Fancy living in a European capital, or gaining citizenship of a Caribbean island? If you have deep enough pockets, the world is your oyster, says Alex Rankine.
How many countries sell citizenship?
About 100 countries worldwide offer residence in return for investment in the local economy – known as a “golden visa” – according to The Economist. America’s EB-5 visa, for example, grants foreigners a coveted green card in return for at least $1m, or half of that if the money goes towards rural or deprived areas. “A dozen or so” jurisdictions go further by also offering citizenship on similar terms, “in effect selling citizenship”. Those willing to stump up $100,000, for example, can secure a passport from the Caribbean island of Dominica – and visa-free travel to Europe – without fulfilling any residency requirements. In Dubai, in June this year, a luxury property developer was promoting Europe-themed artificial islands. The special summer deal? Buy a property, get a Moldovan passport bundled in.
What about Europe?
The EU has “welcomed more than 6,000 new citizens and nearly 100,000 new residents” over the past decade from such programmes, reports Transparency International. That has generated about €25bn in foreign direct investment over the period. Portugal has generated nearly €4bn from its scheme and as much as 5.2% of Cyprus’s GDP in 2017 came from “the sale of EU passports”. The biggest issuers of golden visas in the past decade were Spain, Hungary, Latvia, Portugal and the UK.
What does UK entry cost?
Since 2008 the UK has granted entry to wealthy non-Europeans in return for a £2m investment in British companies. That may seem like a high hurdle compared with some other schemes – Malta grants outright citizenship for a little over €1m – but such “Tier 1” visas have notable attractions, note George Arbuthnott and Jonathan Calvert in The Sunday Times. Because the £2m is an investment, “applicants do not actually part with any of their money… the prudent can watch their money grow in company shares, and then take their cash offshore again to avoid UK tax once they have acquired leave-to-remain status after five years”. Since 2008, more than 11,000 people have taken advantage of the UK’s scheme.
Who buys citizenship?
Chinese nationals are the biggest users of golden visa and passport schemes internationally. Home Office data shows that 3,767 Chinese nationals have used Tier 1 visas to enter the UK since 2008, with Russians in second place on 2,438. As Paul Williams of industry operator La Vida Golden Visas tells Katie Beck of BBC Worklife, individuals in countries where the rule of law is weak regard their overseas investments as “an insurance policy”. As Ben Cowdock of Transparency International puts it, in unstable countries the politically connected often regard second passports as a way to “escape and enjoy the proceeds of their corruption should they find themselves out of favour”.
Everything is not above board then?
No. A recent Sunday Times and Channel 4 undercover investigation filmed private advisers, who help UK Tier 1 applicants, boasting about how easy it is to pull the wool over the eyes of Home Office bureaucrats and avoid tricky questions. One talked of having secured a golden visa for a relative of former Libyan dictator Muammar Gaddafi. Meanwhile, in Malta, the local citizenship-by-investment scheme “has awarded passports to three Russian investors” who are believed to have close links to Vladimir Putin’s inner circle, reports Transparency International. Such incidents suggest that immigration investment schemes are turning a blind eye to “money laundering, corruption and organised crime”.
How are governments fighting this?
The Home Office tightened the Tier 1 visa rules in March this year, with a new requirement that funds to be invested have to have been held in the applicant’s name for at least two years in order to combat money laundering. Canada closed its federal-level visa investment scheme in 2014; the US nearly doubled the minimum amount of cash required to secure an EB-5 visa this summer. Yet any tightening just creates an opening for other countries, including the likes of Greece, Portugal and Malta. Greece’s programme was only established in 2013 and is a bargain at €250,000, reports Liz Alderman in The New York Times. It has already prompted Chinese and Russian investors to pour an estimated €1.5bn into the local property market. “Athens is witnessing an investor boom.”
Isn’t investment a good thing?
In principle, policies that bring in more foreign direct investment (FDI) should be a clear win for the receiving country. The Sunday Times estimates that Tier 1 has raised at least £5bn for UK businesses since 2008. Yet in practice the benefits can be murkier. That newspaper’s recent investigation showed that industry insiders routinely advise Tier 1 investors to move funds offshore after five years to avoid UK tax. In many southern European countries visa investment takes the form not of dynamic business creation, but of property acquisition. That does little to create jobs and can end up pumping up housing bubbles and pricing out local residents.
Is the trend here to stay?
The growing power of nationalist and nativist politicians in many Western countries could power a backlash against the idea that, as Beck puts it, “citizenship is now a commodity”. Yet ironically, a world of tougher immigration controls only increases the attractiveness of multiple nationalities. Golden-visa professionals report that Brexit has been generating enquiries from worried British clients for the first time. Given this, along with the seemingly unstoppable desire of Chinese and Russian nationals to move funds offshore – and the willingness of cash-strapped governments to welcome them – the practice looks set to endure.