COVID-19 has shifted the factors people consider when deciding where they live, and many are increasingly looking to establish residence or citizenship for their families in an alternative jurisdiction. This blog looks at their options.
The world has faced a series of unexpected challenges in 2020. The coronavirus pandemic continues to have a wide-ranging health and economic impact worldwide, while political issues, both national and geopolitical, are creating ongoing global uncertainty. In an increasingly interconnected world, how are these global challenges affecting people’s decisions about where they “choose” to live?
Investment migration and the global landscape
COVID-19 has shifted the factors people consider when deciding where they live, and many are increasingly looking to establish residence or citizenship for their families in an alternative jurisdiction. Several factors are informing their strategy:
There are a variety of investment migration options available to enable people to achieve these aims.
Investment migration programmes worldwide
Investor citizenship and residence programmes offer individuals the ability to acquire citizenship based on a significant investment in that country. So, where are individuals currently looking to establish residence or citizenship and what are the options available to them?
The well-known Citizenship by Investment programmes in the Caribbean offer a relatively quick route to citizenship, with a comparatively low investment threshold (as little as USD 150,000 in Grenada) and no physical residence required. However, investors are increasingly seeking greater benefits from an alternative citizenship than is offered by the Caribbean countries and are focusing heavily on the Citizenship by Investment programmes in the EU, primarily Cyprus, Malta and Portugal.
Cyprus requires a minimum investment of €2 million (typically in property) and has worked extensively to address historic reputational concerns and stress the importance of the integrity of their programme. The first iteration of Malta’s 2014 Individual Investor programme recently reached its cap and closed to new applicants. The programme raised over €1 billion in revenue and the Maltese government has confirmed its plans to introduce a new programme in September 2020, with the terms of the programme expected imminently. Portugal also offers a popular and effective residence by investment programme requiring a minimum investment of €350,000 or €500,000 (depending on the location of the investment) in property, and recently delayed plans to force investment outside of the most popular locations such as Lisbon and Porto - perhaps reflecting an understanding of the increasingly competitive nature of global investment migration programmes. While minimal physical residence is required for applicants to obtain permanent residence, they are required to spend at least five years in Portugal, with onerous residence requirements, to obtain Portuguese citizenship.
The EU is seen as a comparatively stable region with relatively sound health care systems and governance, and free movement rights also offer people the ability to live and do business in any country throughout the EU. In a coronavirus dominated world, many people (for example, U.S. citizens and British citizens who will soon lose their free movement rights) are viewing these benefits as critical to their ability to effectively manage their wealth, safety and business worldwide.
“Safe havens” and emerging jurisdictions
Investors are also looking at new and emerging destinations, including so-called “safe havens,” in which it would be possible to self-isolate comfortably in the event the pandemic worsens. In 2017, Vanuatu (a set of Commonwealth islands in the South Pacific close to Australia and New Zealand) introduced a citizenship by investment programme which has recently attracted significant interest. The programme requires a minimum, non-recoverable contribution of USD 160,000 to the Government of Vanuatu and personal net assets of USD 250,000, and therefore compares favourably with most other programmes in terms of cost.
By contrast, Montenegro offers Citizenship by Investment with a minimum investment of USD 250,000 or USD 450,000 (depending on the location of the investment). Montenegro is an EU candidate country due to ascend to the EU in 2025, at which point its citizens would benefit from free movement rights. The European Commission is aware of the Montenegro citizenship programme and has not raised any objection in its annual reports. While there is, of course, uncertainty as to whether the programme will close before Montenegro ascends to the EU, interest from investors in the programme reflects the extent and importance of long-term strategic planning when considering an alternative citizenship or residence.
The importance of strategic planning
Now, more than ever, an alternative residence or citizenship is seen as providing the flexibility and security individuals are seeking considering the coronavirus pandemic and ongoing geopolitical instability. We have seen a shift in favour of the EU citizenship by investment programmes in Malta and Cyprus, together with the emergence of programmes in “safe haven” island nations and central European jurisdictions such as Montenegro.
In carrying out strategic planning, investors and their families are broadening their search worldwide, creating a more competitive investment migration landscape. The reputation of a particular jurisdiction’s investment migration programme is a critical part of any investor’s planning, and countries will need to ensure their programmes remain subject to stringent due diligence checks and protect against the risk of being undermined by illicit practices.
For more information on these critical issues, please contact Alex Hood at [email protected], or +44 (0) 207 090 9161.
This blog was released on 2 September 2020, and due to the circumstances, there are frequent changes. To keep current with all the latest updates on global immigration, please visit our COVID-19 microsite, subscribe to our alerts and follow us on LinkedIn.
