Monaco is set to benefit significantly from recent changes to the UK’s inheritance tax (IHT) rules, which could drive an influx of wealthy British expats.
The UK has replaced its domicile-based system with a residency-based one, meaning Britons living abroad for more than ten years can now avoid the 40% IHT on their foreign assets. This change aligns perfectly with Monaco’s tax-friendly environment and luxurious lifestyle, creating another financial incentive for high-net-worth individuals (HNWIs) to relocate to the Principality.
With no income tax and unmatched amenities, Monaco has long been a haven for the world’s affluent. The new UK rules, which take effect in April, could see a surge of British retirees choosing Monaco as their new home, according to the Financial Times. Real estate is expected to benefit directly, with wealthy expats seeking high-end properties to meet the residency requirement. Given Monaco’s limited land and property availability, this could further drive up demand and property prices, enhancing government revenues through transaction fees and taxes.
Monaco’s economy as a whole stands to gain. Wealthy residents bring significant spending power, benefiting local businesses, luxury retailers, and high-end services. Financial institutions and legal firms specializing in estate planning will likely see new opportunities, offering tailored advice to British expats navigating the IHT changes.
The timing is ideal for Monaco, as the UK’s new rules provide greater clarity for expatriates. Previously, cutting ties with the UK was complex and uncertain, with disputes often arising after death. The residency-based system simplifies this process, making the decision to relocate more attractive.
To fully capitalise, Monaco could launch targeted campaigns emphasising its compatibility with the new rules. By positioning itself as the ultimate destination for financial security and luxury living, the Principality can attract a new wave of long-term residents, strengthening its real estate market and broader economy while enhancing its status as a global hub for HNWIs.
Photo by Antoine Contenseau
