Acquire Citizenship of Vanuatu by Investing in Government Bonds

Vanuatu offers an opportunity to acquire foreign citizenship and a second passport by investing in government bonds. The bonds are denominated in Australian dollars. You can withdraw from the investment (sell the bonds back) after two to three years while retaining the passport of Vanuatu. Please read on to find out more about the opportunity that became available only a few days ago. Please do not hesitate to contact us if you have any questions! Our consultation is free of charge.

The new offer and the legislative framework

Order NO. 44 from 2023 was published in the Republic of Vanuatu Official Gazette on March 27 this year. The Order makes amendments to the Vanuatu Citizenship Act. The amendments came into force at the moment the Order was published.  

A description of the procedure of acquiring the passport of Vanuatu by purchasing government bonds has been added to Section 13G of Chapter 112 of the Act. The new financial route to citizenship of Vanuatu is known by the name of IGBO (Investment — Government Bond Option).

Citizenship of Vanuatu by investment in government bonds: three options

The foreign investor applying for a Vanuatu passport can purchase securities denominated in Australian dollars (AU$). The required investment amounts are between AU$ 150,000 and AU$ 180,000 depending on the maturity of the bonds.

The foreign investor is entitled to purchase zero-interest bonds only. Technically speaking, Vanuatu has become the only country that ‘sells’ its passport at a prices lower than US$ 100,000 (at the AU$ to US$ exchange rate effective at the time when the article is written).

We have to note that the Australian dollar has been weakening against the US dollar recently. In March last year, the AU$ cost 75 US cents while today it costs only 67 cents. If the tendency continues, the investment in Vanuatu government bonds may turn out even more lucrative. On the other hand, the trend can also reverse but we do not believe that this is likely to happen.  

Bond maturity, years	Minimum required investment amount, thousand AU$	Minimum required investment amount, thousand US$ (at the current exchange rate)
3	150	99
2.5	170	112.2
2	180	118.8

Minimum required investment amounts depending on bond maturity

Clearly, the higher the amount of investment in bonds, the shorter the maturity period. In other words, the more you invest, the shorter the ‘frozen capital’ period is going to be. This allows minimizing the risks associated with the following factors:

• Inflation;
• Fluctuations in exchange rates;
• Vanuatu default.

The Citizenship Commission of Vanuatu is responsible for processing the applications from foreign nationals wishing to acquire citizenship of the country by investment. The Reserve Bank of Vanuatu and the Ministry of Economy and Finance are in charge for bond issuance and redemption.

The bond quota and the ‘black list’ of countries

The Reserve Bank of Vanuatu is going to issue the bonds. In accordance with the amendments to the Citizenship Act, the number of zero-interest bonds is going to be 500 (first issuance). Therefore, the number of foreign nationals applying to the Vanuatu immigration authorities for citizenship-by-investment is limited.

As far as the ‘black list’ of countries is concerned, it does not exist de jure. At the same time, the legislation of Vanuatu makes it possible to reject applications for citizenship from residents of UN-sanctioned countries. As of today, the list of such countries includes the following ones:

• Guinea-Bissau;
• Democratic Republic of the Congo;
• Iraq;
• Yemen;
• North Korea;
• Côte d’Ivoire;
• Liberia;
• Lebanon;
• Libya;
• Syria;
• Somalia;
• Sudan;
• CAR;
• Eritrea;
• South Sudan.

It must be noted that exceptions can be made and citizens of the countries listed above can become eligible for Vanuatu passports. Even if the country is under UN sanctions, its citizen can apply for citizenship of Vanuatu by investment if the following conditions are met:

• The applicant has been residing outside his/ her country of origin for the last 5 years;
  • and
• He/ she can supply proof of residence in a foreign (non-sanctioned) state.

The Investment – Government Bond Option scheme is also unavailable to the citizens of the so-called ‘restricted countries’. The Vanuatu authorities do not provide the list of such countries and similar exceptions apply to citizens of restricted countries anyway.  

Citizenship of Vanuatu for family members

Applicants for citizenship of Vanuatu by investment can add their (core) family members to the application. If they do, additional payments will be required (see below). The following family members can be added to the application for citizenship:

• spouse;
• own/ legally adopted child of the main applicant or his/ her spouse; the child has to be:
  • below legal age (<18); or
  • between the age of 18-25 on the condition that the child is dependent on the parents and/ or is a full-time university student;
• investor/ investor spouse’s parent(s) above the age of 50 on the condition that the parent is dependent on the main applicant.

Master Agent and administrative fees

A specially appointed Master Agent will be responsible for providing services to those foreign applicants for Vanuatu citizenship who wish to invest in government bonds. The officer will accept applications from licensed immigration agents in the country and then conduct his/ her own due diligence procedures. If the Master Agent finds no obstacles to granting citizenship of Vanuatu to the foreign investor, he/ she will pass the application and the supporting documents on to the country’s immigration authorities.

