What makes golden visas attractive to Indian HNWIs, with Sandhya Kapoor

Sandhya: I do want to clarify here, because I know a lot of investors have this

apprehension that whenever there is a change in a program, current investors are

always grandfathered under the old regime. So, just to be clear, any changes that come

to the program, it’s not that the program can get scrapped tomorrow and the

applications that are currently in the pipeline will will disappear. No changes are ever

applied retrospectively.

Salman: Welcome to the investment immigration podcast by you Global.com. With

weekly in-depth interviews with the world’s leading investment immigration

professionals. Hi, everyone. This is the Investment Immigration podcast, and I’m your

host, Salman Siddiqui. This week we are going to focus on Indian high net worth

individuals and find out what country’s investment immigration program interests them

the most and why. We are going to also discuss what is the golden visa process like for

an Indian investor, especially when they seek a second residency in Europe. We will

also look into the Indian government’s policies on dual citizenship laws and its

remittance scheme and how it impacts the golden visa processes of Indian applicants.

To help us understand all of this week, our guest is Sandhya Kapoor, who works as

director at a consultancy firm for residency and citizenship by investment programs

called Active Avenues. She is based in India. Welcome to the show, Sandhya.

Sandhya: Thanks, Salman. Very happy to be here.

Salman: Would like to learn about what is the main motivation for wealthy Indians to

seek second residences abroad. And from what I’m hearing is that more than ever

before, wealthy people from India are seeking residences abroad. So please tell us

what is motivating them.

Sandhya: The Indian market has evolved tremendously since we started in this space,

and what I mean by that is that there is now a very large range of motivations that drive

the Indian investor towards residency and citizenship by investment programs. When

we started, Active Avenues was initially focused in the EB-5 space, and the EB-5

program is of course the green card by investment program for the US. With that

program, the motivation was all about educational and professional advancement for

the investor and their family and a focus on opportunities that could be made available

to the next generation. So there was a lot of focus on the future of the children and their

ability to be able to live and work in the US. But as awareness has grown and Indian

investors, we started receiving questions about the European Golden Visa programs. It

was all about finding Plan B option that entitled investors to a permanent residency or a

citizenship without having to spend considerable time in the country of investment and

to have an option which they may choose to or not to exercise in the future. Recently, of

course, COVID has unlocked an investor profile that honestly, I had never imagined

would exist in India, and that is just one of pure visa free travel. In the past, it has never

been an issue for, well, HNWIs to get travel visas and make trips overseas. But with the

shortage of consular outposts across the world and some of them still functioning at a

diminished capacity and the long wait time for visas, this is really a new motivation that

we are seeing, especially for professionals who are meant to travel to Europe during the

pandemic or to the UK, and they have not been able to do so because of expired visas.

Another interesting motivation we are seeing is just one of pure portfolio diversification.

So this is actually a matter of the program, the choice of residency program following

the investment as opposed to the other way round. So Indians are identifying a country

in Europe where they would like to own a vacation home and then the residency

application just kind of becomes part of the package. So they’re first choosing the

investment and then the program and then not the other way round. So we’ve come a

long way, and I’m happy to say that we serve as investors in all of the categories that I

have discussed.

Salman: Fantastic. So there are a bunch of motivation factors that are in play and it’s

good. You mentioned that how pandemic also was a big major push in this direction.

But I also want to understand how big of a factor is the Indian government’s decision to

widen its tax net playing into this? I’ve heard that now Indian high net worth individual

must now pay around 37% tax if incomes exceed by around half a million dollars. Is that

true?

