Citizenship by Investment

OUR ANALYSIS AND EXPERT OPINION​

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Freedom of movement

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The first criterion that is assessed is the freedom of movement for the citizens of the country concerned. Not surprisingly, European countries lead in this part of the rating. It is also not surprising that Comoros and Cambodia have the worst performance. At the same time, a relatively high rating of the Caribbean countries on this parameter raises doubts.

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The Caribbean republics do indeed have visa-free regimes for many countries, including the Schengen countries. However, in essence, these visa-free regimes give the same rights as ordinary tourist visas. As countries participating in the British Commonwealth of Nations, the Caribbean republics enjoy certain preferential treatments in the UK that are inaccessible to third-country nationals entering the country through tourist visas. This, perhaps, is the main difference between the Caribbean republics passport and tourist visas in terms of freedom of movement.

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Obtaining a tourist visa, including a long-term one, does not represent a particularly difficult task and does not require much effort and investment. If a citizenship by investment programme is valued solely from the perspective of the ease of tourist travelling, then it would also be correct to compare the possibility of obtaining long-term visas that provide for similar freedom of movement. In this case, the costs of obtaining long-term visas will be significantly lower than for obtaining citizenship in the framework of programmes for investors.

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Standard of living

It is interesting that none of the countries participating in the rating scored the highest score in this category. The calculation methodology included estimation of such parameters as life expectancy, real GDP growth, level of education based on average number of years of study, level of security, political freedom, etc. Some of these parameters can be called objective, for example, the average life expectancy. Other parameters raise questions and require additional clarification.

It is difficult to assess the level of education based solely on the number of years of study. The quality of education is very important and affects its level not less, but rather even more than the duration of education. The level of real GDP growth is a very sly indicator, because it interferes with the base effect. The relatively low growth of the Austrian economy as a percentage can be very significant in absolute terms and can exceed the growth rates of other countries. It is also not clear from the report whether such important factors as the level and availability of medicine were evaluated.

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Minimal amount of investments

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This criterion worries all investors. Equally high-top positions in the ranking are occupied by the programmes of the Comoros, Dominica and St. Lucia. All these programmes are based on a free contribution to the country’s budget in one form or another, and cannot be considered as a full-fledged investment programme. Instead, they are sponsorship programmes. It is strange that Dominica and Saint Lucia received the same assessment with the Comoros, since in the Comoros the amount of the donation is about 40,000 dollars compared to 100,000 in the Caribbean republics.

The volume of investments does not take into account the accompanying costs, such as state duties, compulsory legal support etc. The amount of such accompanying costs in some programmes can reach half of the minimum amount of investment. These costs affect the efficiency of investments in such a way that, theoretically, the yield on them becomes possible only with a significant increase in the amount invested.

In addition, an important investment aspect is the period of return on investment. In the case of Caribbean programmes based on investment as opposed to a non-refundable contribution, as well as the investment part of the Malta programme, this period is at least 5 years.

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The requirement to visit and / or reside in the country

It is obvious that for investors the absence of a minimum period of residence in the country as well as visiting the country to obtain citizenship obligations is an additional convenience. Most programmes received a high rating for this parameter, as in most countries there aren’t really any strict requirements for minimum residence time, and in some of them even for a visit to the country for accelerated naturalisation in the framework of investment programmes.

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Timeline

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The criterion itself does not raise questions. It is clear that the speedy processing of documents is preferable for investors. But the results of this criterion evaluation cause some doubts. The text claims that the best indicators for this parameter are in Vanuatu and Saint Kitts and Nevis. In the summary table though, the maximum score for this parameter is given to the four Caribbean programmes.

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Simplicity of the process

This is seemingly an understandable and important criterion for evaluation. But if we look at the components forming it, there is a sense of great confusion. Thus, the Cyprus and Maltese programmes lost points in assessing this criterion based on the obligation to buy or rent property. The decision to treat such an obligation from the perspective of negative encumbrances is not convincing in the least.

The essence of citizenship programmes by investment is to attract financial injections into the economy and to acquire new citizens. Countries attracting new citizens want to see their real connection with the country. The availability of housing, in property or in rent, provides such a link. The absence of such a requirement can be regarded as an open sale of citizenship under the pretext of a programme for investors. We do not take into account the fact that the absolute majority of investors within the framework of citizenship programmes invest in real estate, as within this criterion of rating only mandatory investments are taken into account, and not the investment component.