The Citizenship by Investment and Residence by Investment (CBI and RBI, respectively) programmes are gaining increasing popularity in the EU. Both among Member States and among foreign applicants.
For the latter, aspiring EU citizens or residents, the reasons for seeking a CBI or RBI are clear: legal and health security, freedom of movement, top-level education for families - comfort, in short. Meanwhile, EU countries also have compelling reasons to promote this type of programme, known as golden visas. In short, it can be said that they have become a way of attracting money and capital.
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In the following, we will discuss the main features of these programmes in the EU from both the applicant's and the receiving country's point of view.
Origin of applicants
The lack of transparency regarding these programmes on the part of most states makes it difficult to determine the origin of applicants. Nevertheless, the reality shown in various reports is that CBIs and RBIs attract mainly wealthy citizens from Russia, China, Turkey, the Middle East and other Central Asian states to the EU.
For example, according to data published by El País, in 2019, the largest number of applicants for golden visa programmes in Spain came from China. Their number (455) far exceeded that of the second country of origin, Russia, which had 42 applicants.
Economic level of investors
Generally, RBI/CBI programmes are targeted at high net worth investors, known as high net worth individuals (HNWIs). They tend to come from emerging economies, or countries experiencing some political and/or economic instability.
There are exceptions, however. One of these is Latvia, the EU country with the lowest levels of investment to facilitate the residence of foreign nationals. The Baltic country's first level of investment when it launched its golden visa programme in 2010 was 70,000 euros. Then, due to the uncontrolled increase in applications, this rose in 2014 to 270,000 euros. That rise did not prevent the typical applicant in Latvia from remaining a middle-class Russian man, not necessarily wealthy.
Foreign investors' motivations for applying for such schemes may vary and are not mutually exclusive. The most common are:
- Gain freedom of movement in popular destinations, with a good quality of life and a high level of education.
- Take out a kind of insurance policy, in case the country of origin experiences a situation of political and/or economic instability.
- Enjoy visa-free travel almost everywhere in the world, which some of the EU countries offer to their citizens, greatly facilitating travel options.
- Access a favourable tax regime.
Discover this success story about real estate investment in Spain.
Common features of the programmes
With regard to the RBI and CBI programmes, although they all have their particular cases, differences and exclusivities, most of them share some common features. See:
- Most EU Member States, for example, apply RBI regimes that require little or no physical presence on the territory to become or maintain residency.
- Some form of real estate investment is usually required, either to set up a business or to buy a house. In the case of Spain, the minimum level is an investment of 500,000 euros.
RBI and CBI programmes are a global phenomenon.
Differential characteristics between golden visas
But just as all states have certain similarities, it is also true that the golden visa market is a market. And as such, each country tries to make the best offer to bidders for citizenship in order to keep them. This gives rise to certain substantial differences. For example:
- The residence permits granted vary from temporary permits (renewable up to a total of five years, as in the case of the RBI regimes of Estonia, Ireland, Italy, Latvia, Malta and Portugal), to permanent permits (as in the case of Bulgaria and Cyprus).
- In Italy, Latvia, Cyprus and Malta, the required investments are all passive and can be less than EUR 250 000. Ireland and Portugal combine passive and active investments.
- Within the EU, three schemes offer EU citizenship: Bulgaria does so in return for an investment of EUR 400 000 and Malta for EUR 1.15 million. This amount rises to €2 million in the case of Cyprus.
- Another aspect of the offer that varies greatly is the tax framework that each country applies to RBI or CBI applicants. In Bulgaria, Estonia or Latvia access is given to a low-level personal income tax regime, while Cyprus, Ireland, Malta and Portugal offer the possibility for applicants to benefit from a non-domiciled tax regime. In Italy, new residents with high net wealth can apply to pay a flat-rate "substitute tax" of €100,000 on their foreign-source income.
More information at: Golden Visa: discovering the different programmes of the European Union
Thus, it can be concluded, on the one hand, that applicants for golden visas tend to be wealthy individuals from countries in turmoil or with weaker economies, seeking security, peace of mind, ease of movement around the world and low taxes. For their part, countries play on a range of elements in their offer — tax advantages, initial capital required, offer of citizenship — to attract these applicants.
It is the market for residency and citizenship, one that is only going to get bigger in the post-pandemic years ahead. The bidding is on.
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