In the age of broadband Internet and available information, concepts that are close in meaning are often have some extra content and as a result it is easy to make a mistake. Unfortunately, even experienced wealthy people who have decided to immigrate to another country as an investor can mix them up.
So, what is the difference between economic immigration and economic citizenship? Does economic citizenship mean the same as citizenship obtained by investment in the economy? What are the countries that carry out state programs whereby a foreign investor can obtain a passport, and where is the privileged status of an investor written in immigration law? How is the investment process carried out and where are the funds usually invested?
Vasily Kluev, Accounts Manager and Immigration Adviser at Imperial & Legal, is going to answer the questions about economic immigration in this article. But before that let’s decide on general terms.
Using the exclusion method, economic citizenship can be defined as the citizenship that has been obtained:
The process of obtaining a passport of another state in exchange for investment can be called economic citizenship or citizenship by investment. There is no difference between these terms. Also, there is no difference in the rights and obligations of a citizen and all other citizens of the country.
Economic or, as it is also called, investment immigration is a broader term which means that you can obtain not only a citizenship but also a residence by investment of a foreign state in exchange for investment. In some European jurisdictions, it will take up to 10 years before you receive a passport but due to investment you will get a residence by investment which gives you the right to visa-free life, work and travel within the Schengen area.
A residence by investment, unlike a passport, must be renewed periodically. If you didn’t plan to live abroad initially, but you need the opportunity to come to Europe without visa, programs which provide residence by investment are more preferable, because it is not necessary to spend much money to participate in it. For example, to obtain a Latvia Golden Visa, it will be enough to have €250,000, which can be spent on the purchase of a cozy flat in the center of Riga. In Malta, investors can apply for both residence by investment and citizenship by investment. You can learn more about obtaining a residence by investment in Europe and other countries from our article here.
In general, the investment immigration process is initiated by the government of the country and is implemented through a special state program that provides various benefits to foreigners who are ready to invest in economic development. For example, there is no need to learn a foreign language or study culture. In the UK, the high-end Tier 1 Investor category also has a lot of advantages, but all of them are not the result of any special program. They are provided for by the law regulating immigration to the British Isles.
As a rule, the future holder of a second passport has already a clear goal about the reason of obtaining a citizenship of another country. And the task of specialists in the field of immigration is to choose a program for the client’s requests, taking into account all their individual requirements. In general, the process can be divided into the following 5 stages.
Both in Europe and the Caribbean, an investor has the right to include their family in their passport application: spouse, minor children, and in some cases, financially dependent adult children and parents. The specific conditions may differ depending on the jurisdiction, but almost everywhere the applicant will have to pay additional government fees for their household members.
There are several investment ways to obtain a second passport. We will not consider all the advantages and disadvantages of the investment programs of the Old and New Worlds in this article, but we will certainly analyse the available investment ways.
Today, purchase of a property is one of the most popular investment ways for obtaining citizenship by investment. The main advantage is that land, houses, flats, a share in a residential building under construction or resort, in contrast to shares, are quite tangible and growing in value. In a few years, you will be able to sell your property and even earn money.
The main disadvantage is the cost of ownership of the property because of taxes, utility bills and service charge.
The applicant buys a property as a standalone investment or as part of a combined investment when several options are used. For example, in the Republic of Malta, just buying an apartment worth €700,000 will not be enough. To obtain a European passport of this country, you need to make a gratuitous donation to the state fund and donate money to a charitable foundation registered in Malta. The laws of the country allow renting a Maltese property instead of buying it. In this case, the minimum rental price must be at least €16,000 per year. In Malta, the mandatory holding period is at least 5 years after which you can sell your property and get your money back.
In Cyprus, before the scheme was suspended, a future citizen was free to invest, but they had to buy their own residential property on the island for at least €500,000. So, if the applicant invested in residential properties, at least €2,000,000 was required, and if the investment was sent to purchase a non-residential property, in addition to the obligatory €2,000,000 for its purchase, additional residential property was purchased for an amount of at €500,000. The program for obtaining economic citizenship on the island of Cyprus has been suspended by decision of the government on November 1, 2020.
You can find more attractive conditions for foreign investors that are provided on various Caribbean islands that were formerly British colonies. The table shows the amount of real estate investment required to obtain a Caribbean passport. Pay attention that investments are made only in state-approved projects from authorised developers.
On account of the development of tourism, property prices are growing rapidly. The numbers shown in the table may not be enough to purchase a separate property in a project approved by the authorities, therefore foreigners invest in shares in hotels and resorts under construction. The management company assumes responsibility for the maintenance of your purchase, and you receive a small income regularly from its commercial use and benefits when checking into the hotel, if you decide to visit your second home yourself.
The main advantages:
The main disadvantage: unlike investments in a business or a property, money transferred to the state development fund will not be returned back in a few years.
Investment in government development programs is the most relevant way to invest in the Caribbean countries to obtain economic citizenship. The amount of capital investment varies depending on the jurisdiction, the specific fund and the number of people in the application.
