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August 20, 2017

10 things you need to know about second citizenship

10 things you need to know about second citizenship
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Neil Petch

Chairman of Virtugroup

Maybe you have heard about second citizenship programmes, but do people actually invest in them? Which people? How much? Is citizenship-by-investment really popular? Why do countries even offer citizenship-by-investment? Why do investors invest?

If you have these questions, you’re not alone. So let’s get myth-busting and break down the top 10 things you need to know about second citizenship.

1. More countries than ever allow dual nationality: In the past, investors interested in second citizenship might never have turned that dream into reality. The main culprit? Their home countries refusing to recognise dual citizenship, forcing the potential investor to renounce their original citizenship in order to acquire another.

That’s becoming an archaic attitude. Since 1960, the number of countries refusing to recognise dual nationality has fallen from around 60% to 30%. Data shows many of the 56 countries in the United Nations Economic Commission for Europe (UNECE) region now allow dual citizenship. For investors today, second citizenship is more attainable than ever.

Since 1960, the number of countries refusing to recognise dual nationality has fallen from around 60% to 30%.

2. Dual nationality is on the rise: As you might expect, the above point translates into more people holding dual nationality. One influential report noted the lack of information available on global second citizenships (information not being collected, either through neglect or by law; poor reporting) but the growth trend is clear though, even with limited data.

Many countries have seen an increase of over 100% in dual nationals between censuses. For example, Spain saw an increase from 159,000 to 805,000 dual nationals from 2002 to 2014. The Netherlands saw the number of Dutch dual nationals triple from 1995 to 2009 with Finland experiencing the same increase over the period between 2000 and 2010. Croatia, Romania and Portugal all saw their number of dual nationals double in that same decade.

Clearly, dual nationality is on the rise. If you’re considering second citizenship today, you’ll be in good company.

3. Second citizenship-by-investment is popular: The number of dual nationals might be growing, but what about dual nationals who’ve followed the investment path? The figures above speak of an increasingly global world but many of those people secure second citizenship by naturalisation, building a new life in their chosen country. For many, that isn’t desirable or feasible.

Well, take heart, because second citizenship-by-investment is proving popular. For instance, the Maltese citizenship programme reports application figures of at least 1,000 since its launch in 2014. The Grenadian citizenship programme reports nearly 200 applications in the first half of 2017 alone. Cyprus granted citizenship to 2,277 people in 2014.

Citizenship-by-investment is a luxury reserved for the world’s financial elite, but it’s a luxury that’s becoming increasingly common.

4. There are over 20 citizenship-by-investment programmes: As demand for second citizenship has grown, so has supply. There are now over 20 countries with citizenship-by-investment programmes. There are also residency programmes, some of which offer a pathway to full citizenship via naturalisation over time.

There are now over 20 countries with citizenship-by-investment programmes.

These programmes are very varied in terms of benefits, costs and criteria, so you’re spoilt for choice if you’re considering investment.

5. Citizenship-by-investment is a real cash cow: You might be wondering what exactly is in it for the country offering citizenship? Let’s take St. Kitts and Nevis for example. Their Sugar Industry Diversification Foundation (the main vehicle for investment) has invested more than USD 55m into island development since inception. The programme accounted for almost 25% of island GDP in 2013.

Portugal is another example. The Portuguese programme accounted for a reported 13% of Foreign Domestic Investment inflow in 2014. Cyprus claims citizenship-by-investment has brought EUR 2.7bn into their economy to date. The Maltese citizenship programme lays claim to over EUR 1bn since inception.

An often quoted figure is that several thousand investors spend around USD 2bn per year collectively to secure second citizenship. The financial impact for partaking countries is obvious: second citizenship is win/win.

6. Citizenship-by-investment all started in the Caribbean: The first citizenship-by-investment programme was started by St. Kitts and Nevis in 1984. As of December 2015, the country had issued 10,777 passports under the programme, according to Prime Minister Harris. Harris calls the programme ‘the Rolls Royce of the global [citizenship-by-investment] industry’.

