Wealthy hedge fund managers in London are exploring new destinations to avoid upcoming tax increases. The newly elected Labour party has proposed a plan to change how carried interest compensation is taxed. This change would mean that bonuses received by private equity and hedge fund professionals would be taxed at a much higher rate, no longer treated as capital gains.
In response, several cities, including Dubai and Milan, are attracting these financial professionals with more favorable tax conditions. According to relocation firm Henley & Partners, the UK is expected to lose around 9,500 millionaires in 2024, trailing only China in the number of wealthy individuals leaving the country. Meanwhile, the United Arab Emirates, Italy, and Portugal are seeing an influx, with projections of gaining 6,700, 2,200, and 800 millionaires, respectively.
Major hedge funds are already setting up offices in Milan. Notable firms like Steve Cohen’s Point72, Eisler Capital, and Capstone Investment Advisors have established a presence there. However, it is not yet clear how smoothly these transitions are going for employees. For example, Sebastian Dickgiesser, a European portfolio manager at Point72, has recently moved to Milan from Dubai, according to a source familiar with the situation.
Dubai, on the other hand, is known for attracting investors rather than losing them. The city, along with neighboring Abu Dhabi, has been a popular destination for portfolio managers due to its low taxes, favorable time zone, safety, and proximity to India. These factors continue to make Dubai an attractive option for finance professionals looking to avoid higher taxes elsewhere.
