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– 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.

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

passport and citizenship of an EU 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 18-28) 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

• High demands/requirements

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).

Cyprus

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• Criteria not too

demanding• Freedom of movement

in Schengen Area for 90 days every half year

• No citizenship, therefore no EU passport• Corruption• Crime

Portugal

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• Commonwealth

citizenship• No minimum stay in the

country necessary• Fast track process 3-4

months • Passport after 12 months• Visa free travel to over 180

countries• Lenient

• Low standards of scrutiny• Heavily criticized from EU

for setting low requirements

Malta

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 DisadvantagesUK Tier 1 Entrepreneur Visa• Set up or take over the running of 1

business or more• Work for your business, including being

self-employed

UK Tier 1 Investor Visa• Work and/or study in the UK• International business centre• You can apply to settle • after 2 years if £10 million is invested• after 3 years if £5 million is invested

UK Tier 1 Entrepreneur Visa• Cannot work outside your business, e.g.

work where you’re employed by another business

• Not granted public funds• Not granted citizenship

UK Tier 1 Investor Visa• Cannot Invest in companies mainly

engaged in property investment, property management or property development

• Cannot work as a professional sportsperson or sports coach; and doctor or dentist in training

• Not granted public funds• Not granted citizenship

United Kingdom

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• Dual citizenship• Favorable taxes• Language competence not

required• Government support for

priority investment projects• Competitively priced

healthcare and education• Relinquishment of current

nationality not required

• Leniency might affect quality of accepted applications

• Less developed country

Bulgaria

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 Disadvantages• Visa free entry to

over 80 countries• Tax status• Exempted from 3

year residence requirements

• Ineligibility for those with major health problems or diseases

Thailand

• Investor Citizenship Program terminated in 2002

Belize

Advantages Disadvantages• 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 non-governmental organizations)

• Heavily criticized • Crime and corruption FAILED

Belize

There are various advantages and disadvantages associated with the different citizenship and visa schemes of the countries examined.

Summary

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

• Transparent and trustworthy– One of the few countries to have passed the Henley & Partners country due diligence (the global leader in citizenship planning and

citizenship programs)

• High quality of life– 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 – 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 – Schengen Area and various other countries

• Advantageous tax regime– 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– Low operational costs compared to other EU jurisdictions

• English– Widely used in businesses– Legal system based upon English Common Law

• Strategic geographic location– East meets west– Excellent air and sea connections and telecommunications

Why choose Cyprus?