Nationality by Investment

Countries who sell their passports are often frowned upon but the reality is that all countries try to encourage immigration by the wealthy by granting residency which leads to nationality, or nationality itself, in return for investment – it is just the price and timescale that differs. Many of you will recall the rush by Hong Kong persons to obtain the insurance of a right to abode elsewhere in the lead up to 1997. Canada and Australia were the favoured jurisdictions as they had relatively clear rules and a relatively modest level of investment required in order to grant foreign nationals a residency. And those new residents had to wait only a relatively short time before becoming eligible for, and normally being granted, citizenship. Many of those taking out these residencies did not necessarily want to emigrate but did want to know that they could do so if things didn’t work out for them in Hong Kong after 1997. In the end things turned out swimmingly and lovely and many of those who moved abroad came back or shelved any plans they might have had to move away. There are still many countries where the future is uncertain either politically or economically and this encourages their citizens to either emigrate or take out an alternative residency or citizenship as an insurance policy in case things get worse. There are many from the more troubled areas of the world who fear for the future and may more who have money to invest and choose to do so in countries which will give them some kind of formal status in return.

If you are considering a second residency or passport then there are factors worthy of consideration:1. How much do you need to invest to get residency (if anything) 2. How long does it take before you are eligible for citizenship? 3. Do you have to remain in the new country for a certain minimum number of days in order to be eligible for citizenship?4. Does your new country allow you to maintain your old citizenship or prohibit dual citizenship?5. Does your old country allow you to keep your existing passport or does it prohibit dual citizenship?6. Does the passport issued by your new country give you easy travel i.e. does it have arrangements with lots of other countries for visa free entry?7. Are there any requirements for national service (joining the army)?8. What are the costs of living including the tax rates and tax incidence?

Imagine being offered immediate citizenship by Rumbabwe only to find that they do not allow you to keep your old passport, their citizens are unwelcome everywhere else in the world so you need a visa to go anywhere and visas are not necessarily readily available because Rumbabwe freely offer citizenship to other nationalities, that you immediately have to sign up for the army and they are currently engaging war with Freestate and their taxes are 95% on worldwide income and capital gains with no planning opportunities to avoid those taxes.

One of the more interesting possibilities for immediate, well the process takes about 3 months, citizenship is currently available from St. Kitts and Nevis. They have run a successful “nationality by investment” programme since 1984 which allows citizens of other countries to become passport holders in St. Kitts and Nevis in return for a one off investment of US$350,000 in a qualifying property. Applicants must continue to own the property for 5 years or risk losing citizenship. After that they are free to sell the property if they wish. And there is no difficulty in financing the purchase so applicants need only put up about US$200,000 in cash with the rest of the purchase price being borrowed from a bank. There are conditions attached but they are not unattractive. One property developer even offers a scheme whereby applicants can buy a share in a company which owns property for US$400,000 and the developer will buy back those shares for the same US$400,000 after 5 years. This scheme qualifies the purchaser for citizenship. In all cases expect government and other fees of about US$100,000.

St. Kitts and Nevis allows dual nationality and is an UK commonwealth country which many think makes the place rather credible. Their passport gives visa free access to around 190 countries and allows visa free travel within Europe as it has signed agreements with the Schengen countries which is all of Europe apart from the UK. The UK allows visa free access for all Commonwealth citizens. This seems pretty attractive.

The only equivalent programme that we can find is the Economic Citizenship programme run by the Commonwealth of Dominica (do not confuse this with the neighboring Republic of Dominica) where they will offer immediate citizenship in return for an investment in government bonds of US$75,000. Unfortunately the visa free access is much more limited. This programme that has been running quite successfully for quite some time but has recently fallen out of favour as St. Kitts has gained favour.

No other countries seem to legitimately offer the same immediate citizenship program. From time to time I have been approached by others purporting to represent countries which are now offering economic citizenships but the first question to them is to show us the clause in the nationality law which allows citizenship by registration in return for investment. Frequently the laws do not allow it so the scheme seems to rely upon something rather more sinister and should be avoided at all costs.

Other countries offer a swift route to residency in return for a relatively modest investment which in time will lead to citizenship. Canada continues to attract new immigrants under its investment program which requires US$800,000 in investment. This can be financed so the cash contribution is only US$200,000. Citizenship should follow within five years.

Bulgaria has recently announced an interesting program. Bulgaria is full member of the European Union and will grant residency in return for an investment on BGN 1,000,000 which is about US$500,000. Once residency has been granted it is relatively easy to travel freely within Europe. Citizenship should follow 2 years after residency and once granted the EU principle of free movement of labour and right of establishment should allow the new immigrant to live and work anywhere within the European Union without further authorization. This could be very attractive and has attracted many non-EU immigrants. The US, of course, still has many different ways to enter. Each year, 50,000 immigrant visas are made available through a lottery to people who come from countries with low rates of immigration to the United States. None of these visas are available for people who come from countries that have sent more than 50,000 immigrants to the United States in the past five years. Anyone who is selected under this lottery will be given the opportunity to apply for permanent residence (a Green Card). If permanent residence is granted, then the individual will be authorized to live and work permanently in the United States. Successful applicants are allowed to bring their spouse and any unmarried children under the age of 21 with them. The number of places are awarded according to quotas for each country but they treat it as a form of foreign aid so award different countries different quotas depending on their close connection with the US and then the perceived need to help their citizens. One of the biggest recipients is the Philippines so if you are a Philippine citizen you have the biggest chance of winning a green card if you enter the lottery. It is free to enter although many offer to assist with the entry process for substantial fees.