In the article we co-authored with the Zurich team of Henley & Partners Switzerland AG in May 2020, we introduced the benefits of an alternative Citizenship program combined with the UAE Fiscal Residency. A year later those recommendations are still relevant and more sought after than ever. For this monthly Insight, we get inspired by Henley & Partners' latest Investment Migration Programs 2021 report to discuss how alternative residence and citizenship have proved instrumental as options in the Covid19 era and how the UAE has managed to stay competitive and attract millionaires in a period of closed borders.
Alternative residency - a 'must-have' in uncertain periods
Alarming events like the current pandemic oftentimes act as catalysts for taking life-changing actions. When it comes to changing your permanent residency, as Henley & Partners state in their report, "while in the past alternative residence or citizenship may have been 'nice-to-have' assets of convenience that enhanced travel freedom and provided vacation homes, Covid-19 has prompted a noticeable shift. Now they are 'must-have' essential assets because of the undeniable benefits they bring".
The above is especially true for the millionaires of this world who have the 'luxury' to take a 'disaster' as a unique opportunity to rethink their wealth and how they can better protect it. Having a wealth preservation strategy in place is super important, even more so in times of heightened volatility and social, economic and tax uncertainty. More often than not, this involves investment migration and an alternative residency. According to the report, in their residency of choice "they can feel more comfortable and secure, and can envisage a future that is better aligned with their aspirations, not just for now but for generations to come.".
What is more, wherever uncertainty is involved, an alternative fiscal residency - when properly included in an international corporate structure - presents a unique opportunity for asset diversification and confidentiality. Both particularly important considerations for the ultra-wealthy, entrepreneurs and business owners alike.
Where to go?
Covid19 signaled the beginning of a period of uncertainty not seen in many years and, apart from the undeniable impact on our physical and mental health, it has taken a toll on economies and geopolitical alliances as well. It has intensified rivalries between countries, threatened the supremacy of powerful nations and exposed weaknesses in seemingly strong governing and health care systems.
As with any war-like situation having both losers and winners, the pandemic brought to the fore countries whose strategic thinking and crisis preparedness made them the frontrunners for post-Covid economic recovery. Despite that the map is still shaping and it is still unclear who ultimately stands to win or lose after the dust settles, the way a country has been handling the Covid crisis makes for a helpful extrapolation of its governing policy coherence, strategic planning and in general, its ability to adopt and progress.
Typically, these have not been among the top attributes one would consider when choosing an alternative residency. Similarly, the absence of them never made a reason good enough to make them leave their home country. Primary concerns were to go somewhere safe, having a nice weather and a good educational system. For companies, points of focus have traditionally been a favorable tax environment, a convenient location and a strong banking system.
The pandemic came to change long-held perceptions; for those people to whom an alternative residency is a choice, not a necessity, factors such as competent crisis management, strategic planning and access to first rate healthcare should now be added to their list of considerations and become one of their decisive factors.
Why the UAE?
It is widely known that the UAE is one of the most financially attractive locations worldwide. It is a well-developed and diversified economy with excellent infrastructure and transport links and a unique zero tax regime. It offers a business-friendly environment making it both an ideal location for structuring a company and the perfect place for business owners who are looking to enter a new and thriving local market. Being a cosmopolitan and one of the most well-connected countries in the world, the UAE has always been a great place to live in. And for those constantly on the go, it offers the perfect base as long as they do not spend more than six consecutive months outside the country.
More importantly, the UAE is a forward-thinking country. It is a country that managed to grow its GDP by 50% in the past decade, when other economies were slowed down by the financial crisis. More recently, its long-term planning and proactive government policy were further reinforced by an efficient response to Covid19.
Throughout the past year, the UAE unveiled a series of containment measures, rolled out a $34bn stimulus package, invested in digital transformation, partnered up with China for the production of its vaccine at home thus making the UAE vaccination program, as of the time of writing, the second fastest in the world and the country, 14th globally in handling the crisis*.
The UAE makes a frontrunner for post-Covid economic recovery and a country to consider for alternative residency. We at Loggerhead Partners, have conversations with our clients all the time about their fiscal planning and set up agile structures that will give them the ability to maneuver as politics, taxation and the macro economic environment change.
*according to the Brand Finance Global Soft Power Index 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.