It has been approximately 16 years since the investment immigration industry came into greater focus. Over the last decade, we have seen an influx of new programs, new country participation, and interest from high-net-worth individuals (HNWI) in these various citizenship and residency by investment programs.
As the global climate changes politically and economically, more HNWIs are looking beyond their home countries for options that could afford them flexibility, access, and security. So long as these options remain available, the new trend of “collecting” passports and residencies for various reasons will continue to rise.
TRAVEL AND EU ACCESS: KEY DRIVERS TO OBTAIN A SECOND RESIDENCY OR PASSPORT
One of the most important reasons for HNWIs to consider investment immigration options is the ease of visa-free travel and access to various countries for leisure or business.
However, the commonality seems to be that many wealthy individuals would like to keep their existing passports for business, tax, and investment reasons –giving up their passports will cause difficulties in maintaining various business interests in their home countries. As a result, many investors are moving toward obtaining only a second residency rather than a second passport. This may allow them access the Schengen countries and to do business in the European Union (EU) without having to give up their original nationality. For this reason, popular programs have been Malta and Greece residency by investment programs and the Portugal Golden Visa program.
The Portugal and Greece golden visa programs have been popular due to their affordability and the fact that a minimum number of days in the country is not required to maintain residency. Because HNWIS are doing these programs because of flexibility, they also don’t want to be constrained by the need to have physical maintenance requirements on their residency status. Although these programs may also lead to a passport, individuals may wish to maintain residency and forego ever obtaining the passport simply.
TAX PLANNING IS PART OF THE DECISION-MAKING
Recently, countries like India and China have been discussing the possibilities of global taxation t to keep investments within these countries as more individuals choose to invest abroad. The concept of worldwide taxation being unacceptable to those with many international business interests and investments has caused HNWIs to discover citizenship by investment (CBI) programs offering desirable tax benefits.
For example, Hungary boasts one of the lowest corporate tax rates in the EU at only 9% and income tax at 15%. This makes this program a good place to form a tax hub or set up a business. In addition, countries like the United Arab Emirates (UAE) now provide golden visas, allowing renewable residency for up to 10 years. It is a known fact that the UAE has one of the most favorable tax regimes in the world at zero income tax and 9% corporate tax (newly introduced), offering tax residency for those who spend six months in the country as a resident. The UAE golden visa allows HNWIs to continue to travel freely, while retaining the option of becoming a resident of a tax-free country.
To become a tax resident of a specific country, one must spend the government-allotted number of days in that country to claim tax residency while also not spending the government-allotted number of days in any other country where they may become a tax resident. Tax planning for high-net-worth individuals has become crucial in this era of second passports, residencies, and global access.
CHILDREN AND EDUCATION LEAD MANY HNWIS TO SEEK RESIDENCY OPTIONS
The most important reason why HNWIs continue to explore investment immigration options is for future planning purposes, specifically for their children. Parents from Eastern nations often prefer sending their children to school in Western nations such as the EU, Canada, and the United States to offer them future opportunities in their chosen career fields and superior education. One of the main purposes is to allow their children to obtain jobs with large Fortune 500 companies after graduation and develop their CVs. For this reason, the United States EB-5 Immigrant Investor Program remains the most popular option for wealthy individuals planning to educate their children. Under the EB-5 program, an investor must invest a minimum of $800,000 in an EB-5-approved project to obtain a green card for the investor, their spouse, and any children under 21.
Although the minimum investment amount for EB-5 increased in 2022 to $800,000, the program's popularity has not slowed down. In fact, an increasing number of parents have obtained a green card for only one child in the family who may already be a student in the U.S. or working there on restrictive visas such as the H1-B.
With a U.S. green card, the child can take advantage of lower tuition rates, work without sponsorship during the summers while receiving their education and obtain employment without sponsorship upon graduation.
The introduction of Adjustment of Status (AOS) Concurrent Filing in 2022 has only further bolstered the appealing nature of the program. Under AOS Concurrent Filing, an applicant can file for an Employment Authorization Document and Travel Document while submitting their EB-5 application. This means that an applicant can continue to live and work legally in the United States while waiting for their green card to be processed. Before that, an applicant would have to wait approximately 24 and 36 months for the green card to be processed before they could enjoy the benefits of living and working legally in the U.S.
NEED FOR FLEXIBILITY AND SECURITY WILL CONTINUE DRIVING INTEREST IN RCBI PROGRAMS
Residency and citizenship by investment (RCBI) programs are still strong for HNWI as an alternative investment class. With the desire for flexibility and security on the rise, individuals will want opportunities for second passports and residences, allowing them to live, work, and travel visa-free around the world legally. These programs offer an unprecedented way to access global networks and open borders that may never have been available previously. They offer families the opportunity to choose bespoke options specific to their own future needs without potential inaccessibility.