Sandhya: Yes. So this is a question we’re actually asked quite often. And it is important

to point out that tax residency is actually different from permanent residency. The US is

the only country that considers you to be a tax resident just by virtue of having a

permanent residency, i.e. a green card. Most other countries have 183 day physical

presence requirement for you to be a tax resident. Now, Indians, unlike other

nationalities that have dominated the investment migration market to date, Indians are

not necessarily looking to migrate to the country of investment. And I know this is

another topic that we are going to discuss. So if physical presence is not on the agenda

in this country, then tax planning doesn’t really come into play. So, for example, if an

Indian investor is applying for the Grenada CBI program, the tax benefits would only

materialize if the investor actually spent the stipulated amount of time in Grenada to be

considered a tax resident, which is almost never the case, at least as of now. So the

motivation for an Indian investor applying for the Grenada CBI is actually the E2 part, to

live and work in the US and not tax planning. Now on the other hand, if they invest the

US or the UK or Canada, then just by virtue of the requirements of the program they will

fulfill the minimum 183 day physical presence requirement and become tax residence in

these countries. However, the taxation rates in these countries is similar or higher to

India, so they are not really relevant for tax planning. I know for example, UK offers the

non DOM tax regime, but I really wouldn’t identify this as a motivation for Indians to

apply to the UK. Now having said all that, only recently I will say that we have seen a

new formula which is developing since India changed the requirements to be an NRI.

We change it from to 70 days instead of 183 days. Right.

Salman: And for our listeners who don’t know, NRI is a non resident Indian, right?

Sandhya: Correct. That’s a non-resident Indian. So a large number of Indians would

benefit from the NRI status, which would mean that unlike resident Indians, they are not

taxed on their worldwide income, they are only taxed on income generated in India to

just define it very simply. And it was easy to benefit from this status by being outside

India for 183 days. Now, India has changed that. Rules have now become 270 days,

which has made it a lot harder for people to maintain their NRI status. So now we are

seeing a new way of thinking wherein these persons, they feel it is better just to give up

the Indian citizenship altogether so that there is no question of whether they are

resident or non resident and then take up tax residency in a low tax regime like Dubai.

But this is a very recent development since last year. Other than that, like I said,

because Indians don’t typically migrate to the countries that they invest in. Tax planning

has not really been a motivation.

Salman: Right. And we are going to talk more about why Indians don’t migrate to the

countries they apply to in a bit. But before that, I would like to learn from you about the

countries that most Indian high net worth individuals mostly get their second residences

from. So could you please share with us which countries do your own Indian clients

mostly prefer? I think you mentioned the US and Caribbean countries. Is that the trend

that you’re.

Sandhya: For us so far? The US, Portugal and Grenada have sort of been our

frontrunners. The US, as I mentioned, because of the educational and employment

opportunities it offers to the family and to the next generation, Grenada, because it

offers the E2 path to live and work in the US and visa free travel in the Schengen.

Portugal because it is a perfect plan B, which gives you the benefit of obtaining a

residency, which is a path to citizenship with minimum physical presence requirements.

But having said that, we have seen demand for Greece as well for Malta as well. So I do

feel as the industry is evolving and awareness is growing, we are going to continue to

see demand for different jurisdictions. But at the moment this is where we see most of

the demand.

Salman: Right. And that’s interesting. You mentioned that Portugal is one of the

countries in Europe that is preferred. But I want to understand more about that. Why is

that? Why Portugal compared to so many other options there? There’s Malta, there’s

Greece, like you mentioned. Is there something happening in Portugal that maybe fixed

the interest of Indian investors more? What are they telling you?

Sandhya: The reason is that Portugal grants the investor residency, which at the end of

five years can be converted into either a permanent residency or a citizenship. The

physical presence requirement for the above is to. And two weeks every two years in

Portugal. Now, in comparison, Greece would also grant you a permanent residency

actually immediately right upon investment. So they’re not giving you a residency that

finally converts into a PR, they’re giving you a PR outright. But for that PR to convert to

a passport, you actually have to spend time in Greece. So you need to spend

considerable time, meaning six months of the year for seven years to apply for the

Greek passport. So Portugal is giving you a residency, which is a path to a passport

with minimal physical presence requirements, and that is why it is more popular.

Salman: I see. But you must be also aware that Portugal’s residency program might be

changing soon and change is coming to Europe to the Golden visa program, especially

there. So are you worried about that trend?

Sandhya No. I mean, I do not think that any of these programs will disappear overnight.

