The 2016 Knight Frank Wealth Report survey revealed that 37% of Russian UHNWIs - due to the current political and cultural climate - were looking at a change in residence, with many having their eyes on Monaco. As a reaction to the continued growth of Russian UHNWs, who are using established offices in Monaco and the south of France, it’s common practice for these European-based law firms and family offices to offer specialised Russian speaking clients services in order to cope with the demand.
Since the de-offshorisation law driven by President Putin, which came into effect on 1 January 2015, Russian citizens and companies have to pay tax in Russia on earnings from foreign-registered entities. This inspired a shift in tax habits of Russian clients, which meant a huge surge in the demands on family offices, “In the current context clients have two possibilities, either they comply with new legislation and adapt their structures, or they change the residency,” explains Maria Perekopskaia, a legal advisor for Rosemont Consulting who specialises in Russian issues.
“We see a lot of Russian clients becoming residences in Monaco or France, which is a good balance of lifestyle and business structuring. Everyone likes the lifestyle in the very friendly tax environment and being compliant. Living in France with the yacht nearby, it’s the perfect balance!” adds Cécile Acolas, director at Rosemont Consulting.
As outlined in this SuperyachtNews article, since 2007 there has been nearly two 80m+ deliveries for Russian owners each year, with a mammoth four deliveries in 2010. Of course, one cannot discuss this region’s influence on the market without mentioning Melnichenko’s Sailing Yacht A, launched earlier on this year, exemplifying the impact of Russian owners.
In addition to the influx of Russian owners to the superyacht industry, Acolas also credits this groups as positively influencing the housing market in Monaco, which has not been seen in neighbouring France, “The property market of Monaco has evolved positively, where in France it’s had a little collapse, but in Monaco it didn’t due to all these fiscal changes around the world, and as a result people are moving there in order to not have any tax problems,” says Acolas.
Following on from the Wealth Management and Family Office conference in Moscow in late April, the Rosemont team revealed the key concerns of that region continues to be currency control legislation, the automatic exchange of information, change of residency and tax planning. It would appear that the flow of UHNWIs from Russia and their wealth management needs will continue to influence this sector of the market for years to come.
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