Citizenship and Residency

Competition for the Global Citizen

By Christian H Kälin, Group Chairman, Henley & Partners (01/07/2015)

Today, moving from one’s native country to another, possibly more attractive, country has become increasingly easy and commonplace. The advances in communications and computer technology have made it possible for ‘knowledge workers’ to work and live almost anywhere, and for entrepreneurs and investors to operate and supervise their businesses and investments 24 hours a day from virtually anywhere in the world. These are a new phenomenon: Global Citizens.

It is well documented that the number of millionaires in the world has been growing on average by 8-12 per cent over recent years, and that many of these new millionaires are originating from emerging markets, in particular China. Research shows that much of this new wealth is being invested abroad, and by far the most popular asset class for these investments is real estate. High net worth immigrant investors are buying property all over the world, with some of the most desired cities being London, Los Angeles, New York, Sydney, Singapore and Vancouver.

It can be assumed that these investors then wish to spend time for leisure or business in the new country where their property is located; and this gives rise to an increasing need for visa-free travel. The next step is to consider an additional or alternative residence or citizenship.

The new generation of high net worth individuals do not feel themselves to be confined by borders, but rather see the world as their home: global citizens. Forward-thinking entrepreneurs and investors realize that not only their investment portfolio, but also their residence and citizenship portfolio, needs to be diversified to reduce risk, preserve independence, and gain numerous other benefits.


It is now common to be educated abroad and to have connections, homes, and residence or citizenship in more than one country. Latest figures show that people today move an average of 12 times during their lifetime, and this average is only expected to increase. The new breed of Global Citizen is arising all over the world, from every country. They may be self-made entrepreneurs or investors or that also inherited family wealth, international families of substantial wealth, with their own income streams. Typically they own one or more businesses or are investors in multiple businesses or executives.


The drive for these new investor immigrants is less to diversify business-wise, and more to diversify personally. In our extensive experience, we see five key drivers:


1) Mobility: In today's day and age, a person of talent and means needs borderless travel, as business is far more international then it was even just 10 years ago. Making an active decision with regards to attaining visa-free travel gives them, via a second passport, more personal freedom and security for themselves and their families.  


2) Security: The world is a precarious place at times, so HNW families will naturally seek an ‘insurance policy’ in case the world around them suddenly changes.


3) Wealth and tax planning: Some clients need to consider establishing a nexus in another jurisdiction for tax planning purposes.  Whilst moving purely for tax purposes is, in our experience, rarely the sole driver, it remains an important consideration for many HNWI.


4) Quality of life: The motivation to pursue a better overall quality of life is obviously a prime consideration for many individuals and their families.


5) Education and/or Business Opportunity: As anyone who attends a good university in the western world will attest, the student body of such universities are looking much like the United Nations. Indeed, in countries like Canada, the US, the UK and Australia, there is a strong correlation between education and the immigrant investor market.


Global Citizens searching for permanent residence or citizenship are motivated well beyond money and are looking to invest in countries more substantially from a family, social, cultural and business perspective.

The number of countries offering immigrant investor and/or citizenship-by-investment programs has increased dramatically, particularly in the last five years. In the European Union alone, about half of the Member States now have dedicated immigrant investor schemes, many of them created since the 2008 financial crisis. At the same time, the increase in popularity of citizenship-by-investment programs in the Caribbean and more recently in Europe, with Malta and Cyprus, has generated a broader yet still growing supply of available jurisdictions. This trend is expected to continue in the years ahead, as more and more countries create programs seeking to attract Global Citizens to their shores.

The growth of countries offering residence and citizenship programs is keeping pace with the global trend of increased mobility, creating more competition between countries and thus leading to a distinct focus on improving and developing such programs.

Malta is such an example and probably a model for the future. In 2014 Malta, with Henley & Partners as Concessionaire to advise and assist the government, created its Individual Investor Programme, which has seen significant and sustained success since launch. This state-of-the-art program deeply benefits the country and is highly attractive to talented and successful individuals and families worldwide.

