Agefi Luxembourg - avril 2025

Avril 2025 19 AGEFI Luxembourg Economie / Fiscalité “ Capitalgoeswhereitiswelcomeandstayswhereitiswell treated ”–WalterWriston(formerCEOofCitigroup) A s some nations grapplewith an unprecedent outflowof their wealthy population, others are po- sitioning themselves asmagnets attracting these individuals and their families.As we stand on the cusp of the lar- gest intergeneration transfer of familywealth ever (the “GreatWealthTransfer” (1) ), (ultra) highnet worth indi- viduals (HNWIs) are increa- singly concerned about the protection of theirwealth. This second article of a series devoted to some of the current key trends, opportunities and chal- lenges of the international wealthiest fami- lies aims to explore howsome nations are positioning themselves to attract HNWIs. In the wake of an historic year in which more than 50% of the world’s population went to the polls – a recordsincethecreationofuniversalsuffrage–some of themajor economic hubs are experiencing an ex- odus of their wealthy population. While in the last decade the number of HNWIs across the world alongwith theirwealthhas significantly increased (2) , this unrivalled relocationofwealth is takingplace in a global unstable (geo)political and economic con- text. As some nations observe their HNWIs’ popu- lationflee, new jurisdictions are rapidlyemergingas magnets for these individuals, reshaping theprivate wealth landscape. Since2019,theannualrelocationofHNWIsacrossthe world has increased by 16% reaching an unprece- dented 128,000 relocations in 2024 (3) whilst forecasts for 2025 (i.e. 135,000) exacerbate this exodus trend. China and theUnitedKingdom, respectively second and third countries hosting the most HNWIs (4) , are currentlyfacinganexodusoftheirwealthypopulation andtoppedtheranksofthecountrieswiththehighest net outflow of HNWIs. While Chinese millionaires aremainlydriven to leave theMiddleKingdomby a tensegeopoliticalcontextandafalteringeconomy,on the Old Continent, the UK based HNWIs and their families are fleeing away in response to the political instabilityand the race tobail out publicdeficits lead- ing to the redefinition of the domestic “ contrat social ”. Across the Channel, France, fifth country with the most (ultra) HNWIs (5) , may also experience a similar situation as its wealthiest might get tired to shoulder a poorlymanaged public indebtedness by a govern- ment announcingnewtax reforms (6) . Last but not least, aswe finalise this paper, President Trump elected 2 months ago in the US just an- nounced new tariffs smashing global trade norms. To a certain extent the unpredictability and bold po- litical choices of the newUS administrationmay en- couragewealthcreators and their families to relocate outside of theUnited States. When ultra wealthy individuals envisage relocating their residence, there does not appear to be “one fit all” pulling factor. From political stability, personal safety to premium infrastructures, HNWIs take a widerangeoffactorsintoconsiderationwhenconsid- ering their new home country (7) . Combined with a favourable tax regime (8) , these elements appear as the ideal combination for attractingprivatewealth. Which countries are emerging as the preferreddesti- nations for (ultra) HNWIs, and what are the driving forces behind their relocation choice? Switzerland and Italy: The European champions While the United Kingdom is experiencing an exo- dusofprivatewealth,68%ofitsleavingwealthypop- ulation intends to continue to have its residence in Europe (9) . A great opportunity for Italy and Switzer- land, two jurisdictions offering a pleasant combina- tion of an attractive tax regime and a relaxed and quiet lifestyle. The