Depardieu Aside, the Rich Aren’t Moving to Russia

Depardieu Aside, the Rich Aren’t Moving to Russia

The Depardieu Global Guessing Game

French actor Gerard Depardieu has been granted citizenship by Russian President Vladimir Putin, with CNBC’s Robert Frank.

“Putin has already sent me a passport,” Depardieu was quoted as telling Le Monde in December.

The p.r. game helps Russia’s effort to become a more attractive destination for foreign wealth and investment. The government highlights its low, flat tax rate of 13 percent. The government says Depardieu doesn’t even have to live there to become a Russian taxpayer. (Read more: Wealthy Chinese Flee, Bringing Wealthy With Them)

It’s not at all clear, however, that Depardieu is bound for Russia. More broadly, the whole story obscures the darker truth in Russia: a lot of wealth is leaving the country, rather than coming in.

According to the Russian Central Bank, more than $ 80 billion flowed out of the country in 2011, more than twice the rate of 2010. Some say the Central Bank’s numbers are artificially high. But at best, more than $ 36 billion left the country in 2011.

Wealthy Russians have become some of the biggest buyers of real estate in New York, Miami and London. They say privately that they are concerned about political stability in the country as well as growing corruption. While the country’s official tax rate is 13 percent, many wealthy Russians say they are also solicited for much higher fees for political protection.

Edward A. Mermelstein, a real-estate lawyer in New York who specializes in wealthy Russian buyers, said that demand was “very strong” from Russians at the end of last year “and we expect that to continue this year.” (Read more: Why Miami Is Becoming the Russian Riviera)

Russians who buy property and move their families to the U.S. rarely change their tax status. But they are rapidly moving money overseas that would otherwise be invested in Russia.

Putin, in other words, may be hoping to attract stumping for more incoming wealth. But his main challenge is keeping it.

High Net Worth

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