Political instability and an over-reliance on a single economic system are two of the reasons why high net worth investors seek alternative citizenship somewhere other than the country of their birth.
A number of jurisdictions offer citizenship in exchange for substantial investments that further the welfare, advancement and economic development of the country in question. Malta’s citizenship-by-investment programme, for example, offers the chance for wealthy non-EU investors to become European citizens, in exchange for a mixture of donations and investments totalling EUR1.2 million per couple. Turkey, as you will read about below, also offers citizenship in exchange for a real estate investment of USD1 million.
These programmes do tend to be the exception, rather than the rule, though, and many countries have discontinued their citizenship schemes, as they either proved too popular or were incompatible with the framework of national identity.
The Canadian province of Ottawa, for example, recently cancelled a popular immigration program for people with a net worth of at least CAD1.6 million who were able to lend Ottawa CAD800,000 interest-free for five years. The decision left behind 65,000 people on a waiting list, about three-quarters of whom were Chinese.
A popular and accessible alternative to citizenship is a residency by real estate investment, offered by a much wider range of countries and still affording significant benefits. This is a vehicle used frequently by European countries affected by the economic crisis of 2008 and is designed to draw wealthy investors to their shores. Spain and Portugal both have attractive schemes which require relatively modest investments of EUR500,000, and both are popular with non-EU citizens desiring unfettered access to the European Schengen area.
While the majority of residency by investment programmes are motivated by the promise of safety, stability, culture and good weather; there are other aspects to be aware of. In the US, for example, many investors choose to base themselves in specific states which have lower taxes than others. Wyoming, as you will also read about in this feature, is known as an inland tax haven for good reason.
Whatever the reason for purchasing a foreign residency or citizenship, it pays to have expertise on your side when negotiating the various vetting procedures that take place prior to purchase. Establishing the source of funds is just one example of the increasingly onerous requirements, as international bodies toughen up money laundering requirements. Having a professional advisor familiar with the customs, cultures and regulations of the jurisdiction you wish to move to is critical to ensure a smooth application process.
The following discussion draws on the knowledge of five such experts. We hear from IR Global members in the US – Wyoming, Spain, Turkey, Brazil and The Netherlands, as they provide detail on specific programs, layout tax policy for new residents and unpick the wider immigration by real estate investment debate in their own countries.