"Comparison of Citizenship" by Investment Schemes by Christos

Report
Comparison of Citizenship by
Investment Schemes
Christos Vezouvios
Table of contents
• What are citizenship schemes?
• Incentives to apply for a citizenship scheme
• Common provisions
• Countries to be examined
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–
–
–
–
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Cyprus
Portugal
Malta
United Kingdom
Bulgaria
Thailand
Belize
• Why choose Cyprus?
What are citizenship schemes?
Citizenship
• Refers to the status of an individual (the citizen) that is recognized under the law of
the state concerned.
• It allows the citizen to exercise the rights and privileges of citizenship (eg to vote or
to enjoy social benefits); and obliges the citizen to adhere to and carry out particular
duties (eg military service).
Naturalization
• Refers to the legal process by which a non-citizen acquires the citizenship of
another country
Citizenship schemes
• There are a variety of reasons why particular individuals would want to obtain a
citizenship of another country;
• Similarly, many countries would like to attract particular individuals (especially
high net worth individuals)
• This has led to countries, such as Cyprus, Malta, Thailand, Bulgaria and Portugal to
come up with citizenship by investment schemes
Incentives to apply for a citizenship
scheme
• Personal factors
– Family reunification
– Medical and educational reasons
– Higher quality of life
– Lower crime levels
• Financial factors
– Tax planning benefits
– Opportunities for business expansion
– New markets or exploration of new business ventures
• Opportunities for movement
– Unrestricted movement or reduced visa formalities in
various countries
Alternatives to citizenship schemes
Resident visa
• Allows individuals the privilege of residing within a country
of which the person is not a citizen
Permanent resident visa
• Allows the privilege of residing indefinitely within a country
of which the person is not a citizen
 Both offer only limited rights compared to citizenship schemes
Common provisions for the application of
citizenship schemes
The provisions for citizenship schemes are different in each country,
however they usually entail:
Conditions such as:
• Residency in the country for a certain number of years
• Language proficiency of the host country
• Clean criminal record
• Economic criteria such as:
– Investment in government activities of the country;
– Investment in financial assets of companies or organizations of the
country; or
– Investment in real estate.
Cyprus
The Scheme for Naturalization of Investors in Cyprus by
Exception
• 2011: Cyprus introduces a fast-track option allowing qualifying
individuals to obtain Cypriot citizenship by naturalization
• 19 March 2014: Council of Ministers introduces the revised
Scheme for Naturalization of Investors in Cyprus by Exception
Cyprus
Criteria :
• Investments of at least €5 million in the following:
• Acquisition of state bonds; or
• Acquisition of financial assets; or
• Acquisition of real estate, land development and infrastructure projects; or
• Acquisition or creation or participation in Cypriot businesses or companies; or
• Deposits in Cyprus banks; or
• Combination of the aforementioned amounting to at least €5 million
• Losses incurred due to the impairment of deposits following the measures implemented in
Laiki Bank and Bank of Cyprus after March 15, 2013
• The applicant must have suffered impairment on his deposit amounting to a total of at
least 3 million Euros.
• In the scenario where the applicant has suffered an impairment less than € 3 million
Euros he can still file an application if he invests further through other types of
investments to reach the amount of € 3 million.
•
•
•
•
Maintain investment for 3 years
At least 30 years of age
Clean criminal record
Residency in Cyprus
Cyprus
•
•
•
•
•
•
•
•
•
Advantages
Disadvantages
Enables non-EEA citizens to obtain a
• High
passport and citizenship of an EU
demands/requirements
member state
Physical presence in Cyprus is not
required for approval of the application
Spouse of applicant and children under
the age of 18 (and subject to additional
terms children between the age of 1828) may also obtain the citizenship
Visa free travel to over 180 countries
‘Fast track’ process
Passport within 3-4 months
Efficient taxation system
Good infrastructure
Language competence not required
Cyprus
Alternative Immigration Permit
Criteria
• Deposit a minimum of €30,000 in a Cyprus bank;
• Acquire a property costing a minimum of €300,000 (plus VAT)
in Cyprus;
• Annual income of at least €30,000 (additional €5,000 for every
dependent person).