legacy of Switzerland as a hub for HNWIs is steeped in history, tracing back to its long- standing tradition of economic stability and political neutrality. Its reputation as one of the world’s most secure locations forwealthmanagement, with banks offeringdeep-rootedexpertiseinwealthmanagement andprivatebankingservices,attractedgenerationsof wealthy individuals seeking privacy and security. Switzerland has consistently maintained its position as a global epicentre for privatewealth. Beyondthefinancialfactor,Switzerland’shighquality of life, encompassing superior healthcare, education, and a multicultural environment at the heart of Eu- rope, makes it an ideal domicile for UltraHNWIs. In addition, some Swiss cantons offer an attractive tax regimetoforeignnationals,theso-calledexpenditure- based tax regime ( imposition d’après la dépense or “for- fait” ). This regime initially appears at the end of the 19th century. It is a unique tax regime dedicated to non-Swissnationalssettlinginthecountryforthefirst time(orafteranabsenceofatleasttenyears)andwho do not carry out lucrative activities in the country. Oncetaxrulingfiledandadministrativeprocesscom- pleted, individuals are subject to a tax computed on theirlivingexpenses(insteadofactualincomeandas- sets)ataraterangingfrom20%to45%dependingon the cantonof residence. For European Economic Area nationals, the mini- mumannualtaxliabilityrangesbetweenCHF100,000 and CHF 160,000 while income tax for citizens of third-party countries (i.e. not members of the EU or EFTA) ranges between CHF 250,000 and CHF 400,000 (10) .Thisregimeisusedbyalimitednumberof Ultra HNWIs (deriving exclusively passive income). As an illustration, only 4,557 benefited from the regimein2018-correspondingtolessthan0.1%ofthe total Swiss taxpayers. Furthermore, some Swiss can- tons do not levy inheritance tax on the transfer of as- sets to surviving spouse and children. This is a significant advantage especially as we approach the GreatWealthTransfer. As a result, between 2022 and 2023 (11) , Switzerland topped the list of European countries for net inflows of HNWIs, drawing in considerable private wealth. However, in 2024, the Helvetian nation saw its posi- tionas (European) leader slipaway to the benefit of a neighbouring country,whichhas experiencedan ex- ponential increase in arrivals. Beyond the Alps, Italy has steadily become a magnet for HNWIs for some years now, claiming the titleof theEuropeancountry withthelargestnetinflowofHNWIsin2024 (12) .Itsal- lure for wealthy individuals and families is rooted in a combination of its rich cultural heritage, enviable lifestyle andadvantageousfiscal policies. Thehistori- calcharmofthe BelPaese residinginitsluxuryreales- tate market in diversified picturesque landscapes, fromtheMediterraneanSeatotheAlps,anditsworld- renowned cuisine make it a destination to enjoy the best of Europeansophisticationandcomfort.With its strategic location in the Mediterranean, Italy also serves as a gateway toEuropeanmarkets. Since 2016, individuals becoming “new” resident in Italy (or not being resident in at least 9 years of the 10 years prior the first year of application of the regime) maybenefitfromalump-sumtaxregime,makingthe country even more attractive for ultra HNWIs. This regime, available for 15 years, allows new residents (subjecttoapreliminaryrulingwiththeItaliantaxau- thorities) to pay “only” an annual lump-sum tax of EUR 200,000 on income and gains generated from non-Italian assets (with the exception of capital gains realised on substantial shareholdings during the first fiveyearsofresidence).Thisalternativetaxappliesin- steadofthestandardincometaxandregardlessofthe amount of income andgains