Citizenship by investment (“jus pecuniae”) and residence by investment programs (“golden visas”) have seen big growths in recent years. Jus pecuniae means acquiring citizenship against financial contribution. But citizenship for many immigrants, comes at a significant financial cost. Investment based citizenship/residency programs may or may not require the applicant to reside in the country prior to naturalization. There are mainly two routes, that lead to citizenship under investment option, one through naturalizing with residency and other without residency leading to direct citizenship with a passport. The number of countries offering such schemes based on economic investment have increased, fueling global demand for passports and visas.
Fortune recently reported, the 1% of the global rich spent an estimated $2 billion in buying citizenships. According to Christian Kalin of Henley & Partners, Switzerland, residence-by-investment programmes attract about $5 billion a year in foreign direct investment; and citizenship by investment another $2 billion yearly. Both figures are increasing at 20% a year making it a whopping $7 billion dollar industry. But what is causing an alarming growth in this industry? The Rich and wealthy want a quick solution for free movement to many countries with no visa restrictions. The fear of global crisis such as Brexit, Trump victory, Syrian crisis, Turkey attacks, Demonetisation in India is fueling the growth pushing people to look for alternative citizenships elsewhere.
Citizenship too, though often regarded in sacred terms, can be bought and sold. Over the past ten years a substantial industry has developed around – and pushed forward – the market for multiple citizenships. In 2012, two countries could be described as offering citizenship by investment programs; by 2016, they numbered seven, and half a dozen additional states are in consultation about adopting the tool, according to Global citizenship 2.0 by Kristin Surak.
IMF report on revenues from citizenship by investment programs, says St Kitts & Nevis has achieved impressive 11% of GDP in 2015 and slashed its debt by 64%. Portugal golden visa ARI scheme reported 2.4 billion euros (90% invested in real estate) inflows in just 4 years of running the scheme. Malta reported over 1 billion euro inflows since the inception of the citizenship scheme in the EU. Cyprus economy is slowly recovering since the 2013 banking crisis and demand for real estate is high, ever since cyprus introduced citizenship for sale scheme. Dominica recovered from the damage caused by tropical storm Erika that destroyed 90% of the country with the help of the funds from citizenship for sale program. All the countries reported boost in economic growth, employment and demand in real estate since the inception of economic citizenship programs.
I will spot out the main difference between citizenship and residency programs and then will list about 35 countries offering investment programs to foreign investors. Both of these two routes will lead to citizenship.
Citizenship by investment programs (CIP) gets you fast track citizenship within months, waiving naturalisation requirements such as residency, military service, language requirement etc. This is one of the main reasons why citizenship by investment programs are so popular and also less time consuming. The citizenship given is lifetime can be passed on to future family generations through children.
Residency by investment programs (RIP), grant citizenship through residency usually takes years of uninterrupted living to naturalise for citizenship. You must also fully integrate to culture, language etc. You may undergo military service to naturalise for citizenship in some countries. In most countries, if you dont live in the country enough (absent for more than 3 months), you wont even qualify for Citizenship or Green card. The processing time of citizenship applications through naturalisation may take many months or more than a year. It is worth pointing out that some countries like United Kingdom require a PR status before applying for citizenship. Golden visas are issued with limited time validity (say one or two years). You have to go extend the validity of residence permit (under golden visa) once every year or two years and to do this you must visit the country personally.
There are several quick investment routes to buy citizenship through investment. The best, easiest, less expensive and fastest option is one time donation payment to Government fund. You will get your money back if the citizenship is refused. You can also invest in real estate (must hold for 5 years) and get a citizenship, but it is an expensive route to citizenship. Under real estate, you are required to pay various property taxes, fees at end it will end up more than you bargained for. Another interesting option is buying Government bonds ($500,000 onwards), you will get your full money refunded back after 5 years (guaranteed by Government) with no interest. You keep your citizenship for life time. You will not lose your citizenship after getting back your money from bonds. A handful of countries grant residency or even citizenship against capital investments in Art & culture projects, Research and technology sector, Green energy sectors and foundations or organisations serving public interest..
The benefits of second citizenship are enticing such visa free travel to several countries to Europe/UK, education for children, freely do business, tax free status, and also benefits stateless persons .
The biggest problem with programs in United States, United Kingdom, Canada, yes they give you permanent residence status but you are required to physically immigrate and live there permanently. You cannot be absent for more than 3 months in a year. Many investors dont want to move and live there away from home. Another problem is you are taxed on worldwide income, if you get permanent resident status.
Grenada has a very interesting citizenship programme in the Caribbean, which is worth looking at. Grenada signed visa waiver agreement with China on Feb 25, 2015 – since then Grenada is the only country in the caribbean offering visa free travel to China (PRC) to its citizens. Citizenship in Grenada also provides backdoor access to United States through E2 treaty visa. E2 visa is a non-immigrant business visa, a cheaper alternative to EB-5 investor, as it requires no investment minimums and does not require job creation. E2 visa holders have ways to avoid world wide taxation in the US unlike EB5 visa holders.
Tax planning offshore cannot be overlooked when acquiring a second citizenship. In most countries, you are taxed based on your residency (live 182 days/year), not citizenship for the income generate inside the country. The United States and Eritrea are the only two countries in the world with the “Citizenship based tax regime”. The US taxes both citizens and non-citizens on their worldwide income. There are virtually no taxes in the Caribbean. In Europe, Austria (55%), Netherlands(52%), Sweden (62%), Finland(56%-62%), Denmark (56%) has the highest income tax rates.
Source – https://corpocrat.com