In addition to covering the cost of the bonds, the foreign applicant for Vanuatu citizenship has to pay the following administrative fees (the payments will go to the Master Agent):

• Registration fee — 5,000 Vatu;
• Citizenship certificate fee — 10,000 Vatu;
• Master Agent’s service fee — 7,500 AU$;  
• Application processing fee (the amount depends on the number of applicants included in a family application):
  • Single investor — 20,000 AU$;
  • Married couple – 30,000 AU$;
  • Married couple and one child/ parent — 45,000 AU$;
  • Married couple and two children/ parents — 60,000 AU$;
  • Every extra dependent child/ parent — 7,500 AU$.

1,000 Vatu is worth approximately US$ 8.40 at the moment when the article is written.

The Master Agent is entitled to charge additional fees. When the Investment – Government Bond Option became available, the authorities of Vanuatu had not appointed the Master Agent yet. The criteria that are going to be used when selecting the Master Agent are also currently unspecified.

The procedure of acquiring citizenship of Vanuatu by investment in bonds and the required application documents

• The Master Agent and the licensed immigration agent’s fees are payable at the moment when the application for citizenship is filed to the immigration agent. The latter conducts preliminary due diligence checks.
• Then the application is passed on to the Master Agent who conducts his/ her own due diligence checks. If the results are satisfactory, the Master Agent submits the following documents to the Citizenship Commission of Vanuatu:
  • The application form;
  • A legalized copy of a valid passport of the investor;
  • A clean criminal record from police authorities of the investor’s country of origin (please note that the Commission will not accept the application for citizenship from a foreign national who has served 12 months in prison or more);
  • Confirmation of payment of the application processing fee.
• The Commission conducts due diligence procedures guided by the provisions of section 8C of the Act. Two outcomes of these procedures are possible:
  • If the application is rejected by the Commission, the administrative fees will not be reimbursed. The Commission shall inform the applicant about the reasons for application rejection. The applicant can dispute the decision of the Commission. 
  • If the application is approved, the Master Agent shall inform the foreign applicant about it within 48 hours.
• When the application for citizenship is approved, the foreign applicant shall make the investment in the required amount and pay any outstanding fees. The foreign applicant shall make 100% of the investment within 30 days from the time when the application has been approved by the Citizenship Commission.
• The Commission then issues the Citizenship Certificate to the applicant. The Certificate can be issued to the foreign applicant only after he/ she makes an Oath of Allegiance to Vanuatu. The Oath shall be given to the Master Agent or his/ her representative. It is not necessary to visit Vanuatu to make an oath of allegiance.
• The Master Agent or his/ her representative in a foreign country shall hand the Citizenship Certificate to the new citizen of Vanuatu.

Loss of profits and risks involved in acquiring citizenship of Vanuatu by investment in bonds

How safe and how (un)profitable is it to purchase Vanuatu government bonds in order to qualify for citizenship of the country? Because the bonds pay no interest, you have to add 6-7% to the total investment amount (this was the inflation rate in Australia in 2022).

Alternatively to acquiring Vanuatu citizenship by investment, you can also become a citizen of the country by making a non-returnable donation. Citizenship of Vanuatu by donation is going to cost you approximately as much as a two-year investment in government bonds. 

Given this fact, the returnable investment option looks much more attractive than the non-returnable donation option. We must warn you, however, that major international rating agencies do not hold Vanuatu in high regard. The risk of non-redemption exists.  

Reasons why the Investment – Government Bond Option has appeared

Experts believe that the new economic citizenship program has appeared in Vanuatu for two main reasons:

• State income reduction: The popularity of the Vanuatu citizenship-by-investment program dropped after the EU Council suspended the agreement with Vanuatu on visa-free access to Schengen Zone in May 2022. The European officials claimed that the ‘old’ economic citizenship program of Vanuatu supposedly allowed unreliable individuals to obtain citizenship of the country. In January 2023, the EU Council said that Vanuatu had 18 months to ‘fix the situation’. Otherwise, the EU would cancel the visa-free agreement with Vanuatu. Experts believe that the chances to restore the agreement are only negligible for Vanuatu. Thus, the country’s authorities decided to offer new opportunities to foreign investors in order to compensate for the losses caused by the suspension of the visa-free access agreement with Europe. They hope to increase the number of ‘sales’ of passports by offering the opportunity to acquire Vanuatu citizenship in exchange for a returnable investment rather than a non-returnable donation.
• Hurricane Judy: Vanuatu located in the Pacific Ocean is susceptible to natural disasters and hurricane Judy hit the islands in March 2023. It brought heavy rainfalls and squally winds as fast as 150 kilometers per hour. The local authorities had to evacuate people, close schools, suspend the work of public transport, and cancel flights. The hurricane was assigned the penultimate (fourth) category of danger. The consequences of the hurricane are devastating. Now the Government of Vanuatu badly needs additional funds for restoration work. It will be interesting to note that the ‘old’ citizenship-by-investment program was launched in Vanuatu in 2015 after hurricane Pam had wreaked havoc on the islands.

Professional assistance in acquiring citizenship of Vanuatu by investment in bonds

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