Countries that have been operating such programs for many years have all revised them at least once during the past five years, increasing the investment thresholds and tightening the selection criteria to yield more economic benefits and enhance overall program integrity. Such countries include Australia, Singapore, Hong Kong, Canada, the UK, and St Kitts and Nevis. In practice, designing and maintaining an effective program is complex, and governments need to continually assess whether the program objectives are being met.

These programs vary widely in terms of both requirements and conditions, and also in terms of the benefit to the host country. The economic contribution and benefits to the receiving country depends very much on how the programs are set up. Programs range from those that really make a very active contribution such as Malta, to others where there is almost no tangible benefit. The most successful programs entice people to actually take up residence in the host country, and since these individuals are very big consumers, the economic impact is multiplied. In recent years, Henley & Partners has been involved in the design, set-up and operation of many of the world’s most successful residence and citizenship programs, and has to date raised more than US$4 billion in foreign direct investment.

This is particularly true in countries such as the UK or Switzerland where ultra high net worth individuals really move, consume and live. Other countries offering residence programs see almost no such benefit, such as Hungary or Bulgaria or Greece. So, for the country, the benefits really depend on how the investor immigration program is structured. If it is well-structured, the benefits will outweigh the costs; if they are not well-structured, the opposite is often true.

The funds raised under these immigrant investor and citizenship-by-investment programs typically fall into three broad categories:

(a)  Those involving investments in private sector assets, often in real estate.

(b)  Those requiring a transaction between the investor and an entity (or instrument) with a government element to it.

(c)   Those requiring the applicant to pay a certain minimum amount of tax per year.


Investments in private sector assets aim to create jobs and stimulate a particular sector of the economy by injecting foreign direct investments into those assets. Countries like Portugal, Spain and Greece now offer residence to applicants that buy property in their country, aiming to reinvigorate their property markets which were badly affected by the economic crisis.

Some countries direct the investments into a government entity or sovereign wealth fund from which revenues can be spent on economic development projects and other government priorities (eg, The Sugar Industry Diversification Foundation in St Kitts), or into a chosen government financial instrument such as government bonds (eg, the UK) or promissory notes (eg, Canada/Quebec).

Finally, some jurisdictions (like Switzerland and Jersey) attract HNWI to their shores by providing attractive flat tax regimes on their worldwide income.

However important the initial capital injection, these programs also aim to provide their local economy with ancillary benefits from the secondary investments and personal consumption resulting from investors settling in the country, and these are often considered more significant. The country also benefits from accessing a very privileged segment of the world population who have proven success in business or a world-class skill; have valuable networks and business contacts worth leveraging; and interesting personal experiences, all of which help enrich the citizenry of the chosen country.

The most critical element of any investor immigration program is the entry criteria. Each country must ensure that all new residents or citizens are of good character and background, and that the funds invested have not been raised through criminal activities. Each program’s reputation is only as good as that of the last investor to gain entry.

The Malta Individual Investor Programme has  a world-class due diligence process unrivalled by any country. Specifically, applicants under the MIIP undergo a four tier due diligence process, including:

·         Database and public search (including World-Check and other Sanctions databases)

·         Independent due diligence and verification checks provided by international due diligence firms on the background of applicants and their dependants

·         Risk weighting assessment of all individuals in the application

·         Financial Supervisory Authority and intergovernmental background checks. Also, additional checks are available to Government through the forces of Law and Order, and Identity Malta also has the option to interview applicants prior to reaching a decision

The 2014 launch of the Investment Migration Council, which has a particular focus on due diligence and professional standards, aptly demonstrates the growth and progress towards maturity of the industry. It was formed by the leading companies and experts within the field and will help to improve public understanding of the issues faced by clients and governments in this area, and of procedures and standards. It is a notable indication of the growing importance, stability and value of the investment migration industry and the growing importance of global residence and citizenship programs.