This news service is paying particular attention in March to issues around international financial centres. In this interview, we get an overview from a firm operating in multiple locations.

During this month, we are looking at the shifting fortunes of international financial centres, both the offshore and onshore variety – to the extent that those terms do not any longer mean a great deal. Already, we have carried this article from the British Virgin Islands. There’s more to come – the editor is off to Monaco next week to find out what concerns the industry has there, and then Luxembourg later in the month. A trip to Zurich and Geneva over recent weeks has also reminded the team how important, for example, Switzerland is. In the UK, the government has axed the UK’s long-standing resident non-domiciled system and replaced it with a residency system. Given the depleted state of public coffers, other regimes are looking to go after people whom they think are easy targets. Geopolitical upheavals are making places that appear stable and relatively secure more attractive.

In the following article, we talk to Stephen Atkinson, the global head of sales and marketing, Utmost Wealth Solutions, about how he views the IFC world. 

WealthBriefing: Which jurisdictions appear to be on a roll? Which ones are perhaps growing slower or have a few problems? 
Atkinson: Since talks began about the abolition of the UK’s resident non-dom regime, people have been actively considering relocating their families to other jurisdictions. These conversations have gained momentum and have intensified since the Autumn Budget. The following jurisdictions appear popular with our clients. 

The UAE is the proving very popular largely down to its strong record on personal safety, ease of entry and no personal taxes. Latest estimates suggest that around 240,000 British people are now living in Dubai, with the number increasing every year. In 2023, 40,000 people moved to the UAE from Britain, according to the Office for National Statistics (ONS).

Within Europe, Switzerland, Italy and Portugal have become the preferred destinations for our clients. 

Italy is popular for its climate, lifestyle and four special expatriate tax regimes. This includes an attractive regime for HNW individuals which allows them to pay a flat annual €200,000 ($218,012) tax for up to 15 years. 

Switzerland scores well in quality of life studies and offers a safe and attractive environment in which to retire with universal healthcare, beautiful surroundings and low crime. Taxes can be paid on a lump sum basis predetermined for new arrivals based on factors such as annual worldwide living expenses of the family. Portugal’s key attractions include good climate, lifestyle and no inheritance tax. 

Additionally, Monaco is popular and has benefitted from an influx of millionaires over the past decade as it has no personal taxes, a favourable climate and is another jurisdiction that is considered a safe haven. Australia too has become sought after due its climate, lifestyle and no inheritance tax. 

Conversely Spain, which had long been a popular destination, has declined in recent years. Spain now has some of the highest tax rates in Europe, including wealth taxes and income taxes of up to 47 per cent for high earners. It recently proposed a 100 per cent tax on property purchases by non-EU nationals, including UK citizens and last year it voted to end its Golden Visa programme that allowed non-EU investors to obtain residency in Spain by investing. It also introduced a solidarity wealth tax in 2023 with tax rates ranging from 1.7 per cent to 3.5 per cent on global assets for those with a net worth above €3 million ($3.27 million).

WealthBriefing: When it comes to the qualities that mark out great IFCs today, what are they, and how do you think the competitive features of IFCs that you know have changed in the past 10 to 20 years, and why?
Atkinson: Successful IFCs today are those that go beyond offering competitive corporate and individual tax structures and provide a comprehensive ecosystem that attracts businesses, investors and high net worth individuals. Key qualities include:
 
-- Well-established legal and regulatory frameworks; 
-- Political and economic stability;  
-- Access to a diverse and skilled workforce; 
-- Central geographic location with easy connections to other major financial markets;
-- Reputation for openness to international businesses and investors; and
-- Ease of access and residency. 

Over the past two decades, IFCs have evolved in response to regulatory shifts, geopolitical changes and technological advancements. The OECD Common Reporting Standards (CRS) have reshaped how IFCs operate and those centres that promote tax transparency while maintaining competitive advantages have thrived. Further, those that have diversified beyond tax efficiency and focus on wealth management, fintech, private capital and sustainable finance, have also done well.

Traditional IFCs such as London, New York, and Zurich have faced growing competition from Dubai, Hong Kong, and Singapore which offer a mix of business incentives, modern infrastructure and regional access.

Dubai is a great example in point. In addition to offering no income tax, no capital gains tax and no inheritance tax, it has created dedicated financial free zones that provide a supportive regulatory environment. It offers golden visa programmes making it easy to obtain long-term residency. It boasts world-class infrastructure, a high quality of life, access to talent, a focus on innovation, a strong legal framework, a business-friendly environment and a strategic location in the Middle East.

WealthBriefing: There is a lot more to being in an offshore jurisdiction than tax, although clearly tax is very important, given the state of the world. What, in your view, are the attractions of IFCs overall?  
Atkinson: While tax efficiency remains a crucial factor, key attractions include robust regulatory frameworks, common law jurisdictions, ease of doing business, high quality of life – safety, good healthcare and schools, world-class infrastructure, economic and political stability, strong talent pool, strong investment ecosystems, connectivity and innovation. 

Ultimately, for people to be drawn to these centres and remain there, they must enjoy living in that country. I’ve had clients move to Italy for tax reasons, only to then leave for Portugal because they hated the Italian traffic. There have also been reports of people moving to Dubai but complaining of horrendous traffic and high living costs. 

This is more important as an increasing number of countries are imposing exit taxes. We are therefore advising people to take a long-term view and to ensure that if they are considering a move to a new country that they will be happy there for the foreseeable future, particularly if the ability to leave and move somewhere else becomes more difficult. 

People should also be mindful of the fast-evolving political and economic backdrop and how that may affect current preferential tax regimes. Many governments, particularly in Europe, are facing significant deficits, slowing economies and pressures to boost defence spending which is leading to governments searching for additional revenue streams. Take France, for example, where President Macron went to great lengths to lure city bankers from London with a benign tax regime. However, as it wrestles with a soaring deficit the French government has backed extending taxes on the wealthy to address this shortfall.

In my view, people are better off moving to a jurisdiction where they’d prefer to live long-term even if the taxes are higher, but not debilitating. Further, while some countries may look high tax, they may not be if people have set up the right structures. For those considering a move, our advice is to ensure that your money remains accessible and in a safe location.

WealthBriefing: Where does Utmost base itself, where has it expanded, and what places does it expect to get more business from?  
Atkinson: We are headquartered in the UK and have operations across Europe, the Middle East, Asia and Latin America. Our life insurance entities are in Ireland, Luxembourg, the Isle of Man and Guernsey.

We see plenty of opportunities to expand our business in Europe and the penetration rate of our products. There’s also a lot of wealth and emerging wealth in Asia and Latin America and we are keen to expand our penetration in those markets. 

WealthBriefing: With Trump in power and the chances of a global minimum corporate tax rate receding, what effect do you think this will have on IFCs overall?   
Atkinson: Traditional IFCs such as London, New York, and Zurich will continue to face heightened competition from Dubai, Hong Kong and Singapore which are aggressively investing in their ecosystems and infrastructure to position themselves as leading financial hubs and the most attractive global destinations for high net worths and top professionals.