Nirbhay Handa, Managing Director, GSAT, Henley & Partners
The unprecedented and highly volatile global conditions triggered by the COVID-19 pandemic and the Great Lockdown of 2020 have forced individuals across the globe to reassess their circumstances and highlighted the unquantifiable value of freedom and of having options in times of crisis.
The first two decades of the century saw the world becoming increasingly interconnected. Across the economic spectrum, families gained access to business, career, educational and lifestyle opportunities on a global scale by investing in residence or citizenship programs, thus expanding their horizons, enhancing their travel freedom and transcending the constraints imposed on them by their countries of origin. Acquiring alternative residence or citizenship enables greater flexibility and participation in the world’s leading economies, and having alternatives is an essential part of any family’s insurance policy for the twenty-first century. The more jurisdictions one is subject to, the more diversified one’s assets and the lower one’s exposure to country-specific and global volatility.
With the advent of 2020, abruptly and unbelievably, the world was grounded by lockdowns and border closures in efforts to curb the coronavirus, further emphasizing the advantages and necessity of having a ‘Plan B’ to protect against future shocks. In addition to the organic growth of alternative residence and citizenship, the coronavirus pandemic appears to have led to a sharp increase in demand for investment migration programs, from highly developed nations such as the UK and the USA and emerging wealth markets alike, and in particular India, Indonesia, Nigeria, and Pakistan. At Henley & Partners, we saw a 62.6% increase in enquiries received from Indian nationals in 2020 as compared to 2019, with a 26% increase in applications for that same time period.
The rise of investment migration
Investment migration, comprising residence-by-investment (RBI) and citizenship-by-investment (CBI), enables wealthy individuals to acquire alternative residence or citizenship in another country in exchange for a significant economic contribution to that country. Residence- and citizenship-by-investment (RCBI) programs are designed to manage the combination of risk and opportunity for investors by simultaneously diversifying the distribution of assets and permitting access to a significantly expanded set of possibilities for investment, global influence and travel as well as residence in a country of their choice for those who wish to relocate temporarily or permanently.
When the first modern investment migration programs were developed in the late 1980s and early 1990s, the industry was largely unformed, unknown and unregulated. Today, by contrast, investment migration is part of every astute investor’s portfolio. The number of programs is increasing steadily as governments tap into their potential to boost capital and talent inflows. The investment migration industry is an established and fast-growing feature of the global economic landscape, endorsed by significant players such as the UK and the USA.
A wealth-planning innovation that can reshape your future
The past two years have seen investment migration transform from being a luxury lifestyle product to a sophisticated investment choice. More than simply being about ease of travel or acquiring a vacation home, alternative residence and citizenship encompass portfolio diversification, global investment and operations, and the creation of a new inheritance and identity for the family, particularly through providing access to exceptional education and health options.
By extending their wealth planning and legacy management strategies to include investment migration, investors are catalyzing the transition to new lives in carefully selected countries that offer a better quality of life, where they and their families feel more comfortable and secure, and where they envisage a future that is better aligned with their aspirations, both now and for generations to come.
Asia’s wealth ascendance
Knight Frank’s 2021 Wealth Report revealed that with lower interest rates and more fiscal stimulus, asset prices have surged, driving the world’s ultra-high-net-worth (UHNWI) population (those with a net worth of USD 30 million or more) 2.4% higher in 2020. And it was Asia, with 12% growth, that saw the real upswing. While the US remains the world’s dominant wealth hub, Asia is expected to see the fastest growth in UHNWIs over the next five years, at 39% compared with the 27% global average. Knight Frank predicts that by 2025, Asia will host 24% of all UHNWIs, up from 17% a decade earlier. The expansion in wealth was not universal, with a fall in the number of UHNWIs in Latin America, Russia and the Middle East as currency shifts and the pandemic undermined local economies.
For the second year running, the Knight Frank Wealth Report features a Global Wealth Sizing model that predicts growth in the number of UHNWIs around the world over the next five years, with the biggest climbs predicted in Asia. At 39%, Asia’s five-year UHNWI growth forecast is led by Indonesia at 67% and India at 64%. This would see Asia’s proportion of global UHNWIs rise from 22% to 24%.
