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Potential Dealbreakers when Applying for Citizenship by Investment

Citizenship is granted according to the domestic law of the country granting the citizenship. Many countries incorporate one or both of the legal concepts of Jus Sanguinis or Jus Soli. Jus Sanguinis (Latin for right of blood) is a principle of nationality law, by which citizenship is not determined by place of birth but by having one or both parents or grandparents who are citizens of the state. Jus Soli (Latin for right of the soil) is commonly referred to as “birthright citizenship”. It is the right of anyone born in the territory of a state to nationality or citizenship. In addition, many countries incorporate into their domestic nationality laws a method for an individual to “earn” citizenship through naturalisation. Naturalisation laws can take many forms and can include the following:

  1. Meeting certain religious criteria;
  2. Meeting certain physical presence, tax residence, language and local knowledge criteria;
  3. Citizenship by Investment connected with specific economic contributions; and
  4. General Authority: In many countries the power to grant citizenship is granted to some government office or body on their own criteria such as contribution to the state in sports, humanities, art, economic benefit, etc.
CBI

Residence Permit by Investment is the only real way for a foreigner who is not a descendant of a European ancestors and is not residing in one of the EU countries to eventually become a citizen of the European Union. It is also one of the few options that greatly simplifies and speeds up the procedure for obtaining a second passport if you do not insist on staying attached to Europe. 

It is believed that individuals applying for participation in the Residence Permit by Investment programs are most anxious about two problems: how to find the money necessary in order to practically implement the project, and how to choose the appropriate jurisdiction.

In fact, there are many more potential problems that should occupy an applicant’s thoughts. The most difficult thing in this connection is not to choose a country or find money, but to understand what actual threats you come under right after being handed in your second passport. There are enough pitfalls here – tax liabilities that are unaccounted for, the limited validity of the residence permit, high requirements put forward for obtaining a second passport, conditions for mandatory presence in the jurisdiction in person… And this is far from a complete list: in reality everything is much more complicated.

That is why we decided to share with our readers a comprehensive account of the process of obtaining a residence permit by investment with the subsequent registration of a citizenship. Our main goal is to go beyond the issues that are widely known and discussed (choosing a country, preparing a package of documents, administrative processing of a transaction, the subtleties of naturalization, etc.). All this information is presented on our portal in great detail, so there is no need to repeat it here. Instead, we are going to cover some deeper questions, which often remain uncovered. The answers to them may not seem of great practical importance or urgency to some people, so they are usually not given the attention they deserve. But this approach is fundamentally wrong. It is like trying to do business without knowing the specifics of taxation in a particular jurisdiction. Yes, you can get a third-party accountant to take care of all the corresponding operations, but if you want to conduct your business competently, you need to have basic knowledge on the topic yourself.

Key Questions to Get Clearly Answered

For many families, acquiring Residence by Investment in a country where they could become naturalised in the future is a viable pathway to an alternative citizenship. Keeping this in mind, let’s begin with the outline of the basic issues connected with obtaining a residence permit by investment from the point of view of further application for citizenship. Such programs are informally labelled “Golden Visa”, which fully and accurately reflects their essence. But one should not assume that it is possible to simply buy a residence permit – there are still some requirements the person needs to meet. Another important point is that it is impossible to evaluate such programs only by the size of the investments. The project budget is important, but it is by far not the only criterion. If you want to achieve the best result for yourself, the choice of jurisdiction should be approached comprehensively. 

Key Criteria for Evaluating Residence Permit by Investment Programs:

Following are several elements that need to be examined when evaluating such programs:

  • Is the residence obtained by: 
  1. Government contribution; 
  2. Investment in the country (guaranteed? liquid? mandatory hold period?); 
  3. Purchase of Residential Real Estate; or 
  4. nvestment in your own business or Start-up?
  • Is the status permanent or time limited, with permanent status only granted after meeting further requirements in the future?
  • Is future naturalisation possible? If yes, is physical presence necessary, and what are other requirements?
  • What are the additional costs? Which family members can be included (e.g., non-minor children, grandparents)?
  • Does the residence permit provide the owner with visa-free travel, and if so, with what restrictions?
  • Are there accompanying tax obligations (income, capital gains, wealth, gift, estate) and are they domestic or worldwide? What are the opportunities for tax planning? What is the actual level of tax liability?
  • What is the minimum period of saving investments and the possibility of their return?
  • What are the requirements for physical presence in order to maintain the residence? Will the applicant qualify for permanent residence in the future? Will they also qualify for citizenship?
  • Does the applicant have the right to reside in other countries?
  • Are there potential adverse family law rules that can create serious complications or threats? Can such rules be overcome by asset protection planning?
  • Are there Investment Treaty opportunities to protect assets in the home country or elsewhere as a result of residence? Are there more opportunities to protect / diversify assets in comparison with the traditional ways of obtaining a residence permit / citizenship?
  • For what reasons may the residence permit / citizenship be cancelled?
  • Is it possible to transfer of the residence permit/citizenship by inheritance?
  • What is the application processing time? 
  • How big is the risk of rejection?