If the number of similar programmes springing up across the Caribbean is anything to go by, Harris’ statement is true.

St. Kitts and Nevis has the distinction of tradition, but today investors interested in Caribbean citizenship-by-investment have ample choice. Only a few years behind St. Kitts and Nevis, Dominica developed their programme in 1993. Antigua and Barbuda joined the party in 2013, with Grenada re-establishing their programme in that year as well. St. Lucia came on board in January 2016, taking heart from the runaway success of the other Caribbean programmes. Investment in the Caribbean is hardly a gamble, given that pedigree.

7. Europe remains a hugely popular choice for second citizenship: The Caribbean is where things started, but the benefits of second citizenship are particularly pronounced in Europe. Around 75% of the top 20 most desirable citizenships are European, according to the 2017 Nomad Passport Index. It’s no surprise, then, that Europe remains such a popular choice for second citizenship.

Cyprus granted the third highest number of citizenships compared to population, at 3.9 new citizenships per thousand people. That’s thanks to the hugely popular Cypriot citizenship-by-investment programme. So if the Caribbean doesn’t tickle your fancy, there’s plenty of choice in Europe.

8. There are three main reasons investors choose citizenship: We’ve been working with global investors for many years, so we’re on the front-line of the decision-making process. In our experience there are three major motivations for choosing second citizenship.

First, increased global mobility. Many investors have restrictions on travel based on their home passport. Citizens from much of Africa, South America, the Middle East and Asia can find their freedom severely limited, with the business costs and personal frustrations attached to that. A second passport can mean upgrading global freedom – often very significantly.

Many investors have restrictions on travel based on their home passport. A second passport can mean upgrading global freedom – often very significantly.

Read more: How much does your current passport limit your travel?

Secondly, many investors are concerned with protecting wealth. The Caribbean is a tax haven, with citizenship unlocking major tax benefits. For wealthy individuals, savings can quite quickly exceed the investment requirement.

And thirdly, we see many investors approach second citizenship as an insurance policy – for themselves, or often for their families. Second citizenship gives you a second start if you need it and, because citizenship passes to children by descent, those benefits apply into the future. For many, the desire to insure loved ones’ security proves an important motivation.

9. Investors come from all walks of life: As you would expect given the above point, many investors come from countries with more restrictive travel limitations. For instance, the main beneficiaries of the Cypriot citizenship programme are from China, Russia, Ukraine, and various Arab states.

As Cypriot citizens, those investors can now travel to 146 countries on visa-free or visa-on-arrival terms. Compare that to travel on a passport from China (57 countries), Saudi Arabia (69), Qatar (79), or Lebanon (37). Given that over three-quarters of the world face greater mobility restrictions than Cyprus, the diversity of nationalities that seek second citizenship is unsurprising.

So whatever your nationality, background or motivation, you won’t be the first to seek answers in second citizenship.

10. Second citizenship is more attainable than you think: Second citizenship might seem an unattainable dream, until you look more closely. These programmes are much more accessible than many people think. From an investment perspective, the requirements can be surprisingly reasonable. The Dominican programme, for example, starts from only USD 100,000 – with a 75% financing option.

Many investors are also concerned about the acceptance criteria but again, the requirements are straightforward. For many programmes, you’re expected to hold a clean criminal record and a clean passport – that’s about it. The success rate for acceptance is generally very high.

Second citizenship: the facts don’t lie

These ten facts show that second citizenship is a genuine investment opportunity worth serious consideration. Investors from across the globe, from diverse backgrounds and with myriad motivations, invest in some 20+ programmes from Cyprus to Grenada, and most places in between.

The industry is growing – will you become part of it?

Next Generation Equity is a government-approved provider of second citizenship and residency programmes tailored to the individual needs of discerning clients across the globe. To learn more about our programmes, please sign up for a free consultation via the form below.

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