Last year, saw the world grapple with the devastating effects of the COVID-19 pandemic. Amid exceptional uncertainty, the International Monetary Fund (IMF) projected that the global economy is set to grow 5.5% in 2021 and 4.2% in 2022. Global growth contraction for 2020 meanwhile is estimated at -3.5 %, which is 0.9 percentage points higher than projected in the previous forecast (reflecting stronger-than-expected momentum in the second half of 2020).
In his April 2020 COVID-19 update, Andrew Shirley of Knight Frank pointed out that wealth creation recovered relatively quickly after the 2008 global financial crisis. This is reflected in the IMF’s January 2021 World Economic Outlook. The growth contraction for Emerging and Developing Asia is estimated at -1.1 % in 2020. Meanwhile, growth projections for 2021 and 2022 is 8.4% and 5.9% respectively. India’s growth is estimated to contract -8.0% in 2020, with growth projected to rise to 11.5% in 2021 and 6.8% in 2022.
According to New World Wealth’s 2019 Global Wealth Migration Review, India’s wealth growth rate in the decade between 2008 and 2018 was an astonishing 96%, rising from USD 4,257 billion to USD 8,148 billion, making India the sixth-largest wealth market in the world with the second-fastest wealth growth rate after China (130%). Australia was in third place with a wealth growth rate of 48%, half of India’s.
The 2019 Global Migration Review also reported that at the end of 2018, India was home to 327,100 high-net-worth individuals (HNWIs) (those with a net worth of USD 1 million or more), ranking it ninth in the world. India also boasted 118 resident billionaires, ranking it third in the world after the USA (715 billionaires) and China (237 billionaires). In 2019, India lost 7,000 HNWIs (2% of its HNWI population), and while New World Wealth maintains that the outflow of HNWIs is not a concern as India generates more HNWIs than it loses annually, given their sudden increase in interest in investment migration, it is interesting to consider the alternative residence options available to Indian HNW families.
The changing face of investment migration in India
Until a few years ago, the investment migration industry in India was predominantly centered on Australia, Canada, the UAE, the UK and the US. Historically, the primary reasons driving investment migration in India have related to education, lifestyle and affinity with the destination country. While these five countries are home to a significant Indian diaspora and their investment migration programs are high in demand despite their complex investment requirements, there is a growing interest in the residence programs hosted by countries in continental Europe, often referred to as ‘golden visas’. Notable spikes in interest in Q1 2020 compared to Q4 2019 were seen in the increased numbers of applications for Cyprus, up by 75%, and Malta and Portugal, both up by 19%.
There are multiple drivers of this new trend. One is investors seeking alternative residence or citizenship as a means of hedging sovereign risk. While India is an exceptionally dynamic place for business activities, commercial growth for corporations and high-yielding investments, it is uncertain on where it stands from a wealth preservation perspective.
It would be fair to say that while onshore private banking in India has emerged in the last 15 to 18 years, it has yet to prove its sustainability and tenacity in tough market situations. India is not alone in facing an unprecedented financial crisis owing to COVID-19, but unlike many European countries, its financial institutions – while doing an exceptional job – need to build more trust on the longevity of solutions they offer for generational wealth preservation.
Until recent times, HNWIs have predominantly sought options that enabled their families to be prepared for unexpected events and that extended their travel freedom. Cash rich and time poor, they did not necessarily wish to move to the places where they acquired a second residence or citizenship – for most, these options were merely an insurance policy should the need arise. Now, however, investment migration is shifting from being a ‘Plan B’ on paper, or being about HNWIs living the life they desire purely in terms of holidays and business travel, to a more holistic vision that includes the possibility of relocating to a new country that promises access to world-class healthcare options and enhanced safety and security.
Another reason HNW families are considering alternative residence or citizenship is the consistent speculation on India’s stance on taxation. Recent media speculation that India will raise the tax bracket for its wealthiest families has caused a stir in the community. Furthermore, the fact that the Union budget for 2020-21 proposed that non-resident Indians not paying taxes in any foreign country should be taxed in India, and the rumors that India will reintroduce estate tax have prompted HNW families to consider CBI opportunities. According to the Reserve Bank of India, there was a ten-fold rise in the spending power of Indian HNWIs between 2013 and 2019, and the overall figure for outbound investment increased from USD 440 million in 2007-08 to USD 13.5 billion in 2017-18.
