The Known Unknowns of Investment Migration in 2025

Reasonable Doubt
With David Lesperance

A contrarian expert on contingency plans for the wealthy delivers uncomfortable truths.

After making a series of investment migration market predictions for 2023 and 2024 – admittedly with mixed results – I am keeping the tradition alive by bringing you my predictions for the market in 2025.

In 2002, Former Secretary of Defence Donald Rumsfeld popularized what later became known as the “Rumsfeld Matrix.”

While Rumsfeld applied the framework to the context of foreign policy, we will use it to outline eventualities to watch for in the investment migration market next year.

We will focus on two quadrants of the matrix: Things we understand and are aware of (known knowns) and the things we are aware of but can’t predict (known unknowns).

What are 2025’s known knowns?

The US

In 2016, Donald Trump was an unknown entity.

Now, however, Americans know what he can do; they just don’t know what he will do.

I anticipate that as the Trump administration begins, you will see an increase in:

• Lineage citizenship applications for Americans, mixed documented families, and undocumented aliens of all economic classes;
• Canadian immigration applications from professionals and businesspeople who qualify under the trade agreement;
• Retirement basis residence permits and digital nomad visas from mass affluent and high net worth individuals (HNWI) who immediately want to leave;
• HNWI applications for Golden Visas and Citizenship by Investment (CBI) for those who are not yet ready to leave but want to have that option in hand.

For others who may have voted for, or been neutral to, a Trump administration, there is a recognition that the future is uncertain.

For example, will he impose tariffs? If he does, how will it impact inflation, the US dollar, and bond and treasury values?

If he carries out mass deportations, what impact will the departure of these workers (and taxpayers) have on the US economy?

Wealth abhors uncertainty, so many HNW Americans are preparing a fire escape plan.

The UK

On October 30th, 2024, the UK Chancellor of the Exchequer, Rachel Reeves, announced her budget for the upcoming fiscal year, which takes effect on April 6th, 2025.

As a result of the budget, the Remittance Tax Regime (AKA the “Non-Dom regime”) will end in April.

While some transition provisions exist, this change will subject individuals who took advantage of this centuries-old regime to worldwide income and capital gains taxation rather than just the UK-source taxes they previously paid.

Additionally, significant changes to certain types of trusts will subject UK tax residents to a 40% inheritance tax on their worldwide assets.

These changes have already resulted in a significant planned departure of HNW non-doms from the UK before the end of Q1 2025.

The UK is losing its highest-value tax contributors as ultra-high net worth (UHNW) Non-Doms (think The Sunday Times Rich List) leave the country.

Unlike other wealthy residents, these individuals can easily generate and maintain their fortunes from anywhere in the world.

These departing non-doms have been major contributors to the UK Treasury – take Akshata Murty, former PM Sunak’s spouse, who alone paid GBP 4.4m in her final year under the Remittance regime.

While this group of departing non-doms is small, their exit will punch a massive hole in future tax collections far exceeding their numbers.

When the Chancellor finds the Non-Dom cookie jar nearly empty, she will inevitably reach for other taxation tools. Since most UK taxpayers have reached their contribution limit, the UK will likely follow other countries in imposing an Exit Tax (triggering immediate capital gains on unrealized appreciation).

Anticipating this looming threat, wealthy individuals with substantial unrealized gains are already planning their 2025 departures from UK tax residency.

When deciding where to relocate, choosing the most appropriate future tax home is essential to success for UK taxpayers. There are several factors to consider:

• Which jurisdiction best meets all of the family members’ needs and preferences?
  It is worth noting that all the departing family members must be able to “live the plan.” For those who think they can ignore their spouse’s input or agreement, remember that tax is a percentage of income, but divorce is a percentage of capital.
• Which jurisdictions have a favorable future tax burden?
  The departing UK taxpayer wants to ensure they don’t jump out of their current tax pot and into another jurisdiction’s tax fire.
• How much time would they want to spend in their former taxing country?
  The UK has a Statutory Residence Test, which defines the number of “midnights” an individual can spend physically in the UK before being presumed to be a UK taxpayer. However, this presumption is rebuttable if the individual can claim a tax treaty position. Therefore, if the individual anticipates exceeding their specific SRT count, they should also consider jurisdictions that have a Double Tax Treaty with the UK.

China

As IMI reports show, Chinese investors remain steady and major participants in Residency and Citizenship by Investment (RCBI) programs, though they no longer dominate the market.

I predict more HNW Chinese will relocate to other countries, driven by two key factors: Beijing’s tightening grip on overseas investment taxation and the disconcerting pattern of prominent figures “disappearing” after falling out of government favor.

I’ve observed this acceleration in the Chinese exodus since the summer of 2024.

Middle East

As dramatic ongoing events in the Middle East continue to escalate, we will see an increase in interest in RCBI from Israel, Syria, Iran, Lebanon, and Palestine.

This will increase for individuals living in the affected countries and those living abroad in places like the UAE and Saudi Arabia.

What are 2025’s known unknowns?

Unlike known knowns, this group of predictions depends on how domestic and international events unfold. Here are a few for consideration:

• Will South Africans leave if “Wealth Tax” proposals get traction?
• Will Taiwanese HNWIs get backup plans if China interprets US actions regarding Ukraine as abandonment?
• Will New Zealand become a competitive option due to the upcoming changes to the Investor Visa?
• Will Vanuatu respond to Nauru’s competition by replacing Honorary with ordinary Ni-Vanuatu status and price adjustments?
• Will HNW Mexicans leave due to the new President’s tax policies and/or the potential impact on the Mexican economy of US trade policy?
• Will events in Syria, Lebanon, Gaza, and Israel cause dramatic political changes in Iran?
• Will Mohammad Bin Salman be crowned king, and what impact will this have in attracting new residents to KSA (or cause nationals to hedge their bets should they get on his wrong side in the future)?

One prediction that I am confident in making is that the world of second residence and citizenship will continue the unprecedented growth we have all seen unfold in 2024. May we continue to live in interesting times!