Over recent years, people have shown a growing interest in obtaining a second residency or a passport.
Many of these programs have been in existence 10-15 years, so why all the fuss now?
One of the major catalysts has been world events over the last few years. Think COVID and people not being able to leave a specific country due to their status – I know people who were trapped in Asia for months. Often applicants are looking to the future – a Plan B…just in case. That’s particularly the case where people have a “weak” passport that makes it hard for them to travel internationally, they have an unstable government, or perhaps weak property rights or banking system.
So what is it all about & what are the benefits and drawbacks ?
In this article I hope to explain some of the bigger programs, the advantages and the things to closely consider. But I must start by saying that this is a complicated area requiring specific personal guidance. All views are mine. I encourage you to reach out and book a meeting with me if you are interested in getting further information and a more personalized approach.
So who am I? What gives me the “platform“ to preach?
I am a seasoned Chartered (UK) MSCI financial planner, still studying each year to maintain my credentials. My clients are internationally minded (and located) individuals. I work within a company network of over 200 people, with a large number of experts on hand. Together we are one of the largest firms working in this market with hundreds of families helped and a 100% success rate. I focus on Residency / Citizenship by investment and traditional wealth planning, pensions, life cover & lump sum investing. I am a Partner with the Residency & Citizenship team at Holborn Assets.
Without doubt this program has been very popular in recent years. When the program started in 2012, you could buy a residential property for circa €280,000, no need to live there, just run down the clock to your 5 years ownership and apply for a second passport once you pass a language test. That was easy right? There were other options, donations, opening a business or buying government bonds but the property route was almost 100% of applications.
That all changed when applications went through the roof after COVID. It became political in Portugal as people argued that it pushed property prices in some areas, to record levels and pushed out (voting) Portuguese and other residents. The program was revised in Jan 2022 to remove residential real estate in the major areas from qualifying for the visa program. It did also leave open the option to invest in commercial property, typically buying an apartment/ hotel unit which is rented by an external provider. This gave you some guarantees & usually a return.
Move the clock forward to 2023, and Premier Costa needed to win votes, so the program was altered again to remove all property!
Now the options are;
- Buy Portuguese government bonds, €2m hold for 5 years
- Deposit €1.5m in a bank, hold for 5 years
- Create a business with 10 full time jobs…lots of risk, liability, and complexity
- Donate to the arts, approx. €250,000 depending on the project
- Purchase a qualifying investment fund for €500,000
Pros/Cons? Or should that be strengths & weaknesses !
The fund investment route is regulated by the Portugal Financial Services and European law
Investors only need to stay in Portugal for a total of 5 weeks over a 5 year period in order to qualify for citizenship or permanent residence. During this time you can be a tax resident in another country
You can add parents on the application and over 65 they don’t need proof of income/means
Great for access to education / healthcare, think kids going to a European University
Residency granted gives travel access to all the EU member states, visa free.
To gain Citizenship you need to learn A2 Portuguese, that’s the lowest level on the matrix! And you only need to have spent a total of 5 weeks in Portugal. The Portuguese passport then gives you the right to live, work, retire anywhere in the EU.
Application times have doubled, due to the rush of applications this year. We are seeing times of 12-18 months to receive your residency cards. However, this is expected to improve as the immigration authority was re organised in 2023 and the number of applications “paused” for 6 months in 2023 while the government decided on the new program.
Costs – the government hiked already expensive costs for the visa in 2023, some 50% increase. If you have a larger family these costs can be substantial as generally there is no discount for children.
That 5 week stay over the 5 years can add significantly to the costs, think a large family holiday to Portugal every 2 years. (Although it is a beautiful country with great hospitality.)
The program has been around for many years but never reached the same level of public exposure that Portugal managed. Like Portugal there are a number of visa options e.g. buy a Government bond, start a business , buy a business, etc. However, this generally leads to residency NOT citizenship (i.e. a passport).
If you are from one to of the former Spanish colonies (it’s a long list!) like Cuba, Philippines, Mexico then you can apply for Citizenship after 2 years, you need to live in Spain & speak Spanish but its fast track. The rest of us need to have lived in Spain for 10 years. For full disclosure I am biased as I live in Spain myself !
Spain has long been a popular place for people to have holiday homes, especially British. After Brexit, people often wanted to stay longer than the restricted third country regulations allow.
Popular investment options
There are essentially 2 choices both must involve a headline €500,000 investment which you must maintain to keep your residency status.
Buy a commercial property normally in the big Cities of Madrid or Barcelona. The companies that manage these programs will “pre pay” rent for 5 or 10 years to you to reduce the capital needed to approx. €375,000. It is a hassle free option and gives you freedom to look at other options, perhaps where to buy your dream home on the beach!
Buy a property over €500,000 ANYWHERE in Spain and you can apply for a residency card ( residencia) but it must be a completed transaction. Don’t expect to put a deposit on a new build and get your residency straightaway!