The 2020 Wealth Report Attitudes Survey, which is based on responses from private bankers and wealth advisors managing more than USD 3.3 trillion of wealth for UHNWI clients, revealed that 82% of clients on the Indian subcontinent are becoming more worried about the impact of climate change, while respondents said the top three causes their clients are interested in are education (95%), healthcare and disease prevention (89%), and conservation or the environment (82%). These prevailing concerns provide further insight into what is driving more and more clients towards seeking alternative residence and citizenship options.
Alternative residence versus alternative citizenship
Over 100 countries have some form of investment migration legislation in place. Of these, about 30 RCBI programs are currently running successfully. More than ever before, wealthy individuals are pursuing these options as the most effective way to access previously unimagined opportunities.
RBI programs provide HNWIs and their families with the option of physically relocating and the right to live, work, study and receive healthcare in their new countries of residence. For some individuals and families, a change of residence is a highly sensible proposition. This is particularly the case for clients who live in countries with limited options for tax and estate planning, for those seeking more lifestyle choices, and for those who live in countries with an unstable political, economic, or environmental climate, for whom alternative residence is also a means to increase personal security and achieve a better quality of life, as well as a pathway to acquiring an additional citizenship.
The privilege of acquiring alternative citizenship is provided by CBI programs. This, in turn, enables families to travel freely to numerous destinations and to settle in another country permanently. Since India does not allow for dual citizenship, Indian clientele predominantly seek RBI options. There are, however, individuals of Indian origin around the world who hold alternative nationalities and who are not subject to dual citizenship constraints when it comes to CBI programs.
Benefits of investing in a European program
Europe’s economic resilience, health security and predominance of liberal democratic institutions have always made it a destination of choice for HNWIs. The current record-low interest rates add to the appeal of real estate markets in investment migration hotspots such as Cyprus, Greece, Malta and Portugal. A European residence permit and/or citizenship will provide investors and their families with access to new markets, top educational institutions, first-class healthcare and a host of additional investment and personal opportunities for both present and future generations.
Working and residential rights: Most European countries that host RCBI programs are members of the EU, and EU and Swiss citizens and nationals of the European Economic Area (EEA) are legally entitled to live, work and seek employment throughout the EU.
Top-tier education: Europe offers excellent education institutions at all levels and is home to thousands of universities, research institutes, and other higher education institutions. Students gain invaluable international experience, skills and knowledge studying in Europe and benefit from excellent prospects in Europe and beyond in addition to international networking and career development opportunities. Student life in Europe’s diverse cities with high living standards is unrivaled.
Access to world-class healthcare: European countries that host investment migration programs offer access to high-quality healthcare, although not necessarily free or low in cost. Even if excellent free public healthcare is available, it is often advisable or a requirement for HNW clients to take out private health insurance and opt for private healthcare providers, especially to reduce waiting times. Apart from Monaco, RBI and CBI host countries spend a significantly higher percentage of their GDP on healthcare than India does. Cyprus and Montenegro spent almost double what India spent on healthcare in 2017, and all the remaining host countries spent more than double India’s 3.53%.
Ease of conducting business: As developed economies, the vast majority of RCBI host countries in Europe score very well in the World Bank’s Doing Business 2020 rankings, and all but two score better than India. A high Ease of Doing Business ranking indicates that the regulatory environment is more conducive to starting and operating a local firm. The UK, Ireland, Austria, Spain, Switzerland, Portugal and Montenegro are all ranked in the top 50 out of 190 economies, with the UK in eighth place. While India made notable improvements in its score in Doing Business 2020, it is ranked at 63.