Portugal
Golden Resident Permit Program
• Permit is originally issued for one year and then renewed for
successive periods of two years, as long as requirements of the
investment activities and minimum duration of stay are
maintained
• Differs from citizenship programs
• Major disadvantage as you still have to invest but do not gain any
advantages of actual citizenship – particularly EU passport
Portugal
Criteria:
• Acquisition of real estate with value of minimum €500,000; or
• Transfer of capital worth minimum €1,000,000 to any type of
Portuguese company; or
• Creation of at least 10 permanent jobs
• Residency in Portugal (consecutively or non consecutively)
– 7 days during the first year
– 14 days in the following two years
Portugal
Advantages
Disadvantages
• Short residency period • No citizenship,
• Criteria not too
therefore no EU
demanding
passport
• Freedom of movement • Corruption
in Schengen Area for
• Crime
90 days every half
year
Malta
Malta Individual Investor Program (MIIP)
Criteria:
• Contribution of €650,000 to the National Development
Fund; or
• Purchase and ownership of property valued €350,000+;
or
• Rent a property with a minimum annual rent of €16,000
per year for at least 5 years;
• No criminal record;
• Residency in the country for a minimum of year;
• Global health insurance policy
Malta
Advantages
Disadvantages
• EU citizenship
• Low standards of scrutiny
• Commonwealth citizenship • Heavily criticized from EU
• No minimum stay in the
for setting low
country necessary
requirements
• Fast track process 3-4
months
• Passport after 12 months
• Visa free travel to over 180
countries
• Lenient
United Kingdom
Criteria:
 UK Tier 1 Entrepreneur Visa
• Minimum of £50,000 invested in a regulated financial institution
in the UK;
• English language competency required;
• Minimum age of 16 years old
 UK Tier 1 Investor Visa
• Investments:
• Minimum of £1,000,000 invested in a regulated financial
institution in the UK; or
• Contribution of £750,000 to the UK government; or
• Purchasing property valued (~€350,000); or
• Renting a property with a minimum annual rent of €16,000 for a
minimum of 5 years;
United Kingdom
Advantages
Disadvantages
UK Tier 1 Entrepreneur Visa
UK Tier 1 Entrepreneur Visa
• Set up or take over the running of 1
• Cannot work outside your business, e.g.
business or more
work where you’re employed by another
• Work for your business, including being
business
self-employed
• Not granted public funds
• Not granted citizenship
UK Tier 1 Investor Visa
• Work and/or study in the UK
UK Tier 1 Investor Visa
• International business centre
• Cannot Invest in companies mainly
• You can apply to settle
engaged in property investment, property
• after 2 years if £10 million is invested
management or property development
• after 3 years if £5 million is invested
• Cannot work as a professional
sportsperson or sports coach; and doctor or
dentist in training
• Not granted public funds
• Not granted citizenship
Bulgaria
Investor Program for Residence and Citizenship in Bulgaria
• Founded in 2009 to attract foreign investment and business
interest in the country
Bulgaria
Criteria:
• Investing at least €500,000 in the capital of
a Bulgarian company which is carrying out
a Priority Investment Project;
• 1 year Permanent Resident status;
• Upon receiving the citizenship, the applicant
holds the investments for a period of two
years.
Bulgaria
•
•
•
•
•
•
•
Advantages
Disadvantages
EU citizenship
• Leniency might affect
Dual citizenship
quality of accepted
Favorable taxes
applications
Language competence not
• Less developed country
required
Government support for
priority investment projects
Competitively priced
healthcare and education
Relinquishment of current
nationality not required
Thailand
Thailand Investment Visa
• 1997- Concept started as a means to help Thai
developers sell their stock of condominiums units
left over from the crisis to foreign investors
• 2006- Visa discontinued once Thai economy
picked up
• 2014- Concept reintroduced increasing the
minimum investment ceiling from 3 million Thai
baht (~€71,864) to 10 million baht (~€240,000)
Thailand
Criteria:
• Applicant must invest a minimum of:
• 10 million Thai Baht (~€240,000) into a long
term savings account with a Thai government
bank; or
• 10 million Baht (~€240,000) into government
bonds or from stated business enterprise.
• Clean criminal record
Thailand
Advantages
• Visa free entry to
over 80 countries
• Tax status
• Exempted from 3
year residence
requirements
Disadvantages
• Ineligibility for
those with major
health problems or
diseases
Belize
• Investor Citizenship Program terminated in 2002
Belize
Advantages
•
•
•
•
Low price
Visa free entry to over 80 countries
Tax benefits
Funds go to Central Bank
• 40% Ministry of Finance to
service Governments external
debt
• 30%Economic development
fund (used solely to finance
capital projects in the country)
• 30%Reconstruction and
Development Corporation
(used to provide low interest
financing to entrepreneurs in
Agriculture, Tourism,
Construction and other sectors
such as religious, charitable,
benevolent and nongovernmental organizations)
Disadvantages
• Heavily criticized
• Crime and corruption
FAILED
Summary
There are various advantages and disadvantages associated with the different citizenship and visa
schemes of the countries examined.
Country
Leniency /
flexibility
Efficiency in
handling
application
Required quality
of applicants
Cyprus
Low
High
High
Malta
High
Low
High
Portugal
High
Low
High
Bulgaria
High
Low
Low
Thailand
High
Low
Low
United Kingdom
Low
High
High
Why choose Cyprus?
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Transparent and trustworthy
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High quality of life
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Low operational costs compared to other EU jurisdictions
English
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Standard uniform corporate tax rate of 10% which is the lowest in Europe
EU and OECD compliant tax system
Investor friendly tax authorities
Good infrastructure
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Schengen Area and various other countries
Advantageous tax regime
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EU citizenship for all the members of the family of the applicant (spouse, children under the age of 18 and children between 18 -28
provided that they are full time students in a recognized academic institution)
Therefore right to live, work and study in any other EU country with privileges of a citizen
Multiple nationalities (passports) allowed under Cypriot Law
Freedom of movement
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•
Prominently featured in surveys and research on the list of countries that are best to operate, live, work or retire in
Access to EU member state status
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One of the few countries to have passed the Henley & Partners country due diligence (the global leader in citizenship planning and
citizenship programs)
Widely used in businesses
Legal system based upon English Common Law
Strategic geographic location
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East meets west
Excellent air and sea connections and telecommunications

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