A UHNW Luxury Real Estate Report indicates that Ultra-High-Net-Worth (UHNW) individuals, generally defined as those with assets in excess of $30 million, are increasingly relying on global investment immigration programs to obtain a second passport.
Among the reasons for seeking second citizenship include relocating to a nation offering greater security and stability, reducing personal and corporate tax liabilities, visa free travel privileges, access to a jurisdiction providing improved standards of living, access to skilled labour and strong education options for children.
Immigrants can choose between two types of programs— Immigrant investor and Citizenship by Investment programs. The former offers fast-track permanent residence with the option of applying for citizenship in due course. The latter offers direct citizenship without any waiting period.
The most preferred investment asset class is real estate, which not just makes the applicant eligible for the second passport but also serves as a place of residence in a foreign country and an investment yielding attractive returns over the long run. Minimum requirement vary from $200,000 in Dominica to $700,000 in Cyprus. Other eligible asset classes include investment in local enterprises, creation of jobs, renovation of properties, charitable donations, and even contributions to cultural or artistic projects.
Demand for such programs comes primarily from the Middle East, South Asia, and Russia. Pakistan tops the list of countries with highest percent of UHNW citizens having a second passport with 17% of its affluent class preferring investment immigration. Lebanon is next with 15%, Egypt, Syria and the USA rank third with 7%, while Russia is next with 6% of its UHNW population holding a second passport.
Six out of every ten UHNW investment immigrant is from the Middle East region. This is because a significant percentage of wealthy individuals in this region, around 40%, are billionaires. In Russia, this figure is 55%. Studies indicate billionaires are five times more likely to opt for investment immigration, which is why Middle East and Russia rank high on this list.
The general trend seen is that affluent residents of nations with political unrest and low asset security often seek security through investment immigration opportunities. In such a setup, demand for investment immigration among Americans may seem incongruous, especially since it is a popular destination for wealthy immigrants seeking a safer life with better options for their children.
The US ranks high primarily due three factors—its large UHNW population, a transparent citizenship renunciation process, and its high-tax regime, especially for the ultra rich.
The USA ranks along with Syria and Egypt in terms of demand for residency and citizenship programs simply because it has a large population of ultra-rich individuals. When it comes to demand for second citizenship, a wealthy Syrian is 300 times more likely to apply as compared to an American citizen.
Renunciation of citizenship is a well-documented process in the USA. Citizens of other countries may simply shift to another country without bothering about formalities related to renunciation. This is not possible in the USA.
Finally, the USA is a very expensive tax destination for wealthy individuals. US citizenship can be a very expensive proposition, especially for those living in low-tax destinations like Dubai or Singapore. Second citizenship for US citizens can result in, even as per conservative estimates, significant tax savings running into millions of dollars.
While investors prefer low-cost programs, the minimum investment limit is just one of the many factors that applicants consider when comparing options. As of 2015, there are more than 20 nations globally, with investment immigration programs. The most popular destination is the EU with 56% of all applications being received by EU member nations. Caribbean nations like St. Kitts and Nevis, Dominica, Antigua and Barbuda, and St. Lucia receive around 25% of all applications. North America, the USA and Canada via the Quebec Immigrant Investor Program, account for 14% of UHNW second passport applications.
This year new programs and modifications to current programs is expected and this will provide important considerations for international investors seeking a secondary residence or passport.
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