Safety and security: Testament to its high levels of safety and security, Europe maintained its position as the most peaceful region in the world for the fourteenth consecutive time on The Institute for Economics and Peace’s Global Peace Index (GPI) in 2020, the world’s leading measure of global peacefulness. The GPI ranks 163 independent states and territories according to their level of peacefulness. The GPI 2019 included research on climate change and peace for the first time. Although there is a lack of long-term quantitative data on climate and peace, what there is indicates that climate has influenced conflict through its effects on livelihood, security and resource availability. South Asia and Asia-Pacific collectively house double the number of people in high exposure climate zones as all other regions combined. All RCBI host countries are ranked High or Very High on the GPI 2020, and three are in the top five in the world – New Zealand in second position, Portugal in third position and Austria in fourth position overall. India is in the Low rankings at 139, but up two places from its 2019 position. For those seeking a more peaceful life, Europe is undeniably a wise move.
Real estate ownership: Real estate has traditionally been seen as an investment with staying power that demonstrates decades-long returns. Most European RCBI programs include the option to purchase real estate, and in exchange investors are granted permanent residence or citizenship. Investors favor European real estate-linked investment migration programs as they are a reliable back-up plan for turbulent times, providing unparalleled safety, security, stability and opportunity, including access to major money markets. Real estate-linked investment migration programs have the additional advantage of enhancing HNWIs’ options for relocation or retirement, or both. The potential gains from investment migration-linked real estate over the lifetime of the investment are trifold: the core value of the asset, rental yields and global access as an ultimate hedge against market and political volatility.
Global mobility and ease of travel: Although 2020 was a year in which most of the world had been temporarily grounded by the Great Lockdown, at the time of writing, borders are slowly and cautiously being reopened, and global mobility is reclaiming its allure. In addition to more residence options, acquiring an alternative residence or citizenship gives HNWIs more travel freedom, particularly between EU member states if EU citizenship is obtained – with permanent residence in Europe, gone will be the days of standing in long customs queues. India’s passport scores consistently low on the Henley Passport Index (HPI), the original ranking of all the world’s passports according to the number of destinations their holders can access without a prior visa. In the April 2021 edition of the HPI, India was in 84th position out of 199 destinations, with visa-free or visa-on-arrival access to just 58 destinations, whereas eight of the European countries mentioned in this article were in the top 10, with access to 184 or more destinations without having to obtain a visa in advance.
All of this holds great appeal for applicants looking to secure better opportunities, more comfortable lives and safer futures for their families.
Europe’s top residence programs
There is a wide range of options for investors wishing to secure alternative residence in Europe, but their attractive real estate options make Cyprus, Greece and Portugal abiding favorites of Indian investors, while the UK’s programs are highly sought after by those preferring to secure residence for themselves and their families in the UK with its host of unique concomitant benefits.
Cyprus’s strategic location at the crossroads of Africa, Asia and Europe has played a significant role in its development as a financial center. Its beautiful beaches and temperate climate make Cyprus an ideal choice for those seeking permanent residence in an EU country.
The fact that it has the lowest crime levels in the EU, a relatively low cost of living, and no inheritance tax add to Cyprus’s appeal. It also offers high-quality healthcare and access to leading medical centers. Additionally, it is a brilliant destination for British education, with a wide range of private English schools and universities, giving access to Canadian, European and US universities.
Cyprus has a prosperous, free-market, service-based economy that has grown in recent years. Its legal system is based on English statute and English common law, and its efficient legal framework and regulations give foreign investors’ confidence to invest and grow.
The Cyprus Permanent Residence Program is real estate based – a big drawcard for Indian investors. The main requirement is the purchase of new, immovable real estate (residential, retail, or commercial, or a combination thereof) with a total market value of at least EUR 300,000 plus VAT.
• Efficient application procedure
• High approval rate if all criteria are satisfied
• Residence is not required, but a visit to Cyprus once every two years is required
• High-quality private schools offering English-language courses
• Very good healthcare system
• Residence applies to the whole family (applicant, spouse, and children under 18)
• Except for biometric capturing, the process can be arranged without being present in the country
Residence permit holders may apply for Cypriot citizenship through naturalization after holding a residence permit for seven years if they have resided in Cyprus for five years prior to their application. They will then obtain a Cypriot passport.
Conveniently situated in south-eastern Europe at the junction of Africa, Asia and Europe, Greece is regarded as the cradle of democracy. Greece’s warm Mediterranean climate, world-renowned gastronomy and cosmopolitan cities, along with its exquisite beaches and authentic local traditions and hospitality, have led many upwardly mobile individuals to make this country their second home.
