U.K.'s Richest Man Has Billions of Reasons to Move to Monaco
(Bloomberg) -- Monaco’s decision to scrap income taxes dates back to the time of the American Civil War.
The move has since helped draw scores of wealthy individuals to the city-state on the French Riviera, and Monaco may now be about to bag the U.K.’s richest person as a foreign resident, according to a British newspaper.
Why Jim Ratcliffe, the founder of global chemicals manufacturer Ineos AG, would ditch England for the world’s most densely populated jurisdiction is a mystery for now. But taxes are a far more likely reason than Monaco’s azure seas and private beaches.
Moving there “isn’t always driven by tax, but it’s definitely up there on most people’s list,” said Richard Morley, a London-based partner at accounting firm BDO. “You don’t just go there for just all the lovely, green open spaces.”
On its website, the Monaco government highlights “favorable” tax treatment for individuals as one of the sovereign state’s characteristics. Unlike the U.K. or other European countries, the principality doesn’t apply any annual property, capital gains or council taxes.
An Ineos spokesman said the firm is “committed to its business base in London and has plans to remain headquartered in the U.K. for the foreseeable future.” He declined to comment on a report in the Telegraph this week that Ratcliffe and other company executives were contemplating a move.
In Monaco, which is less than a square mile in area, Ratcliffe would join Formula One racing driver Lewis Hamilton and cyclist Chris Froome among other U.K. nationals who’ve become foreign residents of the world’s second-smallest country.
Philip Green, owner of the U.K.’s largest clothing company, is among the ultra-wealthy who’ve already relocated family members there, while British investor Simon Reuben is a resident. They have a combined net worth of $8.9 billion, according to the Bloomberg Billionaires Index.
Ratcliffe, 65, is worth $14.6 billion through his stake in closely held Ineos, the London-based company he’s helped build since the 1990s. That’s $1 billion more than Hugh Grosvenor, the seventh Duke of Westminster, whose family has long topped the list of the U.K.’s wealthiest individuals thanks to land they’ve owned across central parts of the English capital since 1677.
The possible move of Ratcliffe, a Brexit supporter, and other Ineos executives to Monaco would be a blow for U.K. Prime Minister Theresa May as she tries to sustain confidence among businesses about the country’s post-European Union future. A spokesman for the U.K. government declined to comment.
It also wouldn’t be the first time that Ratcliffe has said goodbye to the U.K. In April 2010, Ineos announced it was moving its headquarters to Switzerland, partly to save 450 million euros ($522 million) in taxes between then and 2014. By December 2016, however, the company had returned and opened a new headquarters in Knightsbridge, London.
“We have immense confidence in Britain’s economic future,” Ratcliffe said in a news release at the time. The “current business climate makes siting our new headquarters in the U.K. an easy decision.”
Depending on their nationality, foreigners have to meet different conditions to settle in Monaco. Yet all of them have to prove they aren’t criminals, have access to a property in the city-state large enough to accommodate them and deposit at least 500,000 euros to kick-start the process.
Along with taxes, Monaco’s government identifies quality of life, schools and health systems, and a multicultural community in which English is widely spoken as other reasons to relocate to the city-state.
If Ratcliffe leaves the U.K., the decision may mean he’s looking to extract untaxed wealth from a company, said James Hender, partner and head of private wealth services at London-based accounting firm Saffery Champness. “While you’d still have to pay some U.K. tax by moving to Monaco, you can certainly see from the tax benefits alone why someone would want to.”
Look no farther than Philip Green for a demonstration of those benefits. In 2005, the holding company of his London-based fashion firm paid a 1.2 billion-pound ($1.5 billion) dividend. The payment wasn’t subject to U.K. taxes as Green’s wife, Tina, controls the company and lives in Monte Carlo.
In the past two years, Ineos Group Holdings SA -- a unit of the chemical company -- has distributed more than 500 million euros in dividends. A move to Monaco could save Ratcliffe tens of millions of pounds on any future dividends he receives since he wouldn’t face the U.K.’s top rate of 38.1 percent on such payouts.
For Ratcliffe, though, moving to Monaco wouldn’t simply be a case of catching a flight there. While he’d face low taxes once he’s a resident, arranging his affairs before then could be complex.
Individuals looking to move overseas face a range of tax implications, said Paulette Peterson, a director at international tax advisory firm PetersonSims. Calculating them “depends on the structures in place. There could be personal taxes or corporate tax issues. It’s vast.”
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