fromforeign sources. In addition, individuals benefiting from the lump- sumregime are not subject to inheritance andgift tax on their non-Italian assets, a significant pull factor in prevision of the Great Wealth Transfer. Individuals not holding citizenship of aMember State of the Eu- ropeanUnionortheEuropeanEconomicAreacanse- cure the right to reside in Italy, and benefit from the domestic lump-sum tax regime, through investment visa, which requires inter alia aminimuminvestment of EUR 500,000 in an Italian company, or an elective residence visa, contingent upon demonstrating ade- quateincometosupportlivinginItaly.InAugust2024, the government increased the lump-sum from EUR 100,000toEUR200,000.Thiswasaresponsetotheex- traordinaryincreaseofnetinflowofHNWIsbetween 2023 and 2024 from 600 to 2,200 (13)(14) . The flow of HNWIs relocating to Italy increased in 2024 andwill continue to rise further in2025 and the comingyears. Dubai: The undisputed internationalmagnet Forthreeconsecutiveyears,theUnitedArabEmirates ( UAE ), and especially Dubai, has featured in the top three jurisdictionswitnessing themost net inflows of HNWIs,continuingtoattractmoreandmorewealthy families.Followingthepandemic,theUAEwitnessed anetinflowofHNWIsin2022of5,200 (15) bolsteredby theexodusofRussiansfleeingtheircountryhitbythe war and international sanctions. After a slightdropofarrivalsin2023,whenthe country was still second in the list of countries attracting the most HNWIs, it regained its attractive- nessin2024.Outperformingallthe other countries by having a net in- flowofanunprecedent6,700HNWIs, it is the topchoiceof relocation forultra HNWIs last year (16) . In ageing western soci- eties healthcare and securityarebecoming more important than ever. The Emirates are cateringtheneedsofaf- fluent newresidents by offering premium healthcare. In addition, thepoliticaldomesticstabil- ity of the country, coupled with stringentlawenforcement,ensuresasecuresettingfor personal and financial endeavours. Moreover, the high standard of living in theUAE aswell as its very well-connected airports are significant draws when HNWIs consider relocating. Its central location between Europe, Asia andAfrica attracts wealthy families from around the World. Theymaygainaccesstoagoldenvisa,allowingthem tobenefitfromupto10yearsbyinvestingAED2mil- lion(approx.EUR500,000)inthecountry(i.e.deposit, capital, real estate or donation) or, as recently an- nounced,insuper-yachtsregisteredinDubaiorAbu- Dhabi.TheappealoftheEmiratesisgreatlyenhanced bytheabsenceofincome,capitalgainsandinheritance taxes for resident individuals. The prominence and desirabilityoftheUAEontheworldstageforHNWIs opting for it as theirhome is set to rise further (17) solid- ifying the position of the Emirates as leading global hub for privatewealth. Conclusions A handful of jurisdictions have decided to provide a competitive offer including modern infrastructures, stableenvironmentandtaxefficientregimestoattract ultraHNWIsandtheirfamilies.AcoupleofEuropean countriesaresuccessfulinthisrespect.However,other valuable options exist outside of Europe. Froma Eu- ropean perspective, being competitive in attracting wealth creators and their families will be decisive to secure private investments and innovations needed for EU economies going forward. If at one point Eu- rope is not seen anymore as a safe and stable region, some ultraHNWIsmaydecide to opt for other alter- natives such as the Emirates or Singapore. Luxembourg “ticks” boxes to easily become a first- choice European jurisdiction for (ultra) HNWIs (i.e. stability,securityandstrategiclocation).Anattractive, simple and efficient tax regime for wealthy families may allow the