As a member state of the EU, Greece offers its residents and citizens reassuring benefits including high levels of safety and security, excellent education opportunities, robust healthcare options and a dependable rule of law.
The Greece Golden Visa Program is considered one of the most affordable RBI programs that provide access to Europe. Successful applicants and their families benefit from visa-free access to Europe’s Schengen Area within two months of applying. The real estate options are extremely popular with Indian investors, but there is a range of qualifying options:
• Real estate:
o Investment in real estate with a minimum value of EUR 250,000
o A 10-year lease agreement for hotel accommodation or furnished residences in tourist accommodation complexes
o A 10-year time-sharing agreement for hotel accommodation
• A capital contribution of at least EUR 400,000 to:
o A company that has its registered office or establishment in Greece
o A real estate investment company that aims to invest exclusively in Greece
o A closed-end investment company or closed-end mutual fund for acquiring shares, provided that the alternative investment institutions are intended to invest only in Greek companies
• Purchase a minimum of EUR 400,000 of Greek government bonds, units of a mutual fund with scope to invest exclusively in shares, corporate bonds and/or Greek government bonds admitted for trading or traded on regulated markets or multilateral trading mechanisms operating in Greece, or units or shares of an alternative investments fund that intends to invest exclusively in immovable property in Greece
• A capital transfer term deposit for at least one year of a minimum of EUR 400,000 at a domestic credit institution
• Purchase a minimum of EUR 800,000 in stocks, corporate bonds, or Greek government bonds listed for trading or traded in regulated markets or multi-lateral trading facilities
A valid visa is required at the beginning of the application process to enter Greece, and the applicant and their dependants (spouse, children, and parents) must have health insurance in Greece.
• Visa-free travel within Europe’s Schengen Area
• No residence requirement
• Residence permits acquired in 30-60 days and have an unlimited expiry date
• Residence applies to the whole family (married spouse, children under 21 years old, and parents of the main applicant and spouse)
• Good healthcare system
• Apply for citizenship after seven years of residence
• Rent out investment real estate
• Hold shares and receive income from the dividends of a company registered in Greece
Portugal is considered one of the world’s most globalized and peaceful nations. The country is known to be safe and has a low crime rate. Portugal has streamlined its legislation to create an efficient process by which non-EU citizens may obtain a residence permit based on investment via its five-year Portugal Golden Residence Permit Program. The residence permit allows free circulation in Europe’s Schengen Area and requires an average stay of only seven days per year in Portugal over this period, which can also count towards citizenship eligibility after five years.
There are several qualifying options:
• Capital transfer:
o EUR 1 million transfer into a Portuguese bank account or approved investment options
o EUR 350,000 for research activities of public or private entities that are part of the national scientific and technological system
The threshold is reduced by 20% if the funds are committed to a low population density area with less than 100 inhabitants per km² or an area with a GDP per capita below 75% of the national average.
o EUR 250,000 in support of the arts or maintaining national cultural heritage
o EUR 350,000 for acquiring units of investment funds or venture capital funds committed to the capitalization of companies incorporated under the Portuguese law, with a maturity of at least five years and with at least 60% of the investment portfolio in companies with a head office in Portugal
• Real estate:
o A real estate purchase with a minimum value of EUR 500,000
o A real estate purchase with a minimum value of EUR 350,000 for the refurbishment of properties older than 30 years or in an area of urban regeneration, including the cost of renovations
o Creating a minimum of 10 jobs
o EUR 350,000 for the incorporation or increase of the share capital of a company registered in Portugal, creating or maintaining a minimum of five permanent jobs, for a period of three years
While the EUR 1 million capital transfer option is a straightforward route and can include investments in stocks and shares, many Indian investors are drawn to the real estate options. Whether for lifestyle or investment, Portugal has an excellent real estate offering with a large geographic environment and price-point diversity. Many successful applicants prefer to combine the residence permit’s mandatory qualifying stay (an average of seven days per year) with longer visits to Portugal. After five years as a resident, applicants are eligible to apply for Portuguese citizenship.
