Updated: Jul 30, 2020
Having a dual or multiple citizenship suggests that a person is concurrently regarded as a citizen of two or multiple jurisdictions. People can become dual citizens naturally by birth or marriage, but in the last 35 years an individual or a family has the ability to acquire a secondary citizenship through investment.
Numerous jurisdictions and countries around the globe allow an investor to acquire their citizenship by investing in their citizenship by investment programs. These programs vary in investment requirements, fees and duration that can range from a donation in development funds to real estate investments in government approved property, but all in all the majority of them result with the investor being granted a new passport and regarded as a citizen of said nation. But why should an investor be interested in having dual citizenship? What are the benefits of having a second passport?
In 2018 this “little” market had grown into an almost $22 billion industry with the most conservative projections showing a yearly growth of 23% per year. With basic math and simple projections, it is evident that this industry is doubling in size every three years or so and if projections are proven correct it will become a $100 billion sector within the next five years.
What are the benefits of having a second passport?
Taking into consideration recent political and global events such as the Brexit, the Hong Kong protests and the pandemic of Covid-19 it goes to show that you never know when governments, situations and laws will change. By having a dual citizenship, a choice is given as to which political or sociological environment works best for the investor and its family.
Freedom of Travel
Different passports and citizenship schemes allow visa free travel all over the world. For example, by becoming a citizen by investment in the Republic of Cyprus it allows the investor to enjoy visa free travel to 165 countries as well as little to none reciprocity fees.
Business and Investment Freedom
Many countries have established stricter trade and investment barriers for foreigners while the local populace enjoy a much more lenient regime. By acquiring a dual citizenship, for example from an EU nation, the investor can use this lenient regime to make investments in the locality of its secondary citizenship but at same time and with the same ease in the other EU member states as well. By having a dual citizenship one can open bank accounts, manage investments, incorporate and transact with much easier and faster means than without.
Relocation and Work Possibilities
An important feature of a second passport and expanding on the example of having a citizenship in a European Union member is the right attached with the citizenship which entitles the holder to work anywhere in EU without the need of additional work permits. Dual citizenship allows easier relocation and presents more work possibilities than without.
Dual citizenship may prove advantageous for tax optimisation purposes. An investor can enjoy a positive tax regime and the utility of double tax treaties by investing in EU members citizenship by investment programs. Cyprus has one of the most favourable tax regimes for both individual residents and companies (12.5% corporate income tax-one of the lowest within the EU) alike, while at the same time the tax system is simple, transparent and harmonised with EU regulations and directives.
CITIZENSHIP BY INVESTMENT PROGRAM
The Cyprus Citizenship by Investment program offers the fastest and most assured route to gaining a European passport through investment. It is quick and guaranteed and is available to investors who have sufficient funds to invest at least €2.0 million into real estate or participation in Cypriot companies or in alternative investment funds (AIF) or financial assets of Cypriot companies, plus a donation of €75,000 to the Governments Research and Development fund and €75,000 to the Land Development Organisation. No other European Citizenship (Cyprus Citizenship) by Investment program guarantees such assured results offering an EU second passport in just two to three months. Cyprus passport holders enjoy visa free travel to 165 countries.
INVESTMENT IN REAL ESTATE
The property, either residential or commercial, can be rented for income. Any number of properties can combine to make up the €2.0 million minimum investment. The investment can be made personally or through a company in which the applicant is a shareholder. The investment requirement is €1,5 million for residential property along with the requirement of permanent residence at the amount of €500 thousand or €2 million or commercial property along with the requirement of permanent residence at the amount of €500 thousand.
INVESTMENT IN CYPRIOT COMPANIES
An applicant may elect to make investment of at least €2 million by participating in Cypriot Companies along with the requirement of permanent residence at the amount of €500 thousand.
INVESTMENT IN AIF OR FINANCIAL ASSETS OF CYPRIOT COMPANIES
An applicant may elect to make an investment of at least €2 million in AIFs or financial assets of Cypriot Companies along with the requirement of permanent residence at the amount of €500 thousand.
The applicant needs to have committed to the investment prior to applying for the visa and funds must be in place in Cyprus before application. Such funds can be released in accordance with any payment plan agreed for the property, particularly in the case of off-plan developments. However an application can be made within a few days of committing to the investment. The process for gaining the Cyprus passport will then be completed within 6 months. A full refund can be offered for certain real estate investments in the unlikely case of refusal of the citizenship application.
After 5 years the investment can be reduced down to just €500,000 and this investment must be maintained in order for the investor to retain their citizenship.
RESIDENTIAL OR COMMERCIAL PROPERTY
One of the key considerations when deciding between residential or commercial property in Cyprus is the rate of tax (VAT) that applies. Commercial property will attract VAT at a rate of 19% whereas residential property will attract just 5% on the first 200sqm of the first and main permanent residence property.
In addition to the real estate investment applicants will need a clear criminal record. There is no language requirement, medical test or interview. Very simple documents are required for the application. It is easy to apply and there is no requirement to stay in the country.
Lawyer fees will apply for the processing of the citizenship application and purchase of the property and typically amount to around €30,000- €40,000 for a family. Government processing and application fees for a family of three would amount to roughly €21,000.
Qualifying family members include spouse, all children up to the age of 28 and all future generations. Parents can also qualify by making a further €500,000 investment in real estate.
The Cypriot government introduced a package of measures in 2015 to encourage international investment in order to gain Cyprus Citizenship and residence from high net worth investors . Non-domiciled investors will be exempt from taxation in Cyprus for personal investment income including dividends and interest. This means that non-domiciled individuals will pay zero tax in Cyprus irrespective of whether the income is earned in Cyprus or abroad. There is no inheritance tax. Cyprus also has one of the lowest corporate tax rates in Europe at just 12.5%.
LIVING, WORKING AND STUDYING
Applicants of Cyprus Citizenship gain the full rights of EU citizens and have the ability to live, work and study anywhere in the European Union. However the Cypriot government is keen to encourage residency. Cyprus has the lowest crime rate in Europe. An ex British colony and member of the Commonwealth that offers a high standard and affordable British education. An environmentally clean country, over 80% of the population in Cyprus speak English. At least three United Kingdom Universities have campuses in Cyprus.
Applicants gain a European passport and the access this gains allowing travel to 158 countries and districts without a visa. It includes multiple entry into Canada for six months and Australia, Singapore, Hong Kong and Macao for three months.
Cyprus is a full member of the European Union. Citizens of Cyprus are European citizens. One of the fundamental rules of the EU is the ability for its citizens to travel, live, work or study anywhere within the European Union. Cyprus citizens and passport holders are able to live in any of the 28 countries that form the EU.
Additionally, Cyprus is projected to be one of the top 2020 citizenship by investment programs globally as it has announced that it has already applied to join the Schengen and will almost definitely receive a Visa waiver to United States. Finally, the Cyprus government is set to increase the speed of citizenship applications to boost the economy due to the negative side effects of Covid-19 and has already made alterations to its investor program to be in line with EU guidelines.
Written By : Joseph Vrahimis, Executive Chairman, Flexi Group