Business News
Invest in your future: The rise of citizenship and residency by investment
Mar
A global crisis has a way of putting things into perspective, while obliterating the status quo.
Before Covid-19, for some people having good connections and money to burn could buy them the right to live pretty much anywhere.
Then the pandemic happened and for the first time in modern history, nations around the world began restricting entry exclusively to their own citizens and residents. Travellers who consistently enjoyed unrestricted mobility now find themselves locked out of countries they had previously entered at will — all because of their limited citizenship.
This global phenomenon has generated intense interest in Citizenship and Residency by Investment (CBI and RBI) programmes, which greatly expand travel opportunities.
Covid-19: An eye-opener
“The unprecedented trend of bans and suspension of temporary visas and work permits by several countries during the pandemic has exposed the vulnerability of such statuses of residency,” explains Deepanshu Choudhry, Legal Manager, Step Global.
“It has stressed the importance of acquiring proper residency or citizenship in the country where you want to reside as a permanent citizen, so you can enjoy certain exclusive rights and remove uncertainty.”
As an industry, CBI began in 1984 in the Caribbean islands of St. Kitts and Nevis, which offered a passport to foreigners who invested substantially in their economy.
Today, a long list of countries trade citizenship or residency for cash. According to a top industry expert, Henley & Partners, it’s now a global industry worth $25 billion (Dh91.8 billion) a year.
There are some country differences in terms of CBI programme requirements, but common to all are a minimum investment in one of the government-approved options — usually real estate — the purchase of government bonds or a donation to a national economic fund, and the ability to show the legal source of the investment money.
There are numerous benefits to being the owner of the second passport, including freedom of movement, tax reduction, visa-free access to coveted foreign markets, and a better quality of life. Right now, there are other more pressing motivations. Rich people are seeking the assurance of mobility in a world where the health crisis, tense international politics, and climate change are all making people nervous.
Property for sale
For many people, investing in property is the best route. “Purchasing citizenship through real estate remains an excellent source of value for those looking to invest in something tangible that also has growth potential,” says Mahdi Mohammed, CEO of Guide Consultants.
He says that the current economic citizenship market is exploding throughout the Caribbean, where properties are being snapped up by risk-averse yet savvy investors. “In Dominica, which has one of the fastest growing regional CBI programmes, the funds generated have dramatically transformed the country’s housing market,” he adds.
With nearly 30 years in the industry, Bayat Legal Services always has its finger on the pulse of immigration trends. Managing Director, Pej Mohyeddin, is in regular contact with many of the Caribbean programme managers, who confirm business during the pandemic is far from down.
“The numbers have been consistent to pre-pandemic, so that means their ability to process and the interest of customers has not diminished,” he says.
“A lot of people are optimistic about the future and they believe having second passports is definitely going to be a plus in their lives, whether for business, personal or family.”
When it comes to CBI programmes in the EU, Mohyeddin says the market is also buoyant. “Programmes in the EU are doing very well because people realise they need to have access, and a Schengen residency opens the door tremendously because travel restrictions are quite harsh for non-EU citizens during pandemic lockdowns,” he explains. “Therefore, many people are applying for programmes in Portugal, Spain, and Greece to be a resident of Schengen, so in the future they will be able to move more easily when required.”
When it comes to the best way for ensuring you choose the right immigration or second citizenship pathway, Tony Ebraheem, Founder of 111 Immigration, says no two cases are the same.
“However, balancing three things will guide you to select the best programme,” he advises. “How fast you want it, what benefits you are looking for, and how much it will cost.” â–
The first point to check is if the company is properly registered. For example, for a Canada application, they must be registered with the Immigration Consultants of Canada Regulatory Council (ICCRC), the national regulatory body that oversees Canadian immigration professionals. Many consultants in the UAE work in partnership with other external consultants, so they are not directly liable and responsible for a client who pays them. Carefully read the retainer agreement before you pay any fees.
Do they offer good support services?
“Find out if they take escrow account-accepted payments, offer flexible payment terms as well as refunds in case something doesn’t happen as planned,” advises Karun Luthra, Migration Consultant, Vazir Group. “Also, look for personalised support services like a dedicated customer manager, free IELTS tests and training, real estate solutions, guidance in choosing schools for kids and so on.”
Check if they are reputed
It’s a good idea to see if the consultancy is endorsed by any major companies or government authorities, embassies and consulates. Ask around, look online, if the company has a great reputation — you should find plenty of evidence to support it.
They should be well established
Go for a consultant that has been in business for a long time as they will have a high level of experience in processing different types of cases and profiles. This will increase your chances of a successful application.
Find out if they are following industry norms
“In order to avoid scams or any type of fraud and misrepresentation by dubious agents, ensure that the consultants and lawyers follow the standard immigration procedure to the best of their ability as per the established industry standards,” says Deepanshu Choudhry, Legal Manager, Step Global.
Avoid legal trouble while investing in a second passport
In conversation with Dr Sadir Al Kherdaji, Managing Director, Al Kherdaji International Legal Consultants
What are common legal hurdles an investor may face while applying for a citizenship or residency by investment programme?
The applicant must check the legalities of acquiring dual citizenship in the laws and constitution of their home country. Many countries, especially in Asia, prohibit dual citizenship and travelling with multiple passports. Applications for a second passport in such cases come under many challenges.
Another common difficulty could be related to arranging for all due diligence and background check details for application, which can sometimes be simply unobtainable. For example, getting a police clearance certificate from an applicant’s country of birth can sometimes be really hard, especially if the applicant has never lived in that country or obtained its citizenship.
Citizenship is the relationship between an individual and a sovereign state, defined by the laws of that state, along with corresponding duties and rights.
What can be done to limit an investor’s tax risks while opting for a programme?
In general, tax regimes are residence-based or territorial. Therefore, a careful prior study should be made about the tax laws in the place of residence of the applicant and the tax laws of their country of origin, while considering the tax laws in force in the country in which they intend to naturalise. This is to ensure compliance with the laws of the country of naturalisation without prejudice to the necessity to have a creative tax structuring.
After acquiring the citizenship, what legal matters should an investor be aware of?
Citizenship is the relationship between an individual and a sovereign state, defined by the laws of that state, along with corresponding duties and rights. Therefore, the naturalised person should save no effort to be aware of their new duties and rights under the law in force in the country in which they have obtained citizenship. This includes, but not limited to, the basic laws related to civil and financial affairs, such as serving the mandatory national service.
— GN Focus report