• Visa-free travel in Europe’s Schengen Area
• The right to live, work, and study in Portugal
• Low physical presence requirement (seven days during the first year of residence and fourteen days for the two subsequent years)
• Excellent healthcare system
• Attractive taxation system
• Apply for citizenship after five years as a legal resident while keeping other citizenship(s)
• High quality of life and a high level of security
The UK is one of the most attractive destinations in the world both as a business location and a private residence. It is known for having a stable democratic government and a respected system of law. The UK boasts some of the best educational institutions in the world, a good healthcare system, and its capital London is the world’s most influential financial center.
Two popular options for those seeking residence are the UK Investor Immigration Program (Tier 1 Investor visa) and the UK Innovator Program (Tier 1 Innovator visa).
- UK Investor Immigration Program (Tier 1 Investor visa): The Tier 1 Investor visa requires an individual to make a substantial financial commitment in the UK. To qualify, applicants must have held no less than GBP 2 million under their control for two years in advance of the initial application, failing which they must provide evidence of the source of the funds. Within three months of entry into the UK, applicants are required to invest at least GBP 2 million that must be maintained until permanent residence is granted. Applicants must invest in UK share capital or loan capital in active and trading UK-registered companies other than those principally engaged in property investment. Investment in government bonds and offshore companies is not permitted. Those who increase their financial commitment to GBP 5 million or GBP 10 million may apply for settlement after three years and two years in the UK, respectively. This financial commitment must be maintained for five years.
Investors and their families are expected to make the UK their main home by spending more time in the UK than elsewhere. Married or unmarried partners and dependent children under 18 years of age can apply to reside in the UK along with the applicant. Furthermore, the UK recognizes civil partnerships that have been legally registered. Once a resident, the applicant’s children will be entitled to the same public education benefits as British children, with certain restrictions applied only to college and university education. Once permanent residence has been granted, all restrictions are removed. It is, however, important to maintain a physical residence in the UK to avoid losing one’s permanent resident status. One should not be away from the UK for longer than two years.
- UK Innovator Program (Tier 1 Innovator visa): The Tier 1 Innovator visa is aimed at those who can demonstrate relevant experience in business as it requires an individual to set up or run an existing business in the UK. Applicants must be at least 18 years of age and have a minimum of GBP 50,000 in investment funds from any source if they intend to set up a new business. They do not require funds if their business is established and has been endorsed for an earlier visa. Applicants do not have to be the sole founders of their proposed businesses, but if they are part of a team, the team cannot share the investment funds. Applicants granted this visa can work only for their business(es) in the UK.
Married or unmarried partners and dependent children under 18 years of age can apply to reside in the UK along with the innovator. Furthermore, the UK recognizes civil partnerships that have been legally registered in the UK or in the applicant’s home country. There are additional qualifying requirements for the initial application as applicants must have proven business experience and be able to speak English according to level B2 CEFR.
Why the UK?
• International business environment
• Attractive tax regime for HNWIs who are resident but not domiciled
• Direct international flight connections to almost all major cities in the world
• World-renowned schools and universities
• Good healthcare system
• Fast immigration application processing
Other European residence programs
Europe has many other options for investors pursuing alternative residence, particularly for financially independent individuals. Below is a selection of the most reputable programs.
Austria is one of Europe’s wealthiest countries, offering a very high quality of life. With its stable economy, Austria is an outstanding place of residence. An Austrian residence permit allows visa-free access to Europe’s Schengen Area. There are several routes to residence, including the Austria Private Residence Program, designed for financially independent individuals. The key requirements are for an applicant to show sufficient funds, have documented German-language skills on A1 level or hold a university degree, have permanent accommodation in Austria, and have health insurance providing full cover in Austria. Liquid funds of at least EUR 40,000 on a bank account are required (the exact amount will depend on the size of the applicant’s included family). Under this residence category, the individual may not take up gainful employment. After ten years of legal residence, or six years in certain circumstances, it is possible to apply for Austrian citizenship.
An attractive location for private residence, the island nation of Malta enjoys a stable political climate and is strategically located, with excellent air links. The Malta Residence and Visa Program offers the opportunity for qualified applicants to be granted a Maltese Residence Permit, which provides visa-free access to Europe’s Schengen Area. Main applicants must be at least 18 years of age and have a minimum annual income EUR 100,000 or possess capital of no less than EUR 500,000.
