What is Citizenship by Investment?
Citizenship by investment (CBI) is a procedure through which an individual can obtain the citizenship and passport of a country in exchange for investing in that country. Such investment options can include almost everything right from real estate investments, non-refundable cash donations, government bonds, and businesses. Usually, the average processing time for this is approximately six months. Some investments and some countries can give approval to an applicant in less than three months, and some take over a year. The investment cost ranges between $100,000 and $2.5 million. The due diligence fees and the application processing fees are added to the investment costs.
Very few CBI programs need you to set foot in the country to obtain citizenship. CBI is quite the shortcut method to obtain a second passport. Nearly 5000 people across the globe obtain such citizenship every year. The citizenship by investment process requires rigorous criminal background checks and meticulous financial assessments. The first Citizenship by investment program was begun by St. Kitts and Nevis in 1984. This was subsequently followed by Dominica in the year 1993. Over time some programs have died out, and others have joined the success charts.
How to get a second Citizenship
When you are are investing such a substantial amount of money, it is only imperative to know what you are getting your hands onto. Investing in some such programs you don’t get your principal back. These programs are referred to as “citizenship by donation.” In some other programs, you not only get back most of your principal; you also generate a return on investment. Some countries offer passport that only permits visa-free travel to a few selective countries, and some countries offer passports that offer visa-free travel to more than 170 countries and includes almost all developed nations.
Traditionally there are four ways of obtaining second citizenship and a second passport. They are as follows:
Unlike other ways of obtaining citizenship and a passport which may require more time and effort from your end and do not cost as much as CBI, citizenship by investment is a quick procedure. Other methods may require a couple of years, whereas in most countries citizenship by investment takes only a couple of months. In a number of countries, you don’t even need to spend time there to obtain citizenship and passport through CBI.
With a large number of economic passport scams hitting the passports, you must ensure that such a procedure is legal and the citizenship and passport that you obtain is real as per the concerned nation’s law.
The structure of the citizenship by investment program must be absolutely clear. A clear structure means a clear picture of obtaining the citizenship process and the fixed amount of investment. A CBI program functions like a transparent business transaction. A CBI program that is not transparent is not worth your hard earned money.
A citizenship by investment is commoditized. This means that irrespective of your origin and residency you can apply for the program and the price will remain the same for each individual. You will be accepted exactly like someone else from some other country. However, you will need to pass the due diligence. The time that the due diligence procedure takes for an applicant may vary a little from one country to another.
What does not qualify as CBI?
In order to understand what qualifies as citizenship by investment program, it is important to understand what does not qualify as one.
Residency by Investment
Citizenship by investment in no way is the same as a residence by investment. A number of countries grant residency to individuals who make a stipulated investment in their country. However, they do not guarantee citizenship in exchange for the donation. The investment only grants entry into the country. Residence by investment does not sell citizenship; it is just one of the ways in which you can reside in a country. Once an individual is granted residency, he/she becomes naturalized just like everybody else.
Golden Visa programs in Europe in places like Greece and Portugal and US’s EB-5 program is usually confused with a CBI program, however these programs only fast track your ability to stay in the USA, for citizenship you will have to go through the same process as everyone else.
A genuine citizenship by investment program is structured, fast, legal and commoditized. Any program that does not meet these imperative requirements does not qualify as a CBI. If you want second citizenship and a second passport, then the right way to do it is to do it legally. You must avoid programs that need you to pay corrupt officials. A CBI is always referenced in the country’s laws.
If someone is trying to sell you a program, calling it a CBI but is unable to show you any legal reference and basis associated to the citizenship in question, then it is most likely is a scam, and illegal, and you must avoid it.
Some legal non-CBI programs can also work for you, but it is crucial to know all details of the same. Even though everything has a certain amount of risk associated to it, you must make an informed decision and invest in real citizenship by investment program.
A number of programs involve investments and citizenship in exchange for the investments. All these programs can be mistaken for a citizenship by investment program, but they are not. Such programs are usually not commoditized, structured or fast. Such hybrid programs fit the exceptional citizenship category. Such citizenships are not real as per the CBI programs.
Why should you get Citizenship by Investment?
So now you know how how to get a Citizenship by Investment. But the question is: Why should I get a second Citizenship? Because the costs are often high, you have to leave your home country and give up your friends, house, home town and so on.
All passports have travel gaps. Some passports only offer visa-free travel to a few countries that may or may not be on your wishlist. Some passports offer visa-free travel to over 170 countries but do not give you a visa to the country you wish to travel to. For example, Germany offers visa-free travel to 177 countries, but if you want to show up at Russia, you still need a visa. The passports to some countries have larger travel gaps in comparison to others. However, a second passport usually fills those travel gaps for you. If you hold a decent passport, all you need is a second passport to derive maximum travel privileges.
People who primarily benefit from citizenship by investment programs are usually the ones who hold a passport from an emerging world country which has bad or no visa-free travel. Russians, Arabs, and Chinese form a significant part of the citizenship by investment investor pool. Such people do not want to lose on opportunities as a result of bad passports, can afford and are willing to bear the gigantic cost of a CBI program in exchange for great travel benefits.
If you are a US citizen, then you are liable to pay taxes on your worldwide income irrespective of where you live. Even if you have not visited the US for years at a stretch, you still have to pay tax to the US government. Even though there are many ways to reduce US tax liability, renunciation of US citizenship truly liberates you of all US tax obligations. In order to renounce a US citizenship, you will practically require a second passport. Citizenship by investment is an easy bail out option for a high-income US citizen. For such people, the cost of compliance and tax is much higher than the cost of such an investment. This decision makes absolute financial sense for people who pay huge taxes to the US government.
Some people want to obtain a second passport and a second citizenship via a citizenship by investment program just for peace of mind, as a backup policy, protection in the event of economic, political unrest in their country or the event of a natural disaster in their home country, for such people second citizenships acts like an insurance policy. Since this option does not require residency, it is a very feasible solution for well-established individuals all across the globe.
The interest of people in a citizenship by investment program has substantially accelerated over the past few years. Because of a number of factors such as the introduction of FATCA in the US, enhanced visa-free travel privileges, etc. most of the economic citizenship investors belong to emerging economies such as Russia, India, China, Brazil, Mexico, Vietnam, Turkey, and a number countries from the Middle East. The recent years have also seen a rising demand for a CBI program in developed nations.