While much of the world judges tax havens by the clarity of their financial dealings, the High Net Worth Individuals who have to decide where to base their fortunes now have a new way of choosing which location is best for them: happiness.

Many tax havens – that term causes most governments to bristle – have changed their fiscal regimes recently to satisfy calls for transparency from bodies like the Organisation for Economic Co-operation and Development, which has a mission statement saying it aims to improve the economic and social wellbeing of people around the world.

The result is that most havens make a broadly similar financial offer to global high rollers. They typically levy low or no personal or corporate taxation, with only modest differences in the durations individuals are allowed to stay in each location per year, or the amount of money they have to lodge on the island or peninsula in question to qualify for residency.

In other words, the rich will stay rich, whichever haven they choose. What is less certain is how happy they will be unless they make a judgment based on wider factors.

The OECD, World Bank, European Union and the United Nations have each declared an intention to create “quality of life” measures – for everyone, not just tax exiles. Most of these happiness indices are in preparation or confined to a subset of states but a US magazine, International Living, has made a 120-nation league table based on cost of living, leisure and culture, the economy, environment, freedom, health, safety, climate and infrastructure.

Not every global tax haven is included but, of those assessed, Monaco comes highest, followed by Andorra, Switzerland, the Bahamas and the Cayman Islands. Most havens score well on climate, poorly on cost of living, and relatively strongly on health and infrastructure – that is, the provision of hospitals, schools, telecoms and transport systems.

This approach to wellbeing lacks some scientific exactitude but at least allows HNWIs to judge where to buy homes and invest their money. This is increasingly important as tax haven authorities, under severe public scrutiny in an age of austerity, want HNWIs to do more than simply buy a property for fiscal reasons.

A family on Gibraltar with a Barbary Macaque

Take the example of Gibraltar, the micro-state of 28,000 residents off southern Spain where residents pay 10 to 25 per cent income tax but no value added, capital gains, inheritance or sales taxes. It wants to shed its image of being identified with “brass-plating”, ie companies that buy a small property merely to use as a corporate HQ.

Yet it has shied away from insisting HNWIs stay for a minimum period of time per year, or obliging them to make mandatory contributions to infrastructure projects. Instead it wants to increase its tally of 350 so-called Category 2 residents – Gibraltar’s euphemistic phrase for the seriously rich – by relying on “an increase in the quality and volume of luxury housing,” according to James Tipping, director of the government finance centre.

With only 50 properties on the peninsula valued at £1m or above, and few with the finish and interiors expected by the world’s wealthiest buyers, there is now a frenzy of activity in this niche sector. Construction is underway on several apartment schemes and an 11,000 sq ft four-storey house – it will be Gibraltar’s largest.

Of the few international-quality properties already-completed, prices have recently risen as high as the rock for which Gibraltar is famous. A 5,500 sq ft five-bedroom semi-detached house on The Island, built on reclaimed land, is on sale through Savills at £4.2m. Another agency, Chesterton, is selling a four-bedroom period house, once home to the state’s surgeon general, for £1,995,000.

Yet any increase in quality housing may not in itself push Gibraltar far up a happiness index, although it has yet to be officially measured. Admittedly, its crime rate is low and its economy relatively strong but it lacks the spacious leisure facilities of most tax haven rivals. It possesses a fiercely British culture and has inherited a limited infrastructure and physical environment moulded by its past as a military base.

Persuading international HNWIs to not only buy a home there but also to work, rest and play – not to mention educate their children and shop on its limited high street – is a big ask. This is not to say that Gibraltar will never rival Monaco, but no one could claim it is there yet.

Sunset Point on Grand Cayman
Sunset Point on Grand Cayman is on sale for £8.17m

The Cayman Islands are quite different. On Grand Cayman, Cayman Brac and Little Cayman, for example, some of the world’s richest people have put down roots.

Homes are one factor, of course, says Don McDougall, a spokesman for the Cayman Islands’ authorities: “There’s none of the Caribbean ‘mañana’ attitude you get in some other locations. Everything works and that includes housing.” Grand Cayman’s new Sunset Point, a six-bedroom house which took four years to build and is on sale for £8.17m through Knight Frank, is a case in point. It has security systems, extensive garaging and a pool and tennis court – exactly what HNWIs look for.

But there is more, he says, because with an international population from more than 50 countries there is a welcoming feel for newcomers from all cultures, with many people enjoying an outdoor life in a year-round temperate climate. Fantastic sailing and diving, low crime rates and an expanding airport make it all the merrier. Little wonder the Cayman Islands outperform Luxembourg, Bahrain and Qatar in the International Living index.

McDougall cites Norwegian shipping magnate Andreas Ugland, who not only lives on Grand Cayman for most of the year but also runs a vintage car museum there – he moved his collection from England and Canada – as well as competing in power boat races around its coastline. He is also a regular attendee of public events.

Now the Bahamas wants its HNWIs to emulate Ugland and become more involved in the community – and perhaps soften criticism of its reputation for brass-plating. Whereas in the past many internationally marketed properties were merely apartments, ideal for buyers wanting only tax advantages, work has commenced on a new 570-acre community called Albany, close to Nassau airport.

Selling agency Savills appeals to a wider market by describing Albany as “an array of residential offerings and amenities for all the family,” with facilities ranging from a childrens’ water park and “kids clubhouse” to a 71-slip mega-yacht marina. Whether this will truly convince HNWIs to become active residents in Bahamas life remains to be seen.

A former Tube train on Alderney

An issue of a quite different kind is faced by tiny Alderney, a Channel Island around 70 miles off south-west England. It levies 20 per cent income tax but few other taxes and unlike Jersey and Guernsey, two other low-tax islands nearby, it has neither the requirement for hefty financial assets to be deposited nor a pool of above-average priced properties.

Yet it has a small population of just 2,600 residents, by no means all of whom are in the affluent set. It certainly wants more HNWIs and is making official efforts to recruit them by exhibiting at trade shows. Against the trend of the 21st century, it is proud of its eccentric reputation – there is no Caribbean sun and no swish Monaco real estate, but it has, for example, a train service using former London Underground carriages.

Perhaps it should get itself measured on a happiness index. It might just give the bling tax havens a run for their money.


Other low-tax/no-tax locations

Switzerland Income tax from 0 to 13 per cent, dependent on canton and amount of each year spent within Swiss borders. A six-bedroom villa in Zug costs £21.5m from Savills. International Living score: 70/100

Monaco Income tax is generally 0 per cent. A six-bedroom apartment, recently renovated, costs £25m from Knight Frank. IL score: 75/100

Andorra Income tax is usually 0 per cent but up to 9 per cent social security contributions. A three-bedroom ski chalet costs £2.7m from Lucas Fox. IL score: 73/100

Guernsey Income tax of 20 per cent, few other taxes. A five-bedroom house on a headland with 3.5 acre plot costs £6.35m from Fine & Country. IL score: N/A

Jersey Income tax up to 20 per cent, few other taxes. A three-bedroom apartment in a beachfront gated estate costs from £2.55m, from Cameron Pearson. IL score: N/A


Graham Norwood visited Gibraltar as a guest of Savills








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