When planning participation in the investment program in order to obtain a residence permit, you should have answers to all these questions. Only in this case you can be sure that you are investing in something really useful to you. Approaching the initial planning stage with all due seriousness and thoroughness will help you avoid a number of unpleasant “surprises” further down the road, which in certain situations may significantly reduce the value of the residence permit by investment.

Another important point concerns the difference between the “Residence by Investment” and “Citizenship by Investment” programs. These are two completely different options for investors, and they provide different outcomes – getting a residence permit or a citizenship. In some countries, you will have the choice between these two, and you will need to decide, which program you prefer. In others (most of them) there are no alternatives. And in some countries, there is no way whatsoever to “buy” a residence permit or a citizenship (or, less directly phrased, to receive them for investments under a number of conditions).

Many of the factors that you should pay close attention to when choosing the Golden Passport or Golden Visa programs are similar. However, if you are planning to move to another country and are ready to make some investments abroad, you should clearly understand what you are going to get for your money. This is why we would like to share some considerations regarding the Citizenship by Investment programs.

If you want to read more about Residence Permit programmed in various countries, here are some articles on International Wealth portal:

Citizenship by Investment

Citizenship by Investment programs are widely advertised on the internet and in the press. Often the “consultants” who promote these programs proudly proclaim that they are “licensed” or even “exclusive” marketing agents of the government offering these programs. However, the status of marketing agent for a specific government or project inherently puts them in a conflict of interest. These “agents” or “consultants” should be dealt with very carefully. It is always better to consult experts that do not announce any affiliations with any government bodies in order to receive the latest and most comprehensive issues connected to your specific situation. Experts working at our portal have accumulated vast experience in dealing with questions of foreign residence, repatriation, second citizenship and asset protection. Contact us today for an individual consultation!

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Generally speaking, when evaluating Citizenship by Investment programs there are several elements that need to be examined. Some may be so serious that they would constitute immediate insurmountable obstacles that would make your application impossible or useless.

Potential Instant Deal Breakers

  1. What is the status being granted? (e.g., Honorary Citizenship is like being honorarily pregnant…it does not produce the desired result!); 
  2. Does the country publish the names of new citizens? For some applicants, this sort of disclosure may be completely unacceptable.

Other Important Factors to Consider

  1. What is the processing time?
  2. What is the Investment? (Government contribution? Supporting country infrastructure? Investment in business? Buying real estate (existing or future build; hold period; real market value or inflated; maintenance costs; generating revenue)?
  3. What are the additional costs? Which other family members can be included in the application? 
  4. Are there rights to reside in other countries (e.g., the EU)?
  5. On what basis can the citizenship be revoked? Arbitrary or according to the rule of law?
  6. Can the citizenship be inherited and passed on to future generations? 
  7. How easily can passports be replaced when full, lost or expired? 
  8. Are there any Investment Treaty opportunities to protect assets in the home country or elsewhere as a result of obtaining the citizenship?
  9. Does the citizenship provide visa-free travel? (Please note that this feature is wildly overemphasized in the press and by salespeople. Generally speaking, most people never travel to 183 countries. They are concerned about whether they can go to a handful of countries, to which they actually want to travel. Many people supplement a Citizenship by Investment with a Residence by Investment, which allows either to enjoy visa-free travel or to have no difficulty in getting long-term multiple entry visas for a few hundred dollars).

Since it is indeed extremely difficult for an unprepared person who is not involved in international financial planning to understand all the subtleties of the laws and procedures connected with getting a foreign citizenship by investment, we are honored to offer you the services of our experts who will take care of all your matters. We have a wide variety of jurisdictions and service types to suit your individual requirements.