jurisdiction to raise its profile in this segment.Itisworthmentioningthat,ifproperlystruc- tured, (ultra) HNWIs resident in Luxembourg could already enjoy a very competitive tax position inLux- embourg. After analysing the currentmain trends in themigra- tionofultraHNWIs,itwillbekeytoanalysethemain optionsavailabletothewealthyfamiliesforthestruc- turingof theholdingandmanagement of their estate in a cross-border context. Luxembourg is definitely a key jurisdiction for setting up and managing family holdings and funds entities. Yacine DIALLO – Partner Tax Pierre-Philip LEROUX-MOGA – Associate Tax Charles Russell Speechlys – Luxembourg (Avocats) 1)TheNewYorkTimes,“ TheGreatestWealthTransferinhistoryishere, with familiar(rich)winners ”,14May2023. 2) Capgemini Research Institute, “ World Report Series 2024, Wealth Management ”. 3) Henley & Partners, “ The Henley Private Wealth Migration Report 2024 ”,18June2024. 4)UBS,“ GlobalWealthReport2024 ”. 5)KnightFrank,“ TheWealthReport ”,18thedition,2024. 6)Pleaserefertoourarticle“ PrivateWealthinmotion:Thegreatexodus ”, AGEFILuxembourg,17February2025,forfurtherdetailsonthemi- grationofHNWIsfromtheUnitedKingdom(andpotentiallyFrance goingforward). 7) Andrés Solimano, “ Global Mobility of the Wealthy and their Assets: AnOverview,IMC-RP2018/2 ”,2018. 8) Enea Baselgia, Isabel Z. Martinez, “ Mobility responses to special tax regimesfortheSuper-Rich:EvidencefromSwitzerland ”,CESifoWorking PaperNo.11093,April2024. 9)Henley&Partners,“ WEXIT:WealthyBritsExitUKforEUAheadof Budget ”,22October2024. 10)GrégoireUldry,AlexiaEggerCastillo,“ RelocatingtoSwitzerland: lump-sumtaxregime ”,10December2024. 11)Henley&Partners,“ HenleyPrivateWealthMigrationReport2023 ”. 12)Henley&Partners,“ HenleyPrivateWealthMigrationReport2024 ”. 13)Henley&Partners,“ HenleyPrivateWealthMigrationReport2023 ” and“ HenleyPrivateWealthMigrationReport2024 ”. 14) Corriere della Sera, “ Super ricchi in Italia, la flat tax radoppia a 200 milaeuromanonscoraggia ipaperoni :eccoperché ”,9August2024. 15)Henley&Partners,“ HenleyPrivateWealthMigrationReport2023 ”. 16)Henley&Partners,“ HenleyPrivateWealthMigrationReport2024 ”. 17)UBS,“ GlobalWealthReport2024 ”. Private wealth shuffle: Uncovering the latest relocation trends of fortunes DASHBOARDAGEFI Luxembourg 31-Mar-2025 31-Dec-2024 DIFF % Dow 30 (DJI) 42.001,76 42.544,22 -1,28% S&P 500 (GSPC) 5.611,85 5.881,63 -4,59% Euro Stoxx 50 5.248,39 4.869,28 7,79% DAX (GDAXI) 22.163,49 19.909,14 11,32% CAC 40 (FCHI) 7.790,71 7.380,74 5,55% FTSE 100 (FTSE) 8.582,80 8.173,00 5,01% LuxX index 1.533,61 1.303,91 17,62% Nikkei 225 (N225) 35.617,56 39.894,54 -10,72% Shanghai (SHCOMP) 3.335,75 3.351,76 -0,48% US FedFunds Rate 4,33% 4,48% -0,15% 3MonthUS Treasury Rate 4,32% 4,37% -0,05% 5YearUS TreasuryRate 3,96% 4,38% -0,42% EuropeanCentralBank (ECB)RefinancingRate 2,65% 3,15% -0,50% 5-YearEurozoneCentralGovernment Bond 2,56% 2,49% 0,07% Barrel (WestTexas Intermediate) 0,4157 0,4088 1,70% ǧ WestTexas Intermediate (prix en euro par litre) Naturalgas: 1m3= 0,1348 0,1228 9,77% ǧ NaturalGas, HenryHub-I (prix en euro parm3) Naturalgas: 1MWh= 13,00 11,84 9,77% ǧ NaturalGas, HenryHub-I (prix en euro parMWh) Naturalgas: 1MMbtu= 4,12 3,83 7,57% $ NaturalGas, HenryHub-I (prix en $parMMbtu) Gold: 1Kg= 92.688,23 76.453,87 21,23% ǧ Gold: 1oz= 3.118,00 2.624,49 18,80% $ Silver: 1Kg= 1.008,63 840,14 20,06% ǧ Silver: 1oz= 33,93 28,84 17,65% $ Government Debt/GDP last previous trend Japan 216,2% Dec. 2024 217,2% Sep. 2024 -1,0% Singapore 173,1% Dec. 2024 171,7% Sep. 2024 1,4% mostof thedebt reinvested inSingaporedomestic assets Greece 158,3% Sep. 2024 160,1% Jun. 2024 -1,8% Italy 135,3% Dec. 2024 136,2% Sep. 2024 -0,9% France 113,7% Sep. 2024 