And if you see from precedents, even any changes that have ever been introduced to

these programs have always had a grace period. Portugal changed its program already

in starting Jan one of this year, where it restricted investment for Golden Visa in densely

populated places like Lisbon and Porto and the Algarve. And it also saw the investment

amount for the real estate fund investment. So it restricted certain categories and it

made certain other categories more expensive. However, we first learned about this in

January of 2021, so we almost had an entire year to prepare for it and to prepare our

investors for it. And yes, I know there has been a recent statement by the Prime

Minister that possibly the program has outrun its requirement and maybe it is not

required anymore. But again, Salman, this is just a statement. Right. And I know it’s

there for speculation and it’s possible that something may happen to the program

eventually. But as of now, I’m not worried.

Salman: Okay. That’s good to hear it. Basically, you have to watch and see what

happens. If something is said by the prime minister. I mean, it is serious.

Sandhya: Yeah. The thing is that typically a statement like that would be followed by a

plan of action, a timeline, more details, which it is not. Now, I do want to clarify here,

because I know a lot of investors have this apprehension that whenever there is a

change in a program, current investors are always grandfathered under the old regime.

So just to be clear, any changes that come to the program, it’s not that the program can

get scrapped tomorrow and the applications that are currently in the pipeline will will

disappear. No changes are ever applied retrospectively.

Salman: That’s a fair point. And now let’s move on and talk about how your clients

come to you about your preferred destination. So I want to understand, do you advise

which destinations would work best for your clients or do your clients already know

where they want to go and just ask you to make it happen?

Sandhya: Yeah, so it’s really the latter. Even if our clients are quite familiar with the

different programs, they will always ask for our advice before coming to a decision.

Working with us enables them to understand the nuances, the benefits and constraints

of each program as it pertains to their individual requirements. And this is information

that these are insights that they will never be able to get off the Internet or working with

a lawyer or developer or a regional center, which is only focused on one program and

one jurisdiction. Unlike a one stop shop like Active Avenues, which is operating across

the board. Also, just to mention that we are specialized in this space, so we are not a

wealth management firm who are offering these programs as a product. We’re not a

chartered accountancy which are offering these programs as a product. We are

specialized in this space. So we are very familiar with the requirements, the costs, the

processes, the timelines, the changes that keep occurring in these programs. And

additionally, we actually do not charge a consulting fee to the client. So there’s no

additional cost of investing through us as compared to just investing independently.

Salman: Right. And I mean, I want to also know from you, like what is the golden visa

process like for an Indian investor who wants to expand their business or their

investment portfolio in Europe? And we just talked a little while ago about how Europe is

changing in terms of its golden residency program. So I want to also understand if the

process has become harder for Indian investors in recent times to make an entry in

Europe, and what options do you usually advise them and why do you advise them in

this current climate?

Sandhya: Yeah, so Europe is such an interesting market because it offers so many

different outcomes for an investor to choose from. An investor can apply for a

permanent residency that grants them visa free Schengen access and the ability to live

and work in the country of investment. Or on the other hand. They can apply for a

citizenship or a permanent residency. That is a path to citizenship that gives them,

again, a visa free Schengen access, along with the ability to live and work anywhere in

the EU and visa free travel to enumerable. As I mentioned before, we’ve had cases

where the PR or citizenship choice has actually followed the investment as opposed to

the other way around where an investor can actually first choose the country, where

they would like to own real estate or own a vacation home, and then on the basis of

that, decide which program they want to invest in. They can choose to live in Europe or

they can continue to live in India while maintaining their permanent residency in the

country of investment. So unlike the US and UK and Canada that the necessitate

migration or even the Caribbean that actually necessitates a change in citizenship. The

European Golden Visa programs, they really have something for everyone, however,

there have been delays across the board first because of COVID, also because of Oversubscription in some cases some programs introduced changes which took a while to

implement and it took them a while to update their systems with those changes. So

there have been delays, but it amazes me that in spite of this, the volume of

applications only increases as just the motivation to invest in these programs increases.

Salman: That’s true. The volume of applications are increasing, but from what I’ve

heard from other professionals is that the approval rate of those applications hasn’t

been the same what they were seeing pre-pandemic. Are you also seeing something

similar?