Some examples of International Wealth Portal Services on Citizenship by Investment Programmes and some recommended jurisdictions:

Contact us today via e-mail [email protected] for an individual consultation!

Good Backup Plan: A Case Study

The location of your alternative home or business in a foreign country is a factor of extreme importance, or should we say the opportunities that can be explored in this location, and the arrangements that can be made there. There are plenty of examples that demonstrate the dramatic value of one or more alternative homes and business locations as part of a person’s Backup Plan. In some cases, an effective Backup Plan became the only way to maintain a decent standard of living and continue running a business in spite of dramatic or even extreme changes of the external circumstances. 

One example we can describe here is the case a US businessman, who decided to secure an alternative citizenship for himself and also wanted to receive a Work Permit in Canada. This included a Work Permit for his spouse and Student Permits for his children, who were at school age. It was important for this businessman to make sure that when he got the citizenship, it did not automatically make any member of his family a tax resident in Canada. This would be a risk to consider even if he applied for Canadian Permanent Residence (i.e. Landed Immigrant). In addition to the Work and Study Permits, he also purchased a condominium in Montreal, where the costs of mortgage, interest, insurance and condo fees had been covered by the rental income he had been getting from Airbnb. The client also set up a satellite “mirror” back office of his US operations with a part-time local employee, file cabinets and a computer server at a shared work office in Montreal. As part of his Backup Planning, he also updated his US home and business interruption insurance.

The reason to activate the alternative residence options for the businessman and his family arose pretty quickly. When the U.S. National Weather Service began to send out warnings about a Category 5 hurricane that was likely to hit their hometown, this businessman sprang into action. He immediately cancelled the upcoming reservation of his condo on Airbnb and bought airline tickets to Montreal for himself and his family. He also arranged to temporarily expand his office space and temporarily relocated two of his key employees to Montreal. Since these events were happening at the beginning of the school year, he also quickly enrolled his children in private high schools. All this did not take long, because the children had already received valid Student Permits.

By the time the hurricane hit and rendered his home and business premises uninhabitable, the businessman and his family had safely settled in Montreal and continued their personal and family lives without interruption. His business also carried on its operations seamlessly. There were some minor inconveniences associated with fatigue, new surroundings, and the need to change some habits, but generally, everybody quickly adapted to the new life. It is important to note that when the critical situation arose, the family already had a detailed worked out procedure, so they avoided making any unreasonable steps inspired by sheer panic.

This may be considered a textbook example of a person getting an excellent detailed and practical backup plan. The project was implemented without haste, the businessman clearly understood what he would get in the end and had time to carefully prepare for any possible risks. 

In choosing the right alternative home or homes and business locations as part of an effective Backup Plan one must take into account the following factors: 

  • Your family situation is unique, and all the arrangements must be suitable just for you;
  • Your Backup Plan must be sold both at the boardroom table (make financial sense) and at the breakfast table (make personal sense to the whole family);
  • The plan should “Do No Harm” to the family’s tax position. 

In addition, you must clearly understand that it is essentially impossible to obtain an “emergency” residence permit by investment, if only because the formalities take quite a long time. Therefore, if you want to provide an alternate ground for yourself and your family to land on in an emergency, you need to start developing and implementing this project before something unforeseen happens in your life.

Some examples of useful articles on the International Wealth portal on creating your backup plan:

Alternative Funding Sources 

The experience of some client clearly illustrates that having your family safe in an alternative residence, but not having the financial means for maintaining the comfortable lifestyle or the successful operations or your business in the new location is can be a real problem. Needless to say that after relocation will need some extra money for making the arrangements, restoring the familiar household and social amenities, and buying the necessary goods and services. The only thing worse than having no money to relocate and arrange a comfortable stay in the new home is the case when your assets are safe, but you and your family are in actual danger or trapped in a location, from which you cannot get to the Backup residence. To avoid these situations, a Backup Plan needs to ensure that you have the appropriate alternative financial resources that you can use if needed. Please note that the location of these alternative resources does not necessarily need to match the jurisdictions of your family’s alternative home or homes. In fact, given tax and privacy issues it is often a good idea not to place them in the same jurisdiction!

