More and more European countries are implementing schemes and programs designed to attract wealthy American immigrant investors through long-term residency in exchange of investments and the option of permanent residency or citizenship over the long run.
While some countries joined the investment immigration bandwagon to overcome the negative effects of the recent global recession, other European countries opted for such schemes to simply improve their competitiveness by attracting talent and wealth from all over the world. Spain belongs to the former category as it introduced its Golden Visa scheme after property prices were badly hit during the crisis in Europe. The scheme has contributed to the recovery in the real estate market although prices continue to remain far below the pre-crisis era.
Malta, on the other hand, offers residency at very lenient terms to ensure it remains a competitive and attractive destination for global investment. Whatever the reason, these European nations are fiercely competing with each other in a bid to attract more FDI into their economies.
The large number of choices combined with varying laws and regulations related to residency, permanent settlement, and citizenship has complicated the process of choosing the right investment destination. Assistance from Embassies, Consulates, and Immigrant Firms can, combined with independent research and analysis, help the investor make the right choice. It is important for immigrant investors to consider the following factors and issues before proceeding ahead.
Assess the Tax Liability
Shifting tax residence to a foreign country is a simple but effective way to reduce one’s tax liability. However, tax rules vary between different countries offering investment immigration schemes.
Countries like the UK and Portugal charge zero tax from US citizens residing in their countries as long as they have not earned any income in the country. Such residents are required to pay just the federal income tax in the USA. However, the minimum investment requirement in the UK is fixed at is £2 million or around $3.2 million, which can be prohibitive to some investors. Portugal, on the other hand, offers a relatively affordable deal with a minimum investment requirement of €500,000 or around $625,000.
Residency in Switzerland hinges on one’s ability to pay a minimum amount of tax on an annual basis. This annual tax varies from canon to canon with the lowest option costing around 250,000 Swiss francs, which is around $260,000 in taxes every year.
Freedom to Work
US investors seeking residence in Europe should decide whether they wish to enjoy the right to work in their country of residence. Most European countries with golden visa programs allow residents to work after the expiry of a period of one year. However, the right to work is granted without any delays for those starting a business in the European country. Hence, right to reside need not always be accompanied by the right to work.
For wealthy investors, a relaxed and comfortable lifestyle may be more important than the norms related to work and taxes. Latvia may offer a relaxed Mediterranean lifestyle but developed countries like the UK may offer a better and more luxurious lifestyle for wealthy investment immigrants.
Buying Property
Investing in real estate often forms the core of the investment immigration transactions. Investors have a wide range of real estate options to choose from including residential and commercial properties. While numerous websites facilitate easy identification of properties in the foreign country, such sites often cite premium prices as compared to the prices charged in the domestic market. A visit to the locality and interacting with local agents may be the best way to ensure you get a good deal on your property purchase.
Immigrant investors often have to consider the timing of the purchase to ensure the transaction is treated as an eligible investment by the Golden visa program. Normally, investors are required to buy the property before filing the application with the permits being issued in a span of few weeks to few months. Some countries, Greece for example, may be notorious for slow paperwork. However, this is rarely a deterrent for the investors.
Easy Citizenship
If one has more than a million dollars available for investment, then one can consider options that offer not just residency but even citizenship on a fast-track basis. Malta offers citizenship in just one year for those who invest around $1.25 million in the country. Becoming a citizen of a EU member country entitles the individual to move and reside in all 28 member nations without any significant restrictions.
However, it is important to determine whether one is allowed to retain the American citizenship. While the USA allows its citizens to hold dual citizenship, the country offering the Citizenship by Investment program may not allow investors to retain citizenship of any other country.
Source: online.wsj.com