HNWs have enjoyed the benefits of a second passport for years, but is dual citizenship anything more than a status symbol? Arun Kakar reports
A third of all HNWs hold at least two passports, while a further 29 per cent plan to acquire an additional citizenship, according to new research from Henley and Partners.
Six-figure Citizen Investment Programs (CIP) – investing an agreed sum into a country in exchange for citizenship – are a $2 billion business according to Knight Frank. St. Kitts and Nevis was the first jurisdiction to introduce a scheme in 1989, but 15 countries have started offering some variety of CIP scheme since 2011 to capitalise on demand. Incomes account for up to a third of GDP for some jurisdictions. Grenada had its best ever year in 2017, with revenues of $130 million taken in from its program.
The schemes are popular among HNWs – mostly from countries with high levels of geopolitical crashes and rapid wealth creation – in search of a ‘plan B’, according to Kamal Rahman, partner at Mischon de Reya and head of the immigration group. ‘High levels of wealth coupled with political tensions where people feel their level of wealth makes them more uncomfortable: that’s when people start to think of putting a plan in place,’ she tells Spear’s.
According to Bloomberg, of the top ten citzenships that allow outsiders to acquire citizenship outright, eight are tax havens, with Russia and Latin America topping the lists for the highest number of HNWs that both own and want to acquire a second passport.
There’s also the increasing narrative that being a British national isn’t what it used to be. Just ask John Cleese, who recently announced that he would be moving to St. Nevis – a passport that attracts no capital gains tax – in part due to the Caribbean island’s ‘gorgeous weather’ and to escape the British press.
In fact, Britain’s soon-to-be-blue book slipped out of the top ten on a measure of ‘quality of nationality’ (QNI) – an objective value ranked on factors such as ‘peace and stability’ and ‘diversity of settlement freedom’ – making a second passport seem like a more tantalising prospect. France came first in the rankings, with Germany, Iceland and Denmark rounding out the top four. Britain’s prolonged ‘state of limbo’ for non-doms has made advisors tetchy, while uncertainty around ‘requirement to correct’ rules comes with the potential of ‘severe’ penalties for HNWs.
There’s also the small matter of Brexit. ‘The response I get from HNW clients is ‘what is the UK doing?,’’ says Rahman. The anti-immigrant sentiment in the media is being perceived by HNWs as tantamount to rejection of inward investment, according to Rahman. Other countries such as Italy and Portugal are also launching their own ‘golden’ Visa schemes to entice HNWs. ‘Most people who come [to the UK] are self-made,’ adds Rahman. ‘This is not landed gentry.’
Savvy HNWs are applying for not just one passport, but several. On the extreme end lie the so-called ‘octa-citizens’, a presumably small group of HNWs with eight passports bearing their name. Most HNWs, however, tend not to have more than two or three passports, says Rahman. ’I always make the analogy with cars,’ she says. ‘You might start off buying a mini metro but as you get older and wiser, you then trade for a BMW and get a Bentley. Clients often apply to that trajectory, where they might start off with a cheap and cheerful one but then they realise it breaks down occasionally so they find a better model.’
With almost half of all EU states offering a form of investment residency and uncertainty seemingly a fixture of many jurisdictions, padding out security with a range of options might just be the best assurance of security around.
What’s for certain is that the choice is becoming more attractive as geopolitical uncertainty continues to spread and more countries offer some form of citizenship-by-investment. With the CIP market maturing and nations themselves realising the benefits of having HNW citizens, now might be the time to shop around.
Arun Kakar writes for Spear’s