in certain circumstances, six years, you can apply for Austrian citizenship. Investors must purchase permanent residential real estate, deposit a minimum EUR40,000 into a bank account, provide proof of full-cover healthcare, and prove German language competence and financial independence.
The island nation of Malta ticks many boxes for wealthy individuals exploring residence-by-investment programs. The picturesque archipelago in the center of the Mediterranean Sea has a great climate, offers convenient air links, and has English as an official language. It boasts a rich history and a unique culture, offering an excellent quality of life for its population of less than half a million, which includes a significant ex-pat community. The economy is advanced and innovation-focused, particularly in strategic service industries like finance, gaming, and aviation.
To qualify for the Malta Permanent Residence Programme you must purchase a property valued at EUR350,000 (EUR300,000 in South Malta or Gozo) or lease a property for EUR12,000 per annum (EUR10,000 in South Malta or Gozo), contribute EUR28,000 to the Maltese economy if you purchase a residential property or EUR58,000 if you lease a property, donate EUR2,000 to a non-governmental organisation, and pay a non-refundable administration fee of EUR40,000. And if you’re looking for a more permanent solution, Malta’s Granting of Citizenship for Exceptional Services by Direct Investment Regulations (S.L. 188.05), under the Maltese Citizenship Act Cap. 188, LN437 of 2020, allow for the granting of citizenship by a certificate of naturalisation to foreign individuals and their families who contribute to the country’s economic development.
Abundant opportunities across the globe – the choice is yours
According to the newly-launched Best Residence-by-Investment Cities for Business Index, other residence-by-investment cities competing as tax-friendly relocation options are the finance and IT hub Limassol in Cyprus (minimum investment amount EUR330,000), the economic powerhouse Singapore (minimum investment SGD2.5 million), and stable, well-governed Port Louis in Mauritius (minimum investment of USD375,000). Each city has its own unique charms, and residents benefit from regional advantages in addition to business-friendly environments and attractive tax allowances.
With so many prime global cities offering attractive relocation incentives, the wealthy are spoilt for choice when looking to broaden their living and business options beyond their home country. All 25 cities on the Best Residence-by-Investment Cities for Business Index are proactively welcoming foreign investors, and each provides its own allure depending on individual needs and priorities. Identifying the right residence-by-investment program has become a crucial part of the family’s long-term planning, and data-driven choices can clarify priorities and mitigate against the risks facing international business in a post-pandemic future.
Meir Rabkin is a Managing Partner at Henley & Partners North America and has been with the firm since 2018, where he has been advising executives, CEOs, ultra-high-net-worth individuals, and family offices on how best to secure alternative residence and citizenship. His professional career began in the investment sector — developing a clientele at Investors Group, a large institutional asset management firm in Canada. He then transitioned into banking, working for some of Canada’s largest banks such as the Canadian Imperial Bank of Commerce and Desjardins Group. Meir holds a bachelor’s degree in political science and international relations from Touro College, and after 10 years in the investment and banking sector, he decided to pursue an MBA at University Carlos III de Madrid, in Spain. Thereafter, he worked at Mackenzie Investments, where he oversaw operations and development across Eastern Canada. Throughout his career, Meir has accumulated 15 years’ experience building relationships and developing solutions for clients in the international investment industry. He is fluent in English, French, Hebrew, Russian, and Spanish.