Malta introduced its first tax residence scheme more than twenty years ago. Around that time, it was Henley & Partners which started to focus on residence and citizenship planning when most international lawyers and wealth planning professionals were not considering the subject to be of great importance. Today, the world looks very different, and countries find themselves competing not only for international talent but also for investors, entrepreneurs and high-net-worth individuals and families.
Malta has risen to the challenge. Despite being a small country in the Mediterranean Sea, we are a globally networked nation with a vibrant multi-cultural population and a sizeable Diaspora sprinkled across the globe. Being an outward-looking nation, we have always relied on trade and talent to channel our prosperity.
Our rich culture, beautiful climate and advanced standard of living are certainly an advantage, but we need to engage professionals who understand the investor immigration world and who can help us make the case that Malta is a prime destination of choice. One firm which we have had the pleasure of working with is Henley & Partners. Internationally recognized as the firm of choice for residence and citizenship planning, we sought their advice for the reform of our residence schemes and the development of new programs designed to attract foreign investors to settle in our country. Their knowledge and expertise in this area are truly unrivalled and they have imparted on us some very valuable advice.
The Hon. Tonio Fenech MP Minister of Finance, Economy and Investment Government of Malta
Introduction
Following the events of 9/11 and the beginning of the worldwide recession in 2008 we have seen a tightening of immigration rules across the globe. This is diametrically opposed to the needs of business and individuals who have come to expect the free movement of people from territory to territory. The global political climate is one torn between the undeniable economic benefits of migration with the political need to be seen to be implementing protectionist measures to appease the worried general public. While each country is eager to be seen to be making their own mark on the immigration landscape of the world the global immigration landscape has become plagued with a plethora of inconsistencies and diverging rules.
In a mobile global economy the reality of key players within this economy is that they live and conduct business on an international basis. For the ever growing number of these high profile and high net worth individuals, meeting the physical presence requirements for settlement or for naturalization in a country is becoming impractical. It is neither desirable for tax planning and wealth management purposes nor feasible if they are to take full advantage of international business opportunities across the globe.
For these individuals the option of a second or even third citizenship is enormously attractive. The freedom which is afforded them is unparalleled. When one considers the reality that, due to the nature of their business, many international entrepreneurs will not spend more than 6 months a year in any one country the benefits of citizenship by investment become more apparent.
Especially for individuals who hold passports and nationalities with fewer visa waiver agreements, a second passport can open up travel to countries previously restricted by time consuming visa application requirements and processes. Using their second passport means giving the individual and their business access to markets in countries previously beyond their reach. With greater access to new markets come new opportunities for growth.
The economic crisis has brought this issue once again to the forefront of people’s minds. Nations are in greater need of ways in which to raise revenues and individuals are searching for more tax-effective means to structure their global lives. In exchange for a route to citizenship or residency, nations can incentivize high net worth individuals and their families to invest and grow their economies.
In some sectors there remains a stigma attached to the practice of exchanging residence or citizenship privileges for investment. Some believe that in offering permanent residence and citizenship for investment you are devaluing both. However, this outdated belief is no longer reflective of the true nature of investor immigration and citizenship by investment today. These fears stem from historical practices abandoned by modern governments.
There is no doubt that investor immigration and citizenship programs need to be properly monitored and administered in order to prevent abuse. These programs must be run in a manner which is legal and transparent and in keeping with the constitution of the nation offering citizenship. This not only prevents corruption but gives the individual obtaining permanent residence or citizenship a sound legal right to their new citizenship. This is a stark contrast to obtaining residence and citizenship illegally. Sadly, there are a large number of illegal schemes run predominantly on the internet through various agents which amount to immigration, citizenship and passport fraud.
When researching options available in relation to investor immigration and citizenship, much of the information is unclear and it can be very difficult to find real and accurate information. It is therefore a great relief both to the international client as well as their advisors that this new book provides properly researched, up-to-date information on the immigration and citizenship options available today. Of course no book can replace appropriate legal advice, but this volume closes an important gap between obtaining accurate information and consulting with an immigration or tax lawyer.
Most countries are currently able to offer investors citizenship or residency in return for economic investment. This is usually in the form of requiring substantial investment coupled with, amongst other things, compliance with residency and language requirements. Most countries are very selective in the type of investor they will allow to gain citizenship or residency. Many investors searching for permanent residence or citizenship will be motivated beyond money and looking to invest in countries more substantially.
Accordingly, investors are sought after individuals who contribute above and beyond their required investment. Investors who bring their families with them as dependants commonly contribute to the economy in a variety of ways ranging from paying for private school, real estate and the arts. They may extend their businesses to the country in question further stimulating the economy and creating employment whilst also bringing cultural diversity, expanding the international network and increasing contacts to business.
Nations that do not offer an expedited route to citizenship may offer as an alternative an expedited route to permanent residence. The United Kingdom is a good example. It has the Tier 1 Investor program, which is a step in the process toward gaining citizenship. The UK government has always been adamant that investors are to be encouraged. While other migrant routes are being restricted in a desperate attempt to curb net migration figures, investors remain unaffected. It is perhaps unsurprising when one considers that Tier 1 Investors are required to invest into either the share capital of UK trading companies or UK government bonds thereby boosting inward investment to the UK as part of the eligibility and ongoing requirements of the route. The UK is open for business and willing to do what it can to attract international entrepreneurs.
In summary, in a turbulent global economic climate plagued with uncertainly, citizenship and permanent residence in another than one’s home country can offer the stability and freedom which international high net worth individuals seek. The Global Residence and Citizenship Handbook aims to be a comprehensive guide to the investor immigration and citizenship programs of the world and to help the smart investors and their advisors make well informed decisions when deciding which options would be best suited to their individual needs.
Julia Onslow-Cole Global Head of Immigration PwC Legal LLP
PART I
Residence and
Citizenship Planning
1