Sandhya: Well, what you may mean is the pace of the approval rate, which has slowed

down, but the actual approval rate is that has not reduced. So it’s not that we are seeing

rejections or anything in these applications. They are still being approved like before. It’s

just taking longer. For example, even within Portugal with the Ukraine crisis, they are

granting short term residencies to the Ukraine migrants. So half the staff is involved in

actually processing those applications. It’s the same staff which is processing those

applications along with the golden visa applications. So there is a variety of reasons that

things have slowed down.

Salman: So what kind of timeline do your clients have to get for an application to be

processed in Portugal these days? Is it still within the year time frame or is it taking

longer because of the backlog?

Sandhya: Yeah, no, it is definitely longer. So I would say now if anyone who is applying

today, possibly 14 to 16 months to get the residence card, and that’s when your five

year cycle starts, and then at the end of those five years, you can apply either for a

permanent residency or a passport.

Salman: Right. And in other jurisdictions like the Caribbean, it’s much more simpler.

Right?

Sandhya: We have experienced a lot of delays in Grenada as well after the election

with the change in government, changes in the CBI unit to Grenada application, you

should take about four months to process 3 to 4 months from submission of documents.

Now it is taking six months, sometimes even longer files. They’re stuck in due diligence.

Sometimes they have been sent back from the review committee back to due diligence.

So we’re experiencing delays everywhere for a variety of reasons. You know, EB-5, of

course they had plus the investment amount increasing. Then there was the program

lapse for eight months. So there are delays across the board. Now coming back to the

European programs, one thing which I think they could do to make it a little easier for

investors is to actually outsource their biometrics appointments to the consular outposts

in the country where the investor is living. So currently our investors have to travel to the

country of investment to submit biometrics. And this is obviously at the moment it’s

becoming easier now. But in the last two years this was a very cumbersome process, as

you can imagine, because there was unavailability of flights and visas and just travel

restrictions.

Salman: This issue has been there for some time. The biometrics at the countries of

origins of the investors, it’s a fairly simple thing to do in my mind. And a lot of people

have been it’s been on the wish list for some time. Hopefully someday it will happen.

Sandhya: And like in EB-5, if you apply from India, you can consular process in India,

right? You don’t have to fly to the US for an interview, so it should really be the same. It

would be really beneficial if if Europe could do the same.

Salman: But having said that, you mentioned about the EB-5 program. I’ve heard that

the process to get EB-5 residency in the US for an Indian high net worth individual has

actually become harder over the years because I mean the processing times are longer.

Are you also seeing that and we’ve already talked about how it takes a lot of time in

Europe and Caribbean these days, but what’s happening in the EB-5 as well?

Sandhya: Yeah, So, you know, that has kind of consistently been adding up because

first of course there was the increase in. And because of that, there was a very, very

high volume of applications which were filed before the deadline in November 2019.

And then right after that, the pandemic hit in early 2020. Now, even though processing

we have received approvals, obviously the pace of approvals has been slow. And then

of course also with the program lapse for eight months, things have slowed down more.

Of course, the program is highly over-subscribed, so it is already backlog to a certain

extent. The consular outposts are functioning at diminished capacity, so even those who

have been approved are having to wait a long time to get consular interviews. And of

course it’s become more expensive. So that’s just order right there. Right. So

affordability, liquidity, opportunity cost, Indian remittance restrictions. I mean, everything

has got to be considered. Now, of course, the one plus point after the reform is that for

anyone who is already in the US on valid visa, you are now able to concurrently apply

for an adjustment of status when you file an EB-5 application. So that enables you to

get an employment authorization and a travel document right after you apply. And this

also is taking a while. I mean, it’s taking almost up to a year, but it’s a lot better than it

was earlier, where you would first have to wait for two years to get an approval and then

move on to the next step, which was adjustment of status. So literally for almost two and

a half to three years, you are not deriving any benefit from this application. And that has

changed now, at least for those who are living in the US on a valid status. And that’s a

good thing.

