Where are they moving their domicile high net worth entrepreneurs
Where are they moving their domicile high net worth entrepreneurs
The first to leave was Isidoro Quiroga Moreno. On June 18, 2021, after selling a large part of his assets in Chile, the businessman -who through the Benjamín group participates in the mining, energy, health, food, agribusiness sectors and very heavily in venture capital throughout the world – moved with his wife to London with no return date. There he rented a house, where he plans to settle for at least the next three years.
One by one his six children arrived: Isidoro, Benjamín, Gonzalo, Héctor Javier and José, who entered the university there. In August, the youngest of the clan moved from London to California to study at the University of Berkeley. Before Christmas, the last of the Quiroga Cortés family -along with his family- left Chile.
In the environment of the businessman, who turned 70 in August, they say that this family project had existed for a long time. That the idea began to take shape in February 2019 after the signing of the last contracts for the sale of the salmon company Australis Seafood to Lenovo’s parent company, Joyvio, for US$ 880 million.
“They began to think about the possibility of going to live in a place with English, and England was easier for a visa than the United States. Neither he nor his wife speak the language well and they wanted to learn it, ”explains an acquaintance. They emphasize that he left in order to be closer to his investments-“he has many businesses abroad and had to travel constantly,” says one of them.
They add that he has not disconnected from Chile, that his office is still in Santiago and that he continues to invest in various local startups and young businesses. «This is temporary,» comments a friend.
However, the departure of the businessman and his family also has an economic justification. Although those close to him do not openly recognize him, one of the reasons for his transfer would be the loss of his residence and domicile in Chile. “When you lose both, you are no longer subject to taxes on your foreign source income or potential property taxes,” explains a tax expert.
At the core of Quiroga they add: “(His departure) goes through legal certainty as well. And since he decided to leave, it is reasonable to choose a place that is more tax efficient than Chile”.
He is not the only businessman who has chosen to leave the country.
The former main shareholder of Blanco y Negro, Gabriel Ruiz Tagle, moved his residence to Madrid. Since 2021 he has combined his time between Spain, Chile and “other destinations”, they explain close to the former Sports Minister of Piñera 1. Although the change of tax domicile has not yet been specified, it is a process that is in process, they confirm in the environment of the. Several of his children also reside abroad.
Soledad Recabarren, partner of Recabarren y Asociados, assures: «Many people tried to change before December 31 of this year, to leave on January 1 domiciled in another country.» All of them in strict secrecy.
A tax expert agrees: “It is no longer just that people are taking their money out of the country.” According to figures from the Central Bank, between the end of 2019 and August 2021, companies and individuals have withdrawn almost US$25 billion. “That was the first step. Now, with assets abroad, there are entrepreneurs choosing to leave Chile themselves,” she adds.
Where are they going?
One of the reasons that worries the largest estates is precisely the tax project for the super rich, a promise from the government of Gabriel Boric and part of a tax reform that hopes to raise 5 points of GDP in the next 4 years, which will be announced in March.
This intersects with uncertainty about the new Constitution. According to the Plaza Pública Cadem survey, confidence in the Constituent Convention fell this week by 9 points to 50%.
But there is a third factor that has them on alert. «There are people who are leaving because they are afraid of the direction of the country, the legal uncertainty, the growth of crime, but also because they are not comfortable with being pointed at by their capital,» says a tax expert.
It is not coming and going. And those who are aware of the movements emphasize that it is a move that does not make sense for people with assets of less than US$20 million, since it has a very high cost. First, it requires a corporate reorganization, since to lose your domicile you have to take more than half of your income out of the country.
“If you live off your Chilean income, you are still a resident. That is why many businessmen paid the substitute tax to the FUT and took out money and made investments abroad, ”explains the lawyer. And she adds: «Furthermore, you have to break ties with the country: you can’t be here more than 184 days a year.»
Then, when deciding where to live, there are several countries that offer special regimes for foreigners. The most demanded are Uruguay and the Europeans Spain, Portugal and England. Italy and Greece also have special treatments, as do New Zealand and Panama.
Although the United States is one of the main destinations where high-ranking Chilean executives have recently moved, from the tax point of view it is expensive and complex, since there are no special regimes for investors.
Despite this, tax experts explain, “many of these people are willing to pay more taxes, but with clear and more stable rules, as well as interpretations consistent with the Law, which shows that it is not just a tax issue but something much more complex. and permanent”.
In the financial area they warn: «There are many people who are looking at the possibility of leaving, and those games are going to be seen in the next six months.» It will be necessary to see how many of them are achieved.
Who are the main legal advisers to high net worth entrepreneurs?
The issue is complex and requires a high degree of tax expertise, both local and international.
The group of legal advisors that attends to the main estates in Chile is small and very hermetic. Confidentiality and trust is key, and clients do not like to talk to their peers about such private and sensitive issues.
According to the specialized publication Chambers & Partners, in its High Net Worth guide, the band 1 or most recognized advisors in Chile is made up of Jaime del Valle and Carolina Fuensalida, both partners of Fuensalida & Del Valle; Soledad Recabarren; Francisco Javier Allende and Alex Fisher, until now all partners of specialized boutique studios, and Fernando Barros, partner of Barros & Errázuriz and the only member of the group belonging to a “big” studio.