Golden Visa and high inheritance tax costs for British citizens
Golden Visas are still the talk of the town. This visa, which guarantees residency or citizenship by investment, appeals to many wealthy expatriates. In fact, thousands of British citizens have been lured by the Golden Visa over the past years. Some 240,000 British citizens have relocated to the Gulf states, particularly the United Arab Emirates (UAE), a favorite destination for expats. The Emirati Golden Visa, which is particularly lucrative for executives, scientists and engineers, entitles the holder to stay for 10 years and benefits from a virtually zero income and capital gains tax policy.
However, experts point out that the tax exemption British expatriates enjoy is transmitted to their heirs. When they are no more, their heirs will have to pay inheritance tax on their assets. However, many real estate agents fail to inform their expatriate clients of this.
Should inheritance tax be abolished?
Some wealthy Britons choose to live abroad to avoid paying taxes at home. This is without considering the inheritance tax on UK assets, which follows expats wherever they go. Inheritance tax can be high. Currently, 40% is payable on an individual's estate over £325,000. For couples, the amount can rise to £650,000, and homeowners whose children inherit the main house pay £1 million.
To avoid paying such huge amounts, a British expat would have to sever almost all of their property and family ties to the UK: for example, stop owning property or assets in the British territory. These are things that many expats still choose to hold to maintain a foothold in their country, make investments, prepare for retirement, and so on. How can this situation be resolved? 50 Conservative MPs are proposing the complete abolition of inheritance tax. But it remains to be seen whether their appeal will be heard.
Other restrictions of Golden Visas
Other limitations can make Golden Visas less attractive. Initial real estate investments may imply additional costs, such as taxes. Several countries require an initial real estate investment of at least 500,000 Euros, with higher requirements for companies. On top of that, some fees average between 50,000 and 100,000 euros. There are also administrative fees to consider. For an initial application, these fees can amount to several thousand euros. For a renewal, the fees are halved, but still amount to several thousand euros. There are also notary and legal fees.
The other limitation concerns the geographical areas covered by the Golden Visa. These visa holders cannot invest wherever they want. Their real estate purchases must be made within the program's designated areas. Investments are also limited. You can avoid these restrictions by investing under a program other than the Golden Visa, but only if you have the financial resources to invest in other sectors.
A highly controversial visa
Behind all these restrictions lies the main problem with the Golden Visa, which directly affects the holders. It is often blamed for driving up property prices and forcing locals out of their homes. This can sound absurd, considering a housing crisis that has spread to many countries. However, some experts downplay the impact of property purchases on the sector, although they do acknowledge that the presence of wealthy foreigners in a given area helps to drive up rents in that area. And by "rich," they don't necessarily mean the very wealthy Golden Visa holders. All it takes is for the newcomers to have higher incomes than the locals for prices to rise: rents, food prices in local shops, etc.
The most virulent attacks speak of a visa that buys citizenship and reinforces social inequalities. All this further tarnishes the image of the Golden Visa. Portugal has announced the abolition of its program. Spain is still hesitating. But other countries, such as Switzerland and the United Arab Emirates, have no intention of ending the Golden Visa.