Salman: Okay, good. Now moving on, we mentioned earlier, you mentioned that

Indians actually who are seeking permanent residences abroad may not actually

migrate there. So let’s talk a little bit about that. And I’ve also heard that only a small

percentage of high net worth individuals from India actually migrate to the country with

their families even after they get their second residences and passports. Is that true?

And why is that happening?

Sandhya: Yes, it is true. And see, Indians, as I mentioned before, unlike other

nationalities which dominate the investment migration space, Indians are not compelled

to leave India. If an Indian can afford to invest in an investment migration program, it is

likely that they are in the income bracket that could afford a very good life in India. So

they are not doing this for better quality of living. This is all about just having the option

of investing for the future, for the children, for any situation that may arise, and other

pandemic, stuff like that. And they may not necessarily exercise it right, but they just

want to have that option.

Salman: I see. So the Indian high net worth individuals seeking permanent residencies

abroad, do they also then wait for the passports, or is it just the permanent residences?

And they’re happy with that because that’s all you need to maybe expand your business

operations or just have it there in their pocket?

Sandhya: Yeah, I wouldn’t say that they are just seeking a permanent residency. I

would rephrase that to say that they are mostly seeking permanent residencies that are

a path to a passport, which is why the US and Portugal are up there. Right? Some

investors may be attached to their Indian passport today, but in no way do they want to

give up the optionality to maybe change their mind in the future and have a stronger

passport. And so they tend to go for that route.

Salman: Right. And that’s an important point because many of our listeners might not

know, but Indian nationals do have to give up their passports when seeking second

citizenship abroad, in many cases because they don’t have the dual nationality

agreement. But do you think this hinders or demotivate a lot of people from seeking a

second passport? And that’s why Indians? Well, the Indians mostly seek just residences

just to begin with.

Sandhya: No, I would say that they are seeking votes. I mean, some are like I said, the

most popular is the permanent residency, which is eligible to be converted into a

passport in the future. However, yes, there are those seeking permanent residencies as

well. Sometimes they don’t have a need for the passport because maybe a spouse is

already a US citizen and they have the right to exercise that option to the spouse for

themselves and their kids in the future whenever they want it. And at this point in time

they only have permanent residency, which is just easier to maintain and they don’t

have to give up their Indian citizenship for it. On the other hand, we also have investors

who are okay with giving up their Indian passports. They are not so attached to it

wherein they feel that the choice of programs should depend on whether or not they

would have to give up the passport.

Salman: Right. Right. And we are coming close to the end of a program. But before I let

you go, I want to understand what’s your opinion about the policies that. Maybe the

Indian government needs to change to in order to facilitate more the high net worth

individuals to seek the golden visas and other programs. And I’m asking this because

there’s a lot of talk about how this actually helps the country by bringing in more

remittances from abroad to the country, and it eventually helps the country’s economy.

So we were talking about the dual citizenship laws just a little earlier. So do you think

the Indian government needs to revise that, maybe or maybe do more on that front?

Sandhya: They should. I don’t know if they will, given a choice. Every Indian citizen who

invests in these programs would like to have the option of holding on to their Indian

passport, but they do not have that option. And honestly, especially in light of some of

the infamous cases in the past years where I’m sure you’re aware of it, Salman, where

Indian industrialists have siphoned millions of dollars and fled the country because they

had another passport and now they are keeping extradition at bay because they are “no

longer citizens of India”. And this is literally the argument which is being used by their

lawyers to fight off extradition, is that the day the person took up a citizenship of another

country, they ceased to be citizens of India. And so they are no longer subject to the

extradition laws. I mean, it can only help, especially in a situation like that. So, yes, I

mean, it would be definitely be a step in the right direction, but who knows if it will be

implemented.

Salman: Right. Hopefully, somebody from the government will be hearing our podcast.

And I would also like you to quickly tell us about India’s liberalised remittance scheme

and why does it end up slowing the golden visa processes of many Indian applicants

and what needs to change on that front?