The minimum requirements are:
• An investment in approved financial instruments of at least EUR 250,000, to be retained for a minimum of five years
• A non-refundable government contribution of EUR 30,000
• A property purchase of EUR 320,000 (EUR 270,000 in South Malta or Gozo) or a property lease of EUR 12,000 per annum (EUR 10,000 in South Malta or Gozo) to be held for a minimum of five years
• Once five years have elapsed, a suitable property must be held to renew the residence permit.
The requirements to become resident in Monaco are not as strict as commonly thought, but it is nevertheless advisable to employ a consultant or a lawyer to handle the application for residence. Applicants must demonstrate the means to afford the lifestyle and, in particular, the ability to afford to rent or purchase real estate, the cost of which in Monaco is comparable to large capital cities. A residence permit in Monaco allows visa-free access to Europe’s Schengen Area. Residents of Monaco (except for French citizens) are not subject to income tax, capital gains tax, or wealth tax.
Financially independent individuals who are not gainfully employed in Switzerland but who agree to pay a certain minimum in net annual taxes can acquire a residence permit via the Swiss Residence Program regardless of their age. The minimum net taxes are CHF 250,000 (ranging to CHF 1 million) depending on the applicant and the chosen canton of residence. Swiss residence allows visa-free access to Europe’s Schengen Area. The process for obtaining residence for non-EU/EFTA nationals is complex since applications are administered at canton level and at the federal immigration department. The typical processing time for applications is two to six months, depending on the canton and on individual circumstances.
Europe’s top citizenship programs
While there have been multiple debates on the topic of dual citizenship in India, India does not allow dual citizenship, and families have to renounce their Indian citizenship should they wish to acquire alternative citizenship, which makes it challenging for Indian families to consider CBI. Prime citizenship options in Europe are Austria Citizenship-by-Investment and Malta Citizenship by Naturalisation for Exceptional Services by Direct Investment, while the two-year-old Montenegro CBI program and the Turkey CBI program are rapidly gaining in popularity among HNWIs.
An excellent place to establish residence within the EU, Austria is the only Western European country that offers the possibility to obtain citizenship and an EU passport immediately without prior residence requirements. Moreover, an Austrian passport is one of the best travel documents in the world, offering its holders visa-free or visa-on-arrival access to 189 destinations. The program requires a substantial contribution to the country’s economy (from EUR 3 million), in the form of a joint venture or a direct investment into a business that creates jobs or generates new export sales, for example.
The Malta Citizenship by Naturalisation for Exceptional Services by Direct Investment process allows for the granting of citizenship by a certificate of naturalization to foreign individuals and their families who contribute to the country’s economic development. This is possible following a 36-month (or, by exception, 12-month) residence period. Each application is subject to a stringent four-tier due diligence process.
To qualify, the following requirements must be fulfilled:
• A minimum age of 18 years for all applicants
• An investment of at least EUR 600,000 (or EUR 750,000 by exception) depending on the residence status length (36 months or 12 months, respectively)
• The purchase of a residential property of at least EUR 700,000, which must be held for five years. Alternatively, the lease of a residential property with a rental value of at least EUR 16,000 per annum, also held for five years. A 36-month (or 18-month, by exception) lease agreement or property purchase is required during the residence period.
• A donation of at least EUR 10,000 to a registered sport, cultural, scientific, philanthropic, animal welfare, or artistic non-governmental organization or society, as approved by the Community Malta Agency
• Legal residence of Malta for at least 36 months (or 12 months, by exception), which includes the lease of a residential property with a rental value of at least EUR 16,000 per annum, held for that same period. Applicants require a valid residence card in order to apply for citizenship.
Subject to a thorough application procedure including detailed due diligence and background verification checks, applicants and their families are granted Maltese residence (and citizenship at a later stage). Malta’s compliance and due diligence standards are the world’s strictest, aiming to ensure that only highly respectable applicants are admitted.
