India to lose 6,500 millionaires in 2023, prohibitive tax legislation complex rules triggered the investment migration: Report

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India is likely to see an outflow of at least 6,500 high-net-worth individuals in 2023, slightly lower than last year’s figure of 7,500, according to the Henley Private Wealth Migration Report, 2023, which tracks wealth and investment migration trends worldwide. ‘Millionaires’ or ‘high-net-worth individuals (HNWIs) refer to those with investable wealth of $1 million or more.

This places India as the country with the second-highest outflow of HNWIs globally, next only to China (net loss of 13,500).  The report ranks the UK (3,200) and Russia (3,000 ­vs 8,500 in 2022 following its invasion of Ukraine) in third and fourth places, respectively.

The group head of private clients at Henley & Partners said: “Recent and persistent turmoil has caused a shift — more investors are considering relocating their families for a range of reasons, from safety and security to education and healthcare, to climate change resilience and even crypto-friendliness. It is important to note that nine of the top 10 countries for forecast net HNWI inflows in 2023 host formal residence by investment programs that encourage foreign direct investment in return for the right to reside, which can also lead to citizenship in some cases.”

The report cited India’s prohibitive tax legislation, coupled with convoluted, complex rules relating to outbound remittances open to misinterpretation and abuse as some of the issues that had triggered the trend of investment migration from the country.

Dubai and Singapore remain preferred destinations for wealthy Indian families. The former is seen as particularly attractive for its government-administered global investor “Golden Visa” programme, favorable tax environment, robust business ecosystem, and a safe, peaceful environment.

Given India’s capacity to generate new millionaires, the outflows are not considered particularly alarming. A Global wealth intelligence firm projects India’s HNWI population will experience a remarkable 80 percent increase by 2031, positioning the country as one of the world’s fastest-growing wealth markets during the period. This growth will mainly be fuelled by the thriving financial services, health care, and technology sectors within the country. Interestingly, the firm observed a notable trend of affluent individuals returning to India, and as the standard of living continues to improve, it anticipated a significant influx of wealthy individuals moving back to India in greater numbers.

Portugal’s Golden Residence Permit Programme has been the most popular overall in 2023, followed by Austria’s Citizenship by investment offering and St Kitts and Nevis’ Citizenship by Investment Programme. Next is Canada’s Start-Up Visa Programme, the fastest way for entrepreneurs and wealthy individuals to access Canadian residences and the North American market. Rising in popularity this year and last in the top five in Italy’s Residence by Investment Programme, with Greece’s Golden Visa Programme and Spain’s Residence by Investment Programme hot on the heels of their Mediterranean counterpart.

As it has for the past decade, China continues to lose the largest number of dollar millionaires each year to migration. The UK is expected to see a net outflow of 3,200 HNWIs in 2023  higher than the projected 3,000 net loss for Russia. While net losses dropped slightly between 2017 and 2019, the 2023 forecast indicates a far more significant millionaire exit is currently underway.

America is notably less popular among migrating millionaires today than before Covid, perhaps owing in part to the threat of higher taxes. The country still attracts more HNWIs than it loses to emigration, with a net inflow of 2,100 projected for 2023, although this is a sharp drop from 2019 when the country saw a net inflow of 10,800 millionaires.

Australia is expected to see the highest net inflow of HNWIs in 2023, with 5,200 millionaires projected to relocate there. While the United Arab Emirates has dropped to second place after a record-breaking influx in 2022, it is still set to experience a significant net arrival of 4,500 new millionaires this year. Singapore ranks third with a net inflow of 3,200 HNWIs, its highest on record, followed by the US with an expected net influx of 2,100.

Switzerland (net inflow of 1,800) and Canada (1,600) occupy the fifth and sixth positions, respectively.

Greece (1,200), France (1,000, doubling last year’s net intake of 500 millionaires), Portugal (800), and New Zealand (700) also make it to this year’s top 10 list for net HNWI inflows. However, Israel is predicted to drop out of the top 10, with its net inflow of millionaires expected to almost halve to just 600, compared with 1,100 in 2022.

(With inputs from agencies)

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