For modern businesspersons, not only is a second citizenship a signifier of prestige but also an opportunity to protect themselves and their assets, minimize taxes, and travel freely. Which EU and Caribbean countries offer their citizenship in exchange for investment? What are the benefits and costs associated with each program? Find below the answers to these and many more questions.
EU programs of economic citizenship
Most European countries strictly control the issuance of passports to foreigners; as a rule, citizenship status is granted after residing in the country for 10 years, on the average, and meeting an impressive list of requirements, all of which is not too appealing to wealthy entrepreneurs. The best solution for them would be citizenship by investment programs developed by countries such as Malta, Cyprus, Bulgaria and Austria. The most popular among those are the Maltese and Cypriot passport programs.
Maltese citizenship: Advantages, costs, nuances
Malta is a country with European standards of life, education and medicine, it also has an attractive business environment. Citizens of Malta have the right to visa-free entry into 167 countries, including the United States, Japan, and New Zealand. The Maltese passport is an opportunity to live in any country of the European Union and keep the assets in reliable European banks.
The government of Malta launched the citizenship by investment program in 2014. Previously, it was thought that once the CBI program reaches 1800 approved applications, it would be closed; however, the government has plans to “revive” the program. The new conditions will take into account the opinions of citizens after a referendum. At the moment, Malta’s program has strict requirements for the reputation of investors, and only the applicants with impeccable reputation make it past due diligence checks.
Costs associated with the passport of Malta:
- The one-time non-refundable donation to the state fund in the amount of €650,000.
- Acquisition of real estate (an apartment, a villa, etc.) worth at least €350,000. It is also possible to rent property for no less than 5 years, for at least €16,000 per year.
- Investing at least €150,000 in government bonds. The retention period is 5 years, after which it is possible to sell the assets.
IN CASE THE INVESTOR CHOOSES TO RENT REAL ESTATE, THEY WILL HAVE TO PAY AT LEAST €880,000. IN CASE OF REAL ESTATE PURCHASE, THE COST STARTS AT €1 MILLION.
The return on real estate in Malta is 5-8% per year. The cost of rent, as of 2017, has increased by 12-14%.
What to consider when investing in real estate in order to obtain the citizenship of Malta
- Only residential property buyers are eligible for taking part in the program; commercial real estate objects are not suitable for application, as per rules of the program.
- The real estate should be retained for at least 5 years, otherwise, the citizenship status will be revoked.
- The investors are not permitted to lease out the property, so there is no opportunity to gain any passive income.
Today, the majority of investors (88% from July 2016 to June 2017) prefer to rent housing, but the number of those who buy real estate has been gradually increasing.
Cyprus citizenship: The basics of the program
The Cyprus’ economic citizenship program has been active since 2014. After a couple of important changes in 2016, its popularity has increased dramatically. The authorities reduced the investment amount by half, which makes the program more competitive against its European counterparts, especially since after the introduction of changes, not only the spouse and children but also the parents can now apply along with the main investor.
One of the main advantages of the Cyprus passport is visa-free regime with more than 150 countries, including the UK, Australia, Japan, etc. With a Cypriot passport, one gains the opportunity to reside in any EU country. Cyprus has attractive taxation conditions; corporate tax is 12.5%, and taxes on inheritance and wealth are not levied.The passport is issued within 6 months.
For investors wishing to obtain the citizenship of Cyprus, three investment options are available:
- Purchase of residential or commercial property worth at least €2 million. It is also possible to purchase several objects once the total cost reaches the necessary amount.
- Investing at least € 2 million in local business in Cyprus, plus creation of at least 5 jobs for the citizens of the country.
- Combination of the above options: purchase of government bonds worth €500,000, plus €1.5 million investment in business or real estate.
The required retention of assets is 3 years, after which, they can be sold.
TO KEEP THE CITIZEN’S STATUS, THE INVESTOR IS EXPECTED TO OWN HOUSING WORTH AT LEAST €500,000.
Note: If the parents of the principal investor are listed on the application, they are also expected to own a residential property worth at least €500,000.
Thus, while the costs of obtaining Cypriot citizenship appear to be substantial, they can be returned for the most part after three years of owning the assets. Trends in the Cyprus property market indicate a rapid rebound of the sector.
IN FEBRUARY 2018, THE NUMBER OF REAL ESTATE TRANSACTIONS HAS GROWN BY 46% COMPARED TO THE PREVIOUS YEAR.
Most notable growth is happening in the sector of sales made to foreign citizens, largely thanks to the Cyprus citizenship by investment program.
Caribbean citizenship is a worthy and affordable alternative to European citizenship
If you’re not planning to spend an impressive amount on your second citizenship, look at the Caribbean CBI programs. Generally, you’ll either have to invest in the purchase of real estate, or make a non-refundable donation to a state fund thus contributing to the development of the country’s economy.
Caribbean Basin countries offer the following advantages to investors:
- An impressive amount of countries available for visa-free travel: you’ll be able to visit more than 100 countries without having to think about visa-related formalities. Mobility is especially important in today’s business environment, so the second passport can be a major advantage, especially when working with international partners.
- A quick and easy processing. Normally, a passport is issues within 5 months.
- A reliable Plan B for you and your closest ones. Freely include your spouse, children and parents in the application.
- There is no need to reside in the country continuously. There is no need to personally come to the Caribbean country of your choice to obtain your passport or take an oath. The only exception is Antigua and Barbuda: To get the status extended, the applicant is expected to spend at least 5 days in the country during the first five years.
- Low tax burden. In Caribbean countries, several taxes just don’t exist, such as taxes on inheritance, capital gains, or wealth.