Situated on the Balkan Peninsula in Southeastern Europe, Montenegro is known for its magnificent natural beauty. Emerging as a sovereign state in 2006, Montenegro is a member of NATO, uses the euro as its currency, and is an official candidate country for EU membership. A new addition to the suite of CBI programs in Europe, the Montenegro Citizenship-by-Investment Program was developed by the Government of Montenegro and launched in 2019 as part of its ongoing efforts to attract foreign direct investment and increase economic activity.
The program requires applicants to make a defined economic contribution to the country. In exchange, and subject to a stringent vetting and due diligence process including thorough background checks, applicants and their families are granted Montenegrin citizenship.
To qualify, the main applicant must be over 18 years of age, meet the application requirements, and make the following qualifying contributions to the Government of Montenegro:
• Contribution of EUR 100,000 designated for the advancement of local, underdeveloped, self-government units
• Investment of at least EUR 450,000 in an approved real estate development project in Podgorica or in the coastal region of Montenegro. Alternatively, an investment of at least EUR 250,000 into an approved real estate development project in the northern or central region of Montenegro, excluding Podgorica
Within six months, successful applicants and their families acquire citizenship of a country that is an official EU candidate, with a passport that enables visa-free or visa-on-arrival access to 124 destinations including Europe’s Schengen Area, Russia and Turkey.
With the economic, cultural, and historic central city of Istanbul embracing Europe and Asia on the Bosphorus Strait, Turkey is a transcontinental country that benefits significantly from its geostrategic location. The Turkey Citizenship-by-Investment Program allows investors to access both the European and Asian markets, as well as gain lifelong citizenship to a country that is in the process of full membership negotiations with the EU and has strong economic and industrial relations with the Middle East.
The Turkey Citizenship-by-Investment Program was launched in January 2017 to attract foreign direct investment to and boost growth in the country’s real estate sector. The program allows applicants to choose from a number of different types of economic contributions to Turkish society. To qualify for citizenship through the program, applicants must choose one of the following investment options:
• Acquire at least USD 250,000 worth of real estate
• Invest a minimum of USD 500,000 fixed capital contribution
• Deposit at least USD 500,000 or equivalent foreign currency or Turkish lira into a Turkish bank account
• Commit at least USD 500,000 or equivalent foreign currency or Turkish lira into government bonds
• Commit at least USD 500,000 or equivalent foreign currency or Turkish lira into real estate investment fund share or venture capital investment fund share
• Create jobs for at least 50 people, as attested by the Ministry of Family, Labour and Social Services.
Within six to nine months, successful applicants and their families acquire Turkish citizenship, which facilitates visa-free or visa-on-arrival travel to 111 destinations including Hong Kong, Japan and Singapore.
Selecting the best advisor
Unfortunately, not all companies apply best business practices and extreme care must be exercised when selecting a lawyer, company, or choosing to purchase real estate under one of the RBI or CBI programs in Europe. For those interested in pursuing alternative residence or citizenship, it is vital to ensure that a reputable and experienced advisory firm is selected, one that, like Henley & Partners, has a strong global presence and that offers opportunities to acquire alternative residence or citizenship on a sound legal basis.
Transform your future by investing in Europe
The investment migration landscape in India has evolved significantly over the past several years, and there is no doubt that the post-COVID-19 era will bring further changes. FutureMap founder Dr. Parag Khanna predicted in the Henley Passport Index that the effects of the coronavirus would lead many individuals from all walks of life to reconsider their future options. “As the curtain lifts, people will seek to move from poorly governed and ill-prepared places to more proactive countries with greater resilience and better medical care.”
The investment migration industry presents many opportunities for Indian HNWIs and UHWNIs who have an appetite for investing abroad and who are seeking stability and security for themselves and their families, and Europe’s programs certainly tick all the boxes.
Henley & Partners: The global leader in investment migration
For more than 20 years, Henley & Partners has been the global leader in residence and citizenship planning. Each year, hundreds of wealthy individuals and their advisors rely on our expertise and experience in this area. The firm’s highly qualified professionals work together as one team in over 30 offices worldwide. As the industry pioneer, we are best placed to guide you and your family on your residence and citizenship options. Visit henleyglobal.com for more information and to arrange a free consultation.