Making The Case For Offshore In Testing Times – Monaco Conference Report

Tom Burroughes Group Editor 16 May 2023

Making The Case For Offshore In Testing Times – Monaco Conference Report

Wealth structuring, the right way to own a yacht, the challenges for startup backers and the concerns of the NextGen were all put under the spotlight in Monaco at a conference attended by this news service.

Offshore centres prevent people from being taxed twice, sharpen competition for capital at a time of rising regulation and tax, and they have reputations for safety, high quality of life and expertise that deserve respect, a conference in Monaco has heard.

International centres, homes to trillions of dollars of cross-border assets, are important parts of the global financial jigsaw and have built clusters of expertise around structuring wealth, as well as for services ranging from yacht registration through to advice on NextGen wealth transfer. These were some of the messages coming from the TrustConsult Annual Conference, held at the Fairmont Monaco hotel in the principality. The conference was attended by 110 guests.

Christian Bühlmann, group chairman and founding partner of TrustConsult Group, said in his introductory remarks that much of the world had a “one-sided” view of IFCs such as Monaco, while many nations’ tax and spending ran at high levels. As part of the case for IFCs, he said it was important to defend legitimate financial privacy, noting recent calls by policymakers in Europe for public registers of beneficial ownership. In the present environment, there is an “incredible regulatory inflation,” Bühlmann said. This required the industry to “all learn new regulatory language.”

One important feature of IFCs is that they prevent the iniquity of double taxation (where people have to pay taxes in two countries if they are resident in one and have income and gains somewhere else). “We should not be ashamed to avoid double taxation,” Bühlmann said.

The nexus of relations between Monaco, the UK and Switzerland – and tax residency issues in each – were discussed in the first panel. Panellists were Cecile Civiale Vuillier, CEO of TrustConsult Suisse; Daniel Zappelli, founding partner of VSZ Attorneys at Law; Kyra Motley, partner at Boodle Hatfield, London, and Hanna Darrien, legal and tax director at Monaco United Advisors, a multi-family office.

Many of those considering moving to Monaco are entrepreneurs, from where they also wish to keep creating wealth, Darrien told the panel. The jurisdiction has many appealing points, and one of the best is its security. “There’s no wealth tax in Monaco, no personal tax…it is an important business hub,” she said. 

“People are attracted to Monaco for the security and way of life. High net worth clients find it very comfortable and safe,” Civiale Vuillier said. 

London is an obviously famous international city; those who wish to go there have to be careful about their citizenship if they are Monaco citizens because of the 90-day rule [which says one can only spend 90 days outside the principality], Motley said. About a decade ago, the 90-day rule was tightened up and put on a statutory basis, she said. Motley elaborated on the UK’s own residential non-domiciled regime, which the UK opposition Labour Party wishes to end. Furthermore, the fact that the UK's inheritance tax “nil-rate” band hasn’t risen in line with inflation is a concern because a wider share of the UK public – not just HNW individuals – are coming into its net, the conference heard.

Zappelli, a former Geneva attorney general, noted that while Switzerland today is a “safe haven, it’s not necessarily a tax haven.” He noted recent stories of how HNW Norwegians, business owners for example, want to locate to Switzerland to avoid the impact of the Nordic state’s new wealth tax. Switzerland operates a “lump sum” tax system, a process for foreign nationals domiciled in the Alpine state but not gainfully employed there. “If you are young and wanted to work they probably wouldn’t want to come there unless they were working abroad,” Zappelli said. 

Some people as young as 30 who have made money have come to Switzerland because of the safety, the high quality of education for their children,” Civiale Vuillier said. “Before, we had clients who automatically looked at the UK first before Switzerland,” she said, but that’s now changed.

Boodle Hatfield’s Motley said that when the non-dom system in the UK was tightened up (so that a person cannot be a non-dom for more than 15 years) it was expected this would lead to a mass exodus, and Brexit was also thought as causing a big outflow. However, this has not happened to the extent feared, she said. 

Returning to the Swiss situation, Zappelli noted that since the Russian invasion of Ukraine in 2022 and the measures against Moscow, Swiss authorities have tightened entrance requirements. Unfortunately, more work has to be done by people to prove their innocence of wrongdoing, he said. “I spend a lot of time proving that people are not guilty of what they are accused of.”

Zappelli also told the audience that those who violate Switzerland’s residency conditions can be found out if, for example, they put up social media posts that let authorities know they are outside Switzerland more than they should be. He gave a real-life example of such a case, which led to a person losing their residency permit.

Attitudes towards jurisdictions and behaviour have changed, Motley said, noting that people increasingly want to avoid getting reputations for trying to game the tax system. 

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