Five countries offer their citizenship by investment programs in the Caribbean region: Saint Kitts and Nevis, Antigua and Barbuda, Dominica, Grenada, and Saint Lucia. Below, we will dwell on the cost and nuances of each of the programs.
The “Platinum Standard” Saint Kitts and Nevis passport
Thanks to more than 30 years of successful work, the citizenship by investment program of St. Kitts and Nevis is considered to be the most reliable and widely-known Caribbean CBI program. Over this time, over 11,000 investors have received their passports. Among them are Pavel Durov, the world-famous Russian businessman and the founder of Vkontakte and Telegram services, and Adam Bilzerian, the equally famous US-born poker player/private investor.
There are two options to obtain this country’s citizenship:
- Donation towards the development of the country. In March 2018, the government scrapped the Hurricane Relief Fund, but launched the Sustainable Growth Fund instead. According to latest changes, the minimum investment amount for a single applicant is $150,000, and $195,000 for a family of 4 people. There is another option, too – a charitable contribution in the amount of $250,000/$300,000 (for a single applicant/family) to the Sugar Industry Diversification Foundation.
- Purchasing property. The investors are expected to choose objects from the list of government-approved projects. The cost of the object must be at least $400,000. The minimum period of owning the property is 5 years, after which, it is possible to sell it.
It should be borne in mind that real estate acquisition is associated with some additional costs, since investors also have to pay certain government fees. However, not so long ago, the St. Kitts and Nevis government made the decision to reduce the size of some government fees. Today, the government fee for two parents and two children isn’t $150,000, but is lower by 50%. St. Kitts and Nevis has fairly lax requirements concerning the age of investors’ family members, seeing that dependent children under the age of 30 can be included in the application, as well as parents aged 55 years and above.
Antigua and Barbuda CBI program
The passport program of Antigua and Barbuda started operating in 2013, and over this time, over 2,000 investors have applied. Antigua and Barbuda’s citizens can freely cross the borders of 136 states and apply for a 10-year US visa.
To participate in the program, one has to choose one of the following options:
- A non-refundable donation to the National Development Fund. Until November 2018, the amount of the donation has been reduced to $100,000, and after that, will probably return to the previous amount of $200,000.
- Purchase of housing or hotel shares in the amount of at least $400,000; the real estate projects must be approved by the government.
In addition, it is necessary to take into account the costs of due diligence, application processing and some additional fees.
Most investors do not plan to stay in the Caribbean region and therefore prefer the donation option, especially when the price has been reduced. However, if you are interested in buying a villa in the Caribbean, then Antigua property looks like a good option for investment. Thanks to the developed infrastructure and excellent conditions for yachting, the island is popular with wealthy tourists. So the real estate object can be profitable to sell after the obligatory five-year period of holding the property, or lease it, making a profit of 4-6% per annum.
Dominica’s citizenship by money
Launched in 1993, Dominica’s CBI program is one of the oldest in the world. Since 2003, over 12,000 investors and their family members have received passports of the country. In mid-2017, Dominica placed first among 12 countries offering their CBI programs in the Professional Wealth Management rating. The PWM experts assessed the merits of the quick processing timeline, ease of registration, and the moderate cost of the passport program.
To obtain a Dominica passport, one is expected to choose one of the following options:
- A $100,000 donation to the National Development Fund;
- Investing at least $200,0000 in real estate.
Dominica’s real estate is not the most reliable investment, that is why investors tend to choose the first option.
The citizenship of Grenada, an optimal business-friendly option
The program of the Grenadian economic citizenship is gaining momentum quickly, with a 300% increase in applications in 2017.
This is not surprising, since some of the benefits the country offers are not offered by any other Caribbean states, such as the possibility to obtain a E-2 business visa to the US and to visit China without the need to obtain a visa.
Investors are offered the following options:
- A $200k donation to the government fund;
- Real estate investment in the amount of at least $350,000.
The real estate should be retained for at least 4 years before it can be put back on the market The purchase of elite housing on the island is beneficial due to the geographical location, as Grenada is located out of the way of hurricanes. In addition, tourism is developing dynamically in Grenada, so the prospects are promising for the re-sale of the property or renting it out.
The reputation of Grenada could have been affected by the recent inclusion in the offshore zone blacklist that was put together by the EU. However, in early 2018, the country’s reputation was redeemed.
Passport of Saint Lucia
The passport program of St. Lucia is the “youngest” in the Caribbean region as it was launched in 2016. For this reason, it is not yet possible to do a comprehensive assessment of the level of demand or any other statistics. It is known for sure that during the first year of St.Lucia’s CBI program, 38 foreign investors received their passports. The main difference between the Saint Lucia program and its competitors is the variety of investment options:
- A non-refundable $100,000 contribution to the state fund;
- Buying real estate worth at least $300,000.
- Acquisition of government bonds worth at least $500,000.
- Investing at least $3.5 million in a local business project.
Note, however, that the option of acquiring citizenship through the purchase of government bonds is not working yet, and real estate objects are yet to be approved.
Whether to choose a EU or Caribbean citizenship, depends on the objectives of the investor, as well as the amount of funds that they are willing to spend. If job and permanent residence opportunities in Europe are the main goals, Cyprus or Malta’s CBI programs are worth considering, with the Cypriot route being less time-consuming but a more costly one. For those looking to obtain a second citizenship in the shortest possible time and at a relatively low cost, a Caribbean CBI program will do. Investors interested in obtaining the E-2 business visa to the US or establishing a business partnership with China should look at the citizenship of Grenada. Malta’s passport grants its holder the right of visa-free travel to the US.