Budget 10% for purchase fees, its worth noting that you should buy in one persons name, then add your spouse to the application as you will be rejected if not. This is a common error people make when not taking good advice.
Pros and Cons
Very quick processing, ie 3 months MAX after signing the Deeds at the Notary to complete the property purchase.
Great value, government fees are approx. €400!
No need to actually visit, other than to collect your Residencia, just keep the property !
Buy a dream home or multiple properties, rent, stay or Air B& B.
Freedom to travel to EU country states via Schengen access.
Can add family members
Leads to a Passport in 2 years if ex colony or 10 years if from other nation….which gives you time to learn the required B2 level Spanish!
This is hard to find, I guess the investment required plus purchase costs for residential can add up? It must be in “cash” as no mortgages are allowed below €500,000.
Does need 10 years of residency to get citizenship for people not from former Spanish colonies
The USA program is by far the biggest globally, both in terms of numbers and value of investment. The 2 big programs are the EB5 & EB3. So what are they ?
EB5 is a government approved investment program that can target areas where capital or development is needed. The overseas investors money is used together with traditional loans/debt to invest (often) billions of dollars in major projects. It costs each investor from $600,000 to $1.3m depending on its classification status and the developer funding model.
EB3 is a Skilled/Manual worker program, to attract immigrants to live, work & pay taxes in the largest economy in the world. Frankly, the US needs legal immigrants to do many jobs in the country.
For a total of $45,000 in fees (paid in stages) the applicant will be vetted for a job, typically in a Warehouse/Packing/unskilled position which they should stay a minimum of a year. They get full union approved rates of pay (typically $20+ an hour), healthcare and full employment protection. Only the lead applicant needs to work, spouses can of course work elsewhere but are not obliged to. The applicant and their family are granted Permanent Residency in the USA (also known as a Green Card). The card is renewable and also can lead to US citizenship.
Pros and Cons
Both programs are heavily regulated & monitored by the government.
Clean/clear no ambiguity
English is the spoken language
Both programs allow family members
No additional “government fees”
Choice of locations & available jobs
Eb5 is available to people already living in the USA on a valid temporary visa e.g. student visa
Eb3 allows you start a new career and eventually move on to any job you wish. Spouses are able to work anywhere in the US and also do not have to work.
For Eb5 the investment is high with only a small projected return on the capital
Eb5 Processing for NON Priority applications is 18 months +
Eb3 – you will need to live near the work offered & sustain it for 1 year minimum. Processing time to get the Green Card is around 12 months
UAE – Dubai
This program has exploded in popularly since launch in 2019. It is a 10 year renewable residence program based on purchase of a property. The minimum total investment must be at least $545,000 (2m AED). Capital required from the applicant is only $274,000 in cash as the balance $271,000 can be financed (with a mortgage).
Pros and Cons
No need to visit but if you decide to live there as a tax resident there are no income taxes, capital gains taxes etc
Off plan and finished properties qualify
You can add family members and domestic workers ( common in the UAE) to the application
Quick efficient processing, most is digital.
Capital needed only $274,000 rest can be financed. The AED is linked to the USD so USD interest rates tend to apply for loans.
Payment plans are available for most developers in stages to completion
Easy to rent / provide a yield on property due to growing population
This gives you and Emirates ID card, but doesn’t allow you to live, work , study in other Gulf Co-operation Council Countries (GCC). It is only the UAE.
Its expensive to live there. It is a big city and not for everyone. Summers are very hot but the quality of life is excellent.
Completion delays were common but have improved. It is better to use large existing developers with track records.
Like most Caribbean Islands St Lucia is a beautiful place, heavily dependant on tourism and with agriculture still a mainstay of its income. It offers Citizenship to attract foreign direct investment. If you decide to live there, taxes are low, its got good air links to the USA/UK and is very relaxed. Most people who get the passport do not live there – it is just a good Plan B and the excellent passport often makes international travel easier for them.
The program has options, the most popular being a “donation” to the National Economic Fund, from $100,000 for a single applicant. For that you get a passport & visa free access to 140 countries including the USA & UK. There is a property option from $300,000 plus fees but this is less popular & attractive, especially due to the poor past performance & regulation of developers.
Pros and Cons
Cost effective route to second passport with good visa free travel.
If choosing to reside there its an idyllic country with good air links, income tax is low with a maximum of 30% levied.
Quick processing compared to other programs of 6-8 months.
English spoken and is part of the UK Commonwealth of counties with King Charles the head of state.
No need to visit/live there to maintain your Citizenship except initial collection of passports.
It’s a donation ! you are buying a passport for $100,000 (single applicant) or up to $190,000 for a family of 4
No ability to live in the EU/USA/UK only other Eastern Caribbean countries
Passport is not as strong as for example Portuguese but much easier & quicker to obtain and requires less capital
Yes there are more !