The concept of obtaining a second citizenship or residency has become increasingly popular, and many wealthy individuals are looking at alternative residency and citizenship solutions. As our society becomes more global and integrated, the value of dual citizenship and a second passport is increasingly becoming a necessity, which has led to a rapid growth in the investment migration industry.
A number of reasons have been suggested for the increase in demand for dual citizenship, with some of the more prominent reasons being visa-free travel, the ability to travel without completing lengthy paperwork processes involved in obtaining a visa, opportunities to purchase a second home, the various business opportunities across the globe that are more attainable to individuals in possession of dual citizenship. More importantly is the fact that it provides families a certain degree of guarantee for the future, as obtaining second citizenship is something which may be passed on to children and help secure their economic well-being for years to come. Having a second citizenship may also provide families with a safe haven in the event of political instability in their home country.
In light of this, the number of citizenship and residency programs being introduced worldwide are on the rise. Countries are starting to compete on the attractiveness of their programs and are giving due consideration to factors such as quality of life, visa-free access, compliance of their programs, investment, residency requirements, relocation flexibility, total costs, time to acquire residency/citizenship and tax incentives.
The requirements imposed under the various investment programs are vastly different. Let’s compare the requirements imposed under the Maltese, Cypriot and Austrian programs.
MALTA HAS SET THE STANDARD FOR MANY
Malta’s Individual Investor Programme (IIP) was launched by the government in 2014 to attract foreign investment into the Maltese economy. Individuals who invest in Malta will, after taking up residence on the island for one year, be entitled to be naturalized as Maltese citizens. The Maltese program targets high net worth individuals as well as families worldwide. It is widely considered to be one of the best designed and most exclusive citizenship-by-investment programs.
The Maltese program allows visa-free access to 167 countries, requires a minimum residency of a year, boasts one of the most thorough due-diligence checks and takes roughly one year for individuals to acquire citizenship. Applicants need to contribute 650,000 euros to the National Development and Social fund and need to purchase a property of at least 350,000 euros or, alternatively, lease a property with a value of 16,000 euros per year.
Malta’s compliance and due-diligence standards are quite stringent and considered to be one of the most thorough and highly ranked in the citizenship-by-investment industry. Other positive factors include transparency, relocation flexibility and residency requirements.
Malta has set the standard and is likely to play a key role in working with other countries to help adopt a similar approach in terms of compliance and due-diligence criteria that need to be met.
The prime minister of Malta, Joseph Muscat, has also publicly stated that IIP will be renewed as soon as the quota of applications is met.
CYPRUS OFFERS THE FASTEST CITIZENSHIP PROGRAM
The Cypriot program offers visa-free travel to 158 countries as well as the right to work, live and invest in property within the European Union. The due diligence and processing time from the date of submission of the application is usually around three to six months, which makes it the fastest program within the E.U. to obtain citizenship.
In order to obtain citizenship, applicants need to satisfy one of the following four options:
- Invest in real estate and land development. This seems to be the more popular option and requires the applicant to invest at least 2 million euros in real estate.
- Purchase, establish or participate in Cypriot companies or businesses. Applicants are required to commit 2 million euros to the purchase, creation or participation of a company, which is based in and operating in Cyprus. The company in question should employ at least five Cypriots or citizens of other E.U. member states.
- Invest in alternative investment funds (AIF) or financial assets of Cypriot companies, licensed by the Securities and Exchange Commission. Applicant is required to purchase 2 million euros from an AIF established in Cyprus and whose investments are made exclusively in Cyprus.
- Combination of investments. The applicant may proceed with a combination of any one of the above options, provided that the total investment amounts to at least 2 million euros.
Unlike the requirements imposed under the Maltese program, there are no requirements for an applicant to actually reside in Cyprus. There is a requirement for the applicant to purchase a residential property. However, if applicants have opted for option 1 (an investment in real estate), they will not be required to invest in an additional property. Other than a permanent residence, which must be maintained for life, the main applicant must hold the investments under the citizenship by investment program for a period of three years after the citizenship has been granted.
UK INVESTMENT VISA PRESENTS THE MOST EXPENSIVE AND LENGTHY OPTION
The UK residency by investment program is a relatively complex one that provides an Investor Visa to high net worth individuals, following which the recipients are eligible to apply for permanent residency status after a defined period of time has elapsed. The minimum level of capital investment required is 2,286,510 euros, which may be invested in the form of UK government bonds, share capital or loan capital in active and trading UK-registered companies other than those principally engaged in property investment. This investment entitles the main applicant and immediate family members the right to remain in the UK for three years and four months with the possibility of a further extension of two years, when an indefinite leave to remain, or permanent residency, can be acquired. This route can be fast-tracked if higher levels of investment are secured with an Initial Investment of 5.7 million euros when you become eligible for indefinite leave to remain after 3 years; or if an Initial Investment of 11,4 million euros are made and then you become eligible for an indefinite leave to remain after 2 years.
Apart from the higher cost involved, and the relatively lengthy interim period imposed before permanent residency status can be acquired, the UK residency option also differs from the Cypriot and Maltese programs in particular in terms of the stringent residency requirements imposed on applicants. The UK system in fact requires that applicants will spend no more than 180 days per year outside the UK in order to qualify for permanent residency status. This does perhaps make this program a sensible solution for applicants who intend to relocate, more or less permanently, to the UK, but less so for investors who may have business interests or family commitments in other jurisdictions that may make this arrangement less feasible. These restrictions increase significantly should the main applicant consider applying for British citizenship after five years of residency in the UK, since this will require that the individual will have spent no more than 450 days out of the UK during those five years, and no more than 90 days during the final twelve months.
AUSTRIA IS RANKED AS LEAST TRANSPARENT PROGRAM
Austria is considered to be one of the more stable countries in the E.U. and boasts a high standard of living. The process of approval leading to the acquisition of citizenship requires government approval at various levels, including even the cabinet level.
In order to obtain citizenship, an applicant is required to substantially invest in the economy. The investment needs to be a direct form of investment, which means that a passive investment in government bonds would not work. The application process differs vastly from one applicant to another and it is ranked as being the least transparent citizenship by investment program. Although one may assume that the investments costs and fees attributed to this program are high, and that these vary on a case-by-case basis, there is no clear indication of the costs involved unless specific advice is sought. Also, the amount of time taken for an application to be processed is significantly longer especially when compared to other European programs such as Malta and Cyprus. Although this program lacks transparency on the process of obtaining citizenship, it scores very high for visa-free access and relocation flexibility. Austria boasts access to 173 countries.
The below table illustrates the salient features of each program.
Taking all things into consideration, it is easy to understand why the Maltese program has been rated as among the world’s most advanced and exclusive programs. Although the compliance and due-diligence process is considered to be the strictest, the complete transparency of the program, together with the relatively short time required to obtain citizenship, makes it hard for other countries to compete.