112,2% Jun. 2024 +1.5% INSEE Belgium 104,6% Dec. 2024 106,6% Jun. 2024 -2,0% BelgianDebtAgency Spain 104,3% Sep. 2024 105,3% Jun. 2024 -1,0% UK 100,0% Aug. 2024 95,7% Aug. 2023 4,3% Office forNational Statistics Portugal 95,0% Dec. 2024 97,1% Sep. 2024 -2,1% Austria 83,2% Sep. 2024 82,9% Jun. 2024 0,3% Finland 82,1% Dec. 2024 82,0% Sep. 2024 0,1% EuropeanUnion 81,6% Sep. 2024 81,5% Jun. 2024 0,1% Argentina 80,3% Mar. 2023 79,5% Dec. 2022 0,8% Ukraine 79,4% Dec. 2023 72,8% Sep. 2023 6,6% Brazil 76,1% Dec. 2024 77,4% Sep. 2024 -1,3% South Africa 75,1% Sep. 2024 74,6% Jun. 2024 0,5% Morocco 71,5% Dec. 2022 69,4% Dec. 2023 2,1% Hungary 73,6% Dec. 2024 76,0% Sep. 2024 -2,4% Canada 69,4% Mar. 2024 66,9% Mar. 2023 2,5% Egypt 68,6% Jun. 2020 66,3% Mar. 2020 2,3% Slovenia 66,7% Sep. 2024 69,4% Jun. 2024 -2,7% Malaysia 64,6% Dec. 2024 65,0% Sep. 2024 -0,4% Iceland 63,9% Dec. 2023 67,4% Dec. 2022 -3,5% Germany 62,4% Sep. 2024 61,9% Jun. 2024 0,5% China 61,3% Dec. 2024 56,1% Dec. 2023 5,2% FitchRatings (est.) Slovakia 60,4% Jun. 2024 60,6% Mar. 2024 -0,2% Israel 60,3% Dec. 2023 58,8% Dec. 2022 1,5% Croatia 59,7% Sep. 2024 60,1% Jun. 2024 -0,4% India 57,2% Sep. 2024 57,1% Jun. 2024 0,1% Thailand 56,6% Dec. 2024 55,8% Sep. 2024 0,8% Norway 55,1% Dec. 2024 44,5% Dec. 2023 10,6% economic 2023-2024growthdeceleration Nigeria 53,8% Sep. 2024 52,0% Jun. 2024 1,8% Poland 53,5% Sep. 2024 52,3% Jun. 2024 1,2% Romania 53,1% Dec. 2024 51,1% Sep. 2024 2,0% Mexico 47,7% Sep. 2024 48,1% Jun. 2024 -0,4% Latvia 47,2% Sep. 2024 45,9% Jun. 2024 1,3% Serbia 47,2% Dec. 2024 47,4% Sep. 2024 -0,2% Korea 45,7% Sep. 2024 46,1% Jun. 2024 -0,4% NewZealand 44,3% Sep. 2024 41,9% Jun. 2024 2,4% Chile 44,0% Sep. 2024 40,9% Sep. 2023 3,1% Czechia 43,7% Sep. 2024 42,7% Jun. 2024 1,0% Netherlands 43,2% Jun. 2024 43,9% Mar. 2024 -0,7% Ireland 42,1% Sep. 2024 42,7% Jun. 2024 -0,6% Indonesia 39,2% Dec. 2024 38,9% Sep. 2024 0,3% Lithuania 38,4% Sep. 2024 37,4% Jun. 2024 1,0% Australia 38,0% Jun. 2023 41,9% Jun. 2022 -3,9% Qatar 37,4% Dec. 2024 43,3% Dec. 2023 -5,9% MinistryofFinance (est), QatarCentralBank Denmark 33,6% Sep. 2024 33,9% Jun. 2024 -0,3% Sweden 32,1% Sep. 2024 31,9% Jun. 2024 0,2% SaudiArabia 29,9% Dec. 2024 28,5% Sep. 2024 1,4% Taiwan 29,0% Dec. 2023 29,5% Dec. 2022 -0,5% Luxembourg 26,6% Sep. 2024 26,8% Jun. 2024 -0,2% Turkiye 25,6% Sep. 2024 26,1% Jun. 2024 -0,5% Estonia 23,9% Sep. 2024 23,7% Jun. 2024 0,2% Botswana 23,3% Sep. 2024 22,6% Jun. 2024 0,7% Switzerland 23,3% Dec. 2028 23,8% Dec. 2027 -0,5% est. Bulgaria 22,1% Jun. 2024 22,4% Mar. 2024 -0,3% Azerbaijan 16,8% Dec. 2021 22,2% Dec. 2020 -5,4% Russia 14,6% Mar. 2024 14,9% Dec. 2023 -0,3% Source: CEICData, UK&Singapore https://www.ceicdata.com/ except indicatedotherwise This dashboard, exclusive to AGEFI Luxembourg, allows the reader: 1° to see the returns of the main assets and financial indices for the current year - 2° to see on one page the main stock market indices and interest rates - 3° to know the production costof several energyproducts in euros, to comparewith the retailprice -4° toknow thepriceofgoldand silver inkilos and ineuros -5° to immediately see thepublicdate/GDP for several significant countries (2022 trend) Ce tableaudebord,une exclusivitéd'AGEFILuxembourg,permet au lecteur : 1°devoir les returnsdesprincipaux actifs et indices financierspour l'année en cours -2°devoir surunepage lesprincipaux indicesboursiers et tauxd'intérêts -3°de connaître le coût de productionde plusieurs produits d'énergie en euro, à comparer avec le prix audétail - 4° de connaître le prix de l'or et de l'argent en kilo et en euros - 5° de voir immédiatement la dette publique/PIB pour plusieurs pays significatifs (tendance 2022)