Sandhya: Yes, the scheme, which is liberalised remittance scheme, basically allows

every resident Indian to remit USD $250,000 every year and for an NRI you are allowed

to remit USD 1 million every year. And the implication of these restrictions for residency

and citizenship by investment programs is that if you are a single resident investor, you

would have to spread your remittances across two or more financial years if your

investment amount exceeds 250,000. So just remitting the money out can take a while.

Secondly, the scheme is governed by the RBI and their master direction, and in that

master direction is unclear in a certain places it leaves a few areas open to

interpretation, so that sometimes creates confusion in practice. At the micro level, you’ll

be surprised that most bank branches are not aware of the scheme fully and of the

remittance amounts and the technicalities. And we often end up spending weeks just

educating them and explaining to them how it works. And this lack of clarity and

awareness and knowledge it creates required complications and sometimes

necessitates unnecessary paperwork. And that is something that really needs to

change. Policies are also sometimes just introduced overnight without any prior notice

or any grace period. So all these things obviously lead to slowing down the process

because of the remittance restrictions. Of course, it would be a highly welcome change

to just do away with the remittance restriction altogether, but I actually feel it is more

likely to move in the opposite direction and just may become more restricted, which is

why we always encourage investors. If you have the intent and you have liquidity and

you have the ability, don’t wait unnecessarily. While the current regime is conducive to

investments in these programs, you should just you should just do it right.

Salman: And my last question to you would be about the future mobility of Indian high

net worth individuals. And what is your prediction about that? And what do you think

would be the most attractive destination for people from India? Do you think it’s going to

continue with the same trend with the US on top and then Europe and then the

Caribbean? Or do you think it’s going to be a shift to the Middle East where, as you

already know, even places like Dubai are not offering permanent residencies and

sometimes even citizenship? And there’s a big community there already and it’s also

closer to India. So what is your prediction for the future?

Sandhya: I feel that for us, the order of things is going to remain the same for a while. I

mean, I know Dubai is offering a golden visa program, but it’s a little different in the

sense that it does not offer any visa free travel. Right. So in that sense, it is not as

strong as the European Golden Visa programs. It is basically giving the investor the

right to live and work in Dubai. And whether that will eventually be a path to something

else in the UAE that is unclear. So I think it is too new to comment on that. And also,

Dubai has been super popular during the pandemic because they were the most open

and the most lenient when it came to travel in and out of the country. So all that has, of

course, helped. Where I do feel the market will evolve is I think the US again, one has to

say about this program, it’s it’s become so much more expensive. There are delays,

there are possible backlogs on the horizon, but it continues to be popular amongst our

clientele because this is an interesting thing actually. It’s a mind. We’ve always found

that if an investor is leaning towards a certain jurisdiction, if they’re leaning towards the

US, it’s not like you can convince them to invest in Canada. If they’re leaning towards

the UK. It’s not like convince them to invest in Ireland in that once they understand what

the requirements are and the costs and the processes and the timelines and the

advantages and the disadvantages, they’ve pretty much made up their mind. So the US

continues to be popular and I don’t see any other country being able to take away that

popularity in Europe. I do feel that as the market evolves, we will see more investors

looking at the other programs like Greece and Malta and Cyprus who are not

necessarily looking for a passport. They just want visa free Schengen travel. As I

mentioned at the at the beginning of the podcast, that is a trend we are now currently

seeing with COVID, where investors are looking to do this just so that they can travel

visa free in Europe for work, for business, for pleasure, without having to rely on getting

a Schengen visa. So I do feel that in Europe that change will come about and investors

will kind of trend out from Portugal into some of the other programs.

Salman:I see. All right. Thank you so much, Sandhya, for sharing your thoughts and

your insights into the Indian high net worth individuals and how they are going to be

moving around the world in the future and the trends that we are seeing right now. So

thank you so much for your insights. And with that, we’ve come to the end of our show. I

want to give a shout out to our listeners. Please stay tuned for more investment

immigration programs from around the world and I hope you’ll keep enjoying the show.

So thank you. And thank you again, Sonia.

Sandhya: Thanks so much.

Salman: You’ve been listening to the investment immigration podcast by Youth global

dot com. Join us again soon for more in-depth conversations exploring investment

immigration opportunities from around the world.