OFCs and HNWIs: A New Breed of BFFs?

Rihanna claims to have a BFF with Katy Perry; Madonna has one with Gwyneth Paltrow; Victoria Beckham has forged one with Katie Holmes since her move to LA; and last week Kim Kardashian revealed her new one at the London’ Eye’.

What’s a BFF?

The acronym which stands for ‘best-friend friendship’ has been around for at least three decades but in recent times has enjoyed a resurgence in popularity since Hollywood’s young ‘glitterati’ adopted it as a way to describe the person, other than their ‘SO’ – significant other – with whom they are frequently seen in public.

No longer the exclusive reserve of the ‘rich and famous’, Offshore Financial Centres (‘OFCs’), actively seeking to diversify their economies traditionally reliant on corporate multinationals, are re-thinking their immigration policies to establish BFFs with the world’s High Net Worth Individuals (‘HNWI’).

Examples of OFC-BFFs

Established OFCs like Monaco and Switzerland, have long enjoyed BFFs with a number of famous ‘tax exiles’, including Tina Turner, Phil Collins, David Bowie and Ringo Star. While Singapore, a rapidly expanding Asian OFC has over 150,000 HNWIs each worth more than US$1M who account for 2.9% of the country’s population.

These country- BBFs are not just based on tax avoidance/mitigation but a desire amongst HNMWIs to be resident in an OFC that has made concerted efforts to welcome the ‘best and brightest’ with open arms. In fact as witnessed by Facebook’s co-founder move to Singapore over two years ago, the demographic of HNWIs is no longer the retiree or person with ancestral wealth but the young ‘noveau riche’ entrepreneurs interested in living and working in an environment where they can successfully leverage country-BFFs.

Immigration Policies Matter

Like citizenship BFFs with OFCs are evidenced by permanent residency ‘stamps’, ‘passes’ or ‘certificates’ proving that the HNWI has satisfied the domestic legal requirements to be afforded the status of ‘resident’.

For example, in the Cayman Islands changes are in the pipeline allowing HNWIs to apply for a ‘Certificate of Permanent Residence’ (but without the right to work) as long as they invest in real estate of a prescribed amount.

It seems likely that with the increasing currency of ‘Robin Hood’ taxation ‘onshore’, more and more HNWIs will be seeking out OFC-BFFs.

 

 

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