Why Obtain Citizenship by Investment This Year and How is It Different to Residence by Investment?

Health issues, uncertainty in conflict-torn regions, trade wars, economic instability and power struggles can make families across the world feel stranded. While it is in a country’s interest to keep its brightest people home, the reality is that many of them just want peace of mind for what tomorrow may bring. For those looking for a legal, secure and globally recognised way out of uncertainty, there is the less trodden path to becoming a citizen of the world, called Citizenship by Investment.

Why Do You Need Second Citizenship?

A survey conducted by CS Global Partners – an international legal consultancy specialing in residence and citizenship solutions – has found that 2/3 of South African nationals are researching second citizenship. This is due to the turbulent political and economic environment in the region. 45% of the participants said that they would invest at least 5% of their annual salary to gain a second citizenship, while 70% claim that they would be willing to relocate if they had one. Of those wanting to relocate, 60% cited their family’s future as a motivating factor, while 50% said that a second passport, specifically, provided a “plan B” that added security pending South Africa’s future.

CEO of CS Global Partners, Micha-Rose Emmett, commented that “in an increasingly unstable world of political and economic turmoil, people are looking for alternate citizenship as a backup plan, in case the situation changes in their home country.” She added that “the results are consistent with the conversations we typically have with clients and stakeholders across the globe. People want to know that their families – and all that they have worked hard to achieve – will be safe and secure not just today, but well into the future.”

Second citizenship can be obtained in a variety of ways, with some paths more commonly travelled than others. Traditional options include birth within a nation’s recognised territory, descent, marriage, or long-term residence. Increasingly, however, individuals and families from around the world are looking at a more time-efficient path to guarantee their physical security, financial stability or a more global lifestyle. These desires can be achieved through citizenship by investment (CBI).

What is Citizenship by Investment?

Also known as “economic citizenship”, CBI is, to some extent, an exclusive means of acquiring second citizenship of a country you may have had no connection with beforehand. It is a legal process, entrenched in legislation, whereby an applicant is awarded citizenship in return for a significant investment into a nation’s economy.

It was pioneered as a concept by the Caribbean twin-island of St Kitts and Nevis in 1984 where it is still successfully running to date, dubbed as the Platinum Standard of CBI programmes. Citizenship by investment provides a direct route to legally acquiring citizenship via an investment or contribution to the adoptive country’s socio-economic development. Importantly, especially for the Caribbean nations, citizenship can only be acquired if the investor passes the due diligence criteria set by their desired host country.

Today, there are just over a dozen jurisdictions around the world that have official government-led, legitimate programmes. At the same time, however, and in contrast to more typical ways of achieving second citizenship, it is also more open: allowing investors to apply even if they do not necessarily have a previous connection to a nation, or a deep-set understanding of its culture and history. Foreign investors, regardless of their country of origin – with some exceptions – are generally eligible to obtain second citizenship of any of the current active programmes, provided they meet all the other requirements.

Access to economic citizenship is contingent on the individual’s integrity and their ability to provide a nation with a significant monetary contribution that collectively drives economic growth. CBI programmes typically have two routes: an applicant must either make a contribution to a government fund or invest in pre-approved real estate.

In practice, this means that most CBI countries do not impose residence or travel requirements, mandatory interviews, or language requirements. Importantly, however, this does not mean that anyone can obtain citizenship – all applicants must show good moral standing and a clean criminal background.

When it comes to choosing the best CBI programme, it is important to remember that each of them is different. There is no glove that fits all and the best one will depend on the applicant’s individual needs. Nonetheless, independent researcher James McKay devised a study that ranks CBI programmes against seven factors that are perceived as most valuable to an investor when choosing their second citizenship via CBI. According to him, the aspects that one must consider first before applying for second citizenship are:

  • Freedom of Movement – how many destinations can you travel to visa-free or on a visa-on-arrival basis?
  • Standard of Living – what is the quality of life in the country that offers CBI?
  • Minimum Investment Outlay – how much do you need to invest, at least, to obtain your new citizenship?
  • Mandatory Travel or Residence – do you need to visit or live in the new host country before or after applying and, if so, for how long?
  • Citizenship Timeline – how fast can you secure your new citizenship?
  • Ease of Processing – how much effort is required of you during the application process?
  • Due Diligence – how reliable are the security checks that the new country carries out on all its applicants?

These can all be found in the CBI Index – an annual report published by Professional Wealth Management – a publication from the Financial Times. It is the only independent, comprehensive study that critically analyses and compares all active CBI programmes. The latest edition identified a total of 13 active programmes around the world. According to the CBI Index, the Commonwealth of Dominica – a small Caribbean island known for its untainted natural beauty and Global Community mindset – was awarded as the one offering the world’s best citizenship by investment programme. One of the main reasons it was ranked highest is the fact that it asks the most affordable investment on the market, while the process involved is straightforward, streamlined and reliable.

Those wishing to obtain Dominica’s citizenship must make a one-off non-refundable contribution of US$100,000 to the government’s Economic Diversification Fund (EDF), or acquire pre-approved real estate worth at least US$200,000, which is especially convenient for those also looking for a return on investment. The latter offers a choice of luxury property, including prime developments from world-class brands such as MarriottKempinski and Hilton. Other options include recently refurbished and reopened Secret Bay and Jungle Bay, as well as shares in a 1700s repurposed estate Bois Cotlette and upcoming Sanctuary Rainforest Eco Resort and Spa.

