The Spectre of Brexit: Is the UK Losing Its Appeal?
Nadine Goldfoot considers the likely impact of Britain’s possible withdrawal from the European Union for High Net-Worth Individuals and investor migrants.
The UK has long been among the world’s most appealing destinations for high net worth individuals (HNWIs) and their families looking to secure their personal and financial futures and ensure their continued prosperity for future generations. The stable political and economic climate, world-class private education system, adherence to the principles of the rule of law, and favourable tax regimes have long established Britain as a safe haven of choice for many of the world’s wealthiest investors. The attraction is reinforced by the appeal of a stable and rewarding lifestyle, with a sophisticated cultural scene and all the benefits of London’s status as an international travel hub.
The UK’s place in the EU is also attractive for those looking for alternative residency and citizenship. Those settled in the UK with British citizenship can benefit from the UK’s membership by establishing themselves elsewhere in the EU. By the same token, citizenship of other member states , such as economic citizenship options in Malta and Cyprus allow beneficiaries to enjoy free movement to and establishment in the UK, without meeting any additional UK immigration requirements under the Tier 1 Investor and Entrepreneur route or otherwise.
With the impending referendum on Britain’s membership of the EU, HNWIs and their advisers must consider their long-term options in the UK and elsewhere in Europe. Questions arise around Britain’s financial future outside of the Union, and the continued success of the financial and real estate sectors – prime investment options for HNWIs– will be critical. Any consequent fall in value of the pound too could reduce the appeal of investment in the UK.
The UK’s membership of the EU forms a significant part of the country’s appeal for HNWI investors. As a member of the EU, British companies and residents enjoy easy access to the Union and its single market, despite the UK remaining outside the Schengen agreement. In addition to freedom of movement within the EU and its markets, Britain has benefited from the economic stability and prosperity of the EU, establishing itself as a perfect hub for multi-national organisations looking to reap pro-business economic rewards.
While the Brexit issue does create a degree of economic uncertainty, Britain remains a highly attractive destination for HNWIs looking to diversify their wealth whilst acquiring residence rights in a jurisdiction of economic and political stability. Britain’s private education system remains one of the most highly sought-after in the world. The British passport will continue to open doors (and borders) across the globe, regardless of any re-structuring of the UK’s relationship with the EU. The ESTA arrangement with the USA will continue to appeal to HNWIs from Africa, Asia, the CIS countries and the Middle East, who are already flocking to the UK for enhanced security and wealth planning. Britain’s history of cultivating the rule of law and its reputation for personal safety and security is likely to endure long after the issue of Brexit has receded.
A more important question from an investor migration perspective, is whether, in the event that Britain votes ‘leave’ on the 23 June, investor migrants who have acquired citizenship in the UK other EU member states will continue to benefit from rights of free movement and establishment into and out of the UK. If they do not, will these citizenship options maintain their attractiveness? In the event of a no vote what rights will HNWIs settled in the UK have around the EU? What rights would HNWIs who have chosen Maltese or Cypriot citizenship programmes have to reside or settle in the UK and how will this impact investor migrant choices in the future?
Moreover, prospective investor migrants will have one eye on the recent turmoil in Europe resulting from the ongoing migrant crisis. Certain EU members states have recently raised concerns over the future of the Schengen zone in light of the security issues stemming from uncontrolled migration, and these concerns are certainly worth bearing in mind when considering the value of investor migration programs in countries such as Portugal for example where access to the Schengen zone reinforces its appeal.
Britain’s overall appeal to HNWI investors is likely to endure in the face of the threat to its membership of the EU. Britain continues to attract wealthy investors from all over the world for myriad reasons, including access to education and healthcare, a flourishing property market, and personal and legal security of assets. Britain, however, is only one of several jurisdictions in the EU that offers appealing residence and citizenship options for HNWI. In the event of a no vote on 23 June, the impact of Brexit on HNWIs who have opted for one of the alternative solutions will remain to be seen, if they can no longer enjoy unfettered access to Britain – by no means certain at this point.
Nadine Goldfoot, Partner, Head of Investor Immigration, Fragomen Woldwide, London
Date Submitted: 21 March 2016