In this blog, I’m going to talk about a unique and compelling opportunity that is gaining traction among the affluent worldwide — Citizenship by Investment (CBI).
CBI provides a strategic way for individuals to gain a second citizenship and passport by contributing to the economy of the host country.
These programs provide a legal and efficient alternative to traditional immigration processes, enabling investors to achieve citizenship status expeditiously.
While the specific processes for CBI vary across countries, most programs implement rigorous, multi-step procedures designed to ensure that applicants are reputable and law-abiding citizens in their current countries.
Historically, the Indian investment migration market has been heavily oriented towards US citizenship.
However, there is a growing shift towards residence-by-investment programs in the UAE, Singapore, Greece, and other European nations.
This trend is particularly noteworthy for Indians, who accounted for 9.4% of all global applicants for golden passports in 2022.
But what drives this increasing interest among Indian investors?
The allure of a golden passport lies in its comprehensive benefits. From facilitating visa-free travel to unlocking significant business opportunities, CBI presents a multifaceted advantage that aligns with the aspirations of today’s global investors.
In this blog, we will explore:
- What is citizenship by investment?
- How do CBI programs work?
- Why are affluent Indians investing in overseas citizenship?
- A snapshot of popular CBI programs
- Businesses that benefit from CBI
- Things to keep in mind while applying for CBI
What is Citizenship by Investment (CBI)?
Citizenship by Investment (CBI) programs, often referred to as golden passports, provide a unique opportunity for you to obtain a second citizenship through substantial investments in the host country.
Many countries use this legal mechanism to attract investments and stimulate economic growth. These programs have become increasingly popular because of their varied benefits, such as visa-free travel, personal security, expanded business opportunities, social benefits, tax advantages, etc.
How do CBI programs work?
Citizenship by Investment (CBI) programs offer various investment options for individuals seeking a second citizenship.
These options generally include investments like:
- Real estate: You can purchase property with a minimum value requirement, which must be held for a specified period (usually 3-5 years).
- Government bonds: You can invest in bonds issued by the host country, often for a specific holding period, before you can sell them.
- Business ventures: You can also invest in or start a business that creates jobs or contributes to the economy of the host country.
National development fund donations: Another option is to make a non-refundable contribution to the host government’s fund for supporting national projects.
Why are affluent Indians investing in overseas citizenship?
Wealthy Indians are increasingly seeking secondary citizenship through investment migration programs due to several key factors and challenges:
- Regulatory restrictions: India’s Liberalised Remittance Scheme (LRS) limits individuals from transferring up to USD 250,000 per financial year abroad, complicating the accumulation of necessary funds for high-cost programs like the US EB-5 visa.
- Increased tax rates: From October 1, 2023, the rate of Tax Collected at Source (TCS) for LRS transactions was raised from 5% to 20% for amounts exceeding INR 7 lakh, significantly increasing the overall cost of international investments.
- International mobility and business expansion: Wealthy families seek to expand their businesses and enhance global mobility. CBI programs offer easier access to international markets.
- Better opportunities abroad: Secondary citizenship grants access to superior education, healthcare, and higher living standards, appealing to families aiming for better opportunities for themselves and their children.
- Diversification of assets: Securing a foothold in a new country opens the door to diverse business opportunities. These include real estate investments and access to financial instruments that might not be available domestically. Such diversification is pivotal in safeguarding wealth and mitigating risks by distributing investments across multiple jurisdictions.
A snapshot of popular CBI programs
Investment migration programs offer diverse opportunities for acquiring citizenship through significant investments. Let’s delve into what some popular nations have to offer:
1. Antigua and Barbuda
2. Saint Lucia
3. Austria
These benefits and opportunities have attracted many affluent investors to seek second citizenship, creating a growing demand for businesses that facilitate these programs.
How selling citizenship is now a big business
The CBI market has grown into a global industry worth an estimated USD 20 billion annually and is expected to grow to USD 100 billion by 2025.
This trend has transformed the concept of citizenship from a birthright into a commodity that can be bought and sold, significantly impacting the economies of participating countries and the lives of investors.
For instance, countries like Vanuatu have seen citizenship programs become a major revenue source, with passport sales accounting for more than 30% of the government’s income.
Swiss lawyer Christian Kalin, known as “Mr. Passport,” is a prominent figure in this industry. His firm, Henley & Partners, is one of the leaders in facilitating investment immigration.
Case study: Henley & Partners
Henley & Partners, a global leader in residence and citizenship by investment, has significantly shaped the CBI industry. Founded in 1997, the firm has helped countries design and implement successful CBI programs, raising over USD 12 billion in foreign direct investment.
Henley & Partners offers various services, including citizenship through investment programs in countries like Malta, Portugal, and the Caribbean. Their clientele includes high-net-worth and ultra-high-net-worth individuals, entrepreneurs, top-level managers, artists, and celebrities.
Henley & Partners has established itself as a pivotal player in the CBI industry alongside other organisations, such as the Global Residence Index and Immigrant Invest. Their expertise in designing and managing CBI programs ensures that both governments and investors achieve their objectives, making them a trusted leader in investment migration.
Things to keep in mind while applying for CBI
When considering Citizenship by Investment (CBI) programs, be aware of the administrative complexities and legal requirements involved. Here are some key points to keep in mind:
- Processing time: Applications often take longer than anticipated, even for straightforward cases.
- Document collection: The required documents can be extensive and sometimes cumbersome to gather.
- Total cost: Additional administrative and due diligence fees exist beyond the minimum investment.
Citizenship by Investment offers significant benefits but requires careful navigation of administrative and legal complexities.
By understanding the process, considering the total costs, and seeking expert advice, you can successfully leverage these programs to enhance your global mobility and investment opportunities.
In summary
A second citizenship unlocks opportunities for potential wealth creation, and affluent Indians have picked up the scent.
Many CBI countries feature favourable tax regimes, including benefits like lower or no capital gains tax and lower personal income tax, making them lucrative destinations for investors.
CBI also opens up vast business opportunities. Entrepreneurs can leverage their second citizenship to access global markets.
Also, travel becomes more convenient with CBI, allowing global citizens to explore diverse cultures and economic prospects with greater ease.
Overall, the prosperity and high quality of life in CBI countries make them a compelling choice for wealthy individuals and their families seeking enhanced wealth creation opportunities.
Disclaimer: The information contained herein is for informational purposes and should not be interpreted as soliciting, advertising, or providing any advice.