Besides attracting real estate investors, Dominica is also more suitable for single applicants who seek greater international mobility through the most affordable and efficient route possible – in this case, the fund option. Applications are also guaranteed by legislation to be processed within four months or less.

In St Kitts and Nevis, larger families tend to opt for the Sustainable Growth Fund as the most straightforward route to the country’s citizenship. A family of four, for example, can apply jointly by making a total contribution of at least US$195,000, with US$10,000 required for every additional dependant.

St Lucia is one of the newest CBI Programmes and is popular with Far East Asian applicants. Uniquely, it offers four routes for prospective economic citizens: a contribution to the National Economic Fund worth at least US$100,000; buying into pre-selected real estate with a minimum value of US$300,000; investing at least US$1m into pre-approved enterprises that create no less than three permanent jobs; or an investment into non-interest bearing government bonds.

Citizenship Is Not Residence

There is a closely related concept for international businesspersons and global families, known as residence by investment, offered by many more countries than those with citizenship by investment programmes in place. Both residence and citizenship are two legal statuses that affect your ability to live and work in a country, but the two serve different purposes and, thus, involve different procedures and requirements.

Leading tax advisors Ernst & Young and Smith &Williamson made this observation by examining St Kitts and Nevis, Dominica and St Lucia, highlighting the fact that citizenship is, in fact, unrelated to residence. Both further concluded that the CBI programmes do not facilitate tax evasion. This was later confirmed by Eminent Queen’s Counsel Balraj Bhatia.

Conversely, residence by investment refers to the process by which an individual can apply for long-term or permanent residence by making an investment into a country that offers such programme, provided they meet all the necessary requirements. It also generally asks for physical relocation and much higher investment thresholds than most CBI programmes.

On the other hand, the citizenship of a country comes with the right to live and work there, as well as travel to other nations for short periods, depending on the strength of the diplomatic relations of one’s country of citizenship. From a legal stance, “citizenship” indicates the relationship between an individual and a nation state. Normally, the individual is conferred protection by the state, in return for the fulfilment of certain obligations owed by the individual to the state. CBI programmes also have much more rigorous security checks.

CS Global Partners has found that residence programmes tend to be a better solution for those wishing to relocate in a new country or region, as is sometimes possible. It suits those who feel a strong connection to a country, particularly if that country does not offer a citizenship by investment route, or if their country of origin does not allow second citizenship.

Many countries, however, do allow it, meaning that you can hold multiple citizenships at once without having to abandon one in order to obtain another, giving you and your family the opportunity to become a citizen of the world. Therefore, you can generally apply for alternative citizenship by descent, residence, or the newer investment pathway.

Win-Win Solution

Lately, globally mobile individuals and their families have started discovering reputable Caribbean CBI programmes as affordable, reliable, efficient and most experienced second citizenship alternatives. As a result, these blossoming nations can invest back into their countries’ economic development, energy sustainability, ecotourism and furthering their already impressive diplomatic ties. All of these advancements benefit all their citizens, whether native or adoptive. Investing in them ultimately translates into investing in your own future and wellbeing.

CS Global Partners is the first legal advisory to focus on bringing benefit to the nations offering these programmes. There is no point offering citizenship by investment if the funds generated from it do not eventually benefit native citizens. St Kitts and Nevis, for example, recently announced that CBI has enabled it to sponsor initiatives worth US$22.6m solely on the island of Nevis. This covered areas like education, healthcare, sporting facilities and infrastructure.

Dominica is an eloquent example of CBI transparency and focus on impact. The government often provides updates on how it is using CBI funds for the betterment of Dominicans’ lives on the island. We are seeing how the construction of clusters of public homes all across the island are regularly announced as part of Prime Minister Roosevelt Skerrit’s Housing Revolution. It aims to build 5,000 modern, hurricane-proof homes, all fully sponsored by CBI. Dominica is also building a new geothermal plant that diversifies the island’s energy mix immensely and will provide the entire population with clean energy, with long-term potential for export. The CBI Programme has had a multi-million contribution to this. Importantly, Dominica is also reducing unemployment sustainably by creating thousands of jobs thanks to the ambitious public housing programme and the real estate options under the CBI progressing on schedule, whose construction and maintenance contribute to the island’s flourishing ecotourism thus bringing stable jobs and business opportunities to the local communities.

The big differential is, ultimately, a programme’s integrity and the impact it has on native citizens. Investors have something else to be proud of when they acquire second citizenship from a country that uses those funds to open new opportunities and improve the quality of life of their adoptive nations. Finding that win-win solution rooted in genuine due diligence is what CS Global Partners has been committed to ever since it was established, and we strongly believe that this is the right balance that the investor immigration industry should be guided by.

CS Global Partners is an international, award-winning, industry-leading, legal consultancy firm specialising in citizenship and residency solutions. Headquartered in the heart of London with offices across Asia, Middle East and Africa, CS Global Partners offers tailored, strategic advice to both the clients and the countries it represents. Driving economic prosperity and transforming lives in the process, CS Global Partners transcends the traditional investment immigration industry framework, supporting the governments of Dominica and St Kitts and Nevis to promote their CBI programmes worldwide. We are also authorised marketing promoters for St Lucia in Far East Asia.

Please visit www.csglobalpartners.com for more information.

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