There are quite a few options here, but their use requires some preliminary preparation, so all this should be worked out in advance. For example, you may want to open a bank account and transfer an amount of money sufficient for the starting period after your relocation. Or maybe you prefer to purchase a compact liquid property that can be guaranteed to be easily and quickly sold without significant financial losses, providing you with a lump sum you need to settle in your alternative home. You may be interested in an account on a cryptocurrency exchange, where you can store electronic currency related to real assets (for example, US dollars). One important aspect necessary to calculate here is the emergence of new tax liabilities and the possible full or partial waiver of confidentiality in connection with the alternative funding sources of your choice. If your backup option creates the need to pay taxes (or even if you assume that this may be possible), be sure to discuss this point with your lawyer or a financial advisor. Our portal can provide services of seasoned specialists who will consult you on all the intricacies of taxation at the chosen locations.

Useful Information on the Topic

  1. Complementary Services

Depending on the specific client family threats and concerns, it may be prudent for the Backup Plan to include additional services such as:

  • Global medical coverage;
  • Kidnapping and evacuation insurance;
  • Security reviews and services;
  • Educational Consulting; and in some cases, even 
  • Geopolitical Intelligence Services (to see when and where threats may become imminent).

Threats often arise or become more or less important over time. Given that a Backup Plan is meant to provide safety and opportunities (even beyond your lifetime), it is important to incorporate a consistent monitoring and update the arrangements in order to maintain effectiveness. A properly constructed Backup Plan is a symphony of tax, asset protection, succession planning and lifestyle. 

Obtaining citizenship through investment in a residence permit is an immense topic, and one article cannot be enough to study it in detail. Therefore, we would like to offer you some interesting facts on the topic in the format of short lists. You can always get more information from our experts.

  1. Saving Money

Following are some ways to save money by participating in the residence permit by investment program (in case the subsequent acquisition of citizenship is a priority, and on condition that the jurisdiction is chosen correctly):

  • On taxes;
  • On receiving visas;
  • On your children’s education (without any sacrifices in the quality standards);
  • On business costs;
  • On day-to-day expenses.
  1. Countries we can recommend for participating in citizenship by investment programs:
  • Grenada
  • Saint Kitts and Nevis
  • Dominica
  • Saint Lucia
  • Antigua and Barbuda
  • Vanuatu
  • Cyprus
  • Malta
  • Turkey
  • Jordan
  • Montenegro.
  1. The procedure for obtaining a second passport (on the example of Dominica):
  • Signing an agreement with a licensed immigration agent (beware of scammers!);
  • Paying for due diligence services;
  • Paying the application fee;
  • Submitting the document package to the immigration service;
  • Application processing (in case of a positive decision, you will receive a confirmation letter);
  • Making the investment;
  • Paying the rest of the state fee;
  • Obtaining a certificate of naturalization;
  • Obtaining a complete package of documents.

To read more on the second passport and visa-free travel, please see the following articles:

Conclusions and Recommendations

A wise person (actually, it was Thomas A. Edison) once said that “good fortune is what happens when opportunity meets with planning.” If you care to keep your family and assets safe, and you want to explore all the existing opportunities to protect yourself from tangible risks, make sure you discuss the options for obtaining a residence permit by investment with subsequent alternative citizenship with our experts.

Please note that creating a good backup plan is not a one-time procedure. The risks it covers now may lose significance in future circumstances. In other words, your plan should be reviewed and altered, getting rid of the outdated ideas and services; in the same fashion, your reserve savings should be indexed according to inflation.

Given the multi-dimensional nature of a project aimed at acquiring a residence permit by investment (and subsequently – a citizenship) and the complexity of required decisions, do it yourself plans almost inevitably fail. The cost of failure could be losing anything from a considerable part of your assets to your family’s freedom. Advice from ’salespeople’ who push real-estate linked ‘products’ will not lead you to success. They inevitably offer the products that pay the highest commission, and that may not be in your best interest. The reality is that the market is full of unscrupulous salespeople. These individuals often mislead their victims into taking expensive unnecessary moves or outright scam them, leaving them with huge bills and no valuable results. 

We will not remind you of common and absolute truths about personal security, the priority of eternal values (family, home, children), and the responsibility to those who trust us. Naturally, it is impossible to completely avoid risks, but it is in your power to minimize their impact on the lives of your beloved ones – and we are ready to help you with this!

We will deal with all the administrative hassles, help you to choose the right jurisdiction and do the paperwork, assist in opening personal and/or corporate bank accounts. We offer you help and support in ensuring the most valuable thing – the safety of your family and assets. Contact us for more details at [email protected].

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