Note: The table does not specify the cost of the due diligence fee and the administration fee.
To obtain economic citizenship in Europe, you will also need to donate to government funds. But unfortunately, there, it is only a part of the combined investments under the investment immigration program.
The third most common method of investment in citizenship is used mainly in combination with other investments in Europe.
– In the Republic of Malta, donations to charities of at least €10,000 are a mandatory requirement for obtaining a passport, along with the purchase or rent of real estate and a donation to a government fund.
– In Cyprus, you could invest from €2,000,000 in investment funds or shares of Cypriot companies, but in addition there was an obligation to purchase a residential property worth at least €500,000.
Investments in government bonds, unlike shares and stakes, as a rule, do not have high profitability. Nevertheless, they are often chosen as a reliable way to save your money. The mandatory period of holding assets is 5 years for obtaining citizenship by investment in the jurisdictions given as an example.
The term “economic immigration” means both obtaining citizenship and obtaining a residence permit in exchange for investment. Both economic citizenship and investment citizenship are equal.
You can obtain a second passport after investments in the economy both in Europe and in the Caribbean. Caribbean economic immigration programs are more accessible, and the passport for business and travel opportunities is only slightly inferior to a similar document in the EU.
If you are not afraid of the size of investments in Cyprus and Malta, then by investing in the island economy, you will get a valid European passport with all its benefits.
The most popular investment method is to purchase real estate. The second place is occupied by contributions to government funds, especially relevant in the Caribbean. The third method of our investment scale is the purchase of government bonds and company shares.
Whichever country you decide to invest in, you’d better seek professional legal support, which can be provided by experienced advisers from Imperial & Legal. Our experts will advise you on all issues and select an individual solution for obtaining economic citizenship, taking into account your requirements, budget, marital status and other aspects.
Unfortunately, after the suspension of the Cyprus citizenship by investment programme for an indefinite period of time, Malta remains the only EU country where foreign investors can get citizenship within a relatively short timeframe. It is worth mentioning that even there some amendments have been made to the conditions of acquiring citizenship by investment.
Currently, the citizenship by investment programme of Montenegro is gaining popularity among savvy investors from Eastern Europe. Montenegro is a small country on the Adriatic Sea coast, a former Yugoslavian republic that is now taking steps towards becoming an EU member. Euro is already used as the official currency and citizens of Montenegro enjoy visa-free travel in the Schengen zone.
The amount of investment necessary to get citizenship of Montenegro starts from 372,000 EUR per applicant (all additional fees are included). If you want to find out more about this immigration programme, read the information on our website or book a consultation with our specialists.
Even the previous rules that used to be less strict requiredan investor to stay in Malta for at least a year as a resident before getting an EU passport. Non-EU citizens still have an opportunity to obtain a Maltese passport by investing in the economy of the country. However, now it is not considered to be a special governmental programme, rather a right enshrined in the new immigration legislature as a facilitated way of acquiring citizenship due to a valuable contribution to economic development of Malta.
An applicant may apply for naturalisation a year or 3 years after getting a permanent residence permit. If you apply 3 years later, the cost of the program will be significantly lower. Regardless of how fast you want to get your Maltese passport, the amount of money required to be invested in real estate have doubled from 350,000 EUR to 700,000 EUR according to the new rules. You are also required to contribute 10,000 EUR to a charity organisation operating in Malta. Good news is that according to the new rules you will not have to invest in governmental bonds and shares of companies established in Malta.
We obviously can see a number of changes caused by Brexit. For instance, the EU citizens are no longer a privileged group of applicants and have to go through the same visa application and naturalisation processes as investors from non-EU countries. The only exception is residents of the Republic of Ireland.
However, there is still no governmental programme that would allow a generous investor to obtain a British passport in a short period of time. Still, the British laws allow wealthy investors to get a temporary residence permit rather quickly if they are ready to invest over 2 million pounds into shares of the companies set up in the UK. If your overall investment amounts to over 10 million pounds, you will be able to apply for an indefinite leave to remain 2 years later.
Holders of British ILR hardly differ from British citizens in terms of their rights and duties, but most investors would still apply for citizenship after 5 years of living in Great Britain. Both permanent residence permit and passport are issued only to those who have a good command of English and can pass a Life in the UK test.
So, despite the fact that the UK is no longer an EU member, you can become a holder of a British passport only five years after you have made your contribution.
There are several reasons why immigration advisors advocate for the former British colonies that are now small island states.
There are multiple other reasons to take part in the Caribbean citizenship by investment programmes. If you plan to invest in a Caribbean economy, you might want to speak to our immigration advisors first.
We will work with you to find a customised solution for your immigration, second citizenship, business, tax and other needs.
European passport
Caribbean passport
St Kitts & Nevis Citizenship
Dominica Citizenship
Antigua & Barbuda Citizenship
Citizenship by Investment