As the world becomes ever more globalised and people live and conduct business on a progressively more international scale, freedom to move within the global market provides a decided edge.
Wealth migration is accelerating. According to New World Wealth’s
2017 Global Wealth Review, approximately 82,000 (US dollar) millionaires migrated in 2016, compared to 64,000 in 2015.
But despite the world becoming ever more interdependent, there is still huge disparity in the levels of travel freedom between countries. The changing geopolitical climate – as witnessed by several major recent events, including Brexit and the election of US President Donald Trump – is likely to have a considerable impact on global movement, with steps even now being taken towards creating barriers to entry.
Needless to say, for those who already hail from countries with few visa-waiver agreements, time-consuming visa-application processes are a serious mobility shackle. With our citizens granted visa-free access to just 98 countries (many of which are within developing regions), South Africa is currently positioned 55th on the 2017
Henley & Partners Visa Restrictions Index, a leading global ranking of countries based on the degree of travel freedom enjoyed by citizens, produced in partnership with the International Air Transport Association (IATA). By comparison, a British, American, Canadian, French or Swedish passport grants its holder visa-free access to over 170 countries. (a German passport, which currently tops the Index, confers unrestricted entry to 176 countries).
Acquiring an alternative citizenship through investment has become a USD 2 billion a year industry
Several thousand HNWIs around the globe seek a second, and even third, passport annually.South Africa’s wealthy are no exception. South Africa is home to over 40% of the continent’s dollar millionaires and is the largest HNWI market in Africa. The number of millionaires is expected to reach 42,300 by the end of the year, up from 38,500 at the beginning of 2016. According to the New World Wealth, this number could be considerably higher, were it not for the significant number of them leaving local shores. Based on its 2016 migration survey, the market-research firm estimates that South Africa lost nearly 1,000 millionaires to emigration in 2015. According to the survey, their top reason for leaving was economic uncertainty.
While there’s no denying that a second residence or passport provides a Plan-B hedge in uncertain times, permanent emigration is not the only route for those seeking to enhance their global mobility.
A number of the international investment-migration programmes currently on offer don’t even require applicants to board a plane
The citizenship-by-investment options of certain island-nations in the Caribbean, for example, have no residence or visitation requirements at all. Acquired for between USD 200,000 (non-refundable contribution) and USD 350,000 (property investment), Grenadian citizenship, which is transferrable by descent, offers visa-free access to 124 countries. These include the UK, the Schengen area, Brazil, China and other key markets. There are no residence or visitation requirements and processing generally takes just four months.
But it is to Europe that most upwardly mobile South Africans look for passport diversification.
On freedom of movement, relative affordability and speed of processing, Malta’s citizenship-by-investment programme is the most popular
Ideally located in the Mediterranean, between North Africa and the Middle East, the island of Malta boasts one of the lowest costs of living in Europe. It weathered the recessionary storm far better than Greece, Italy and Spain and is classified as ‘an advanced economy’ by the International Monetary Fund. What’s particularly attractive to investors, however, are its favourable tax rates, coupled with a thoroughly modern citizenship-by-investment programme (the only one to be sanctioned by the EU) through which successful applicants, as well as their children and even their parents, can acquire the right of establishment in all 28 EU countries, as well as Switzerland.
Governments of countries like Malta and Grenada introduced their investment-migration programmes as a means of driving economic growth and enriching their nations by attracting people who have proven business success, diverse skills and valuable networks. For the increasing number of wealthy and talented individuals looking to diversify their citizenship portfolios, they offer greater mobility, access to international opportunity, and future security.
So, while property, pension funds and private equities still have their place, an increasingly valuable asset in the portfolios of wealthy investors has become a second passport.
With a network of over 25 offices around the world, Henley & Partners is a global leader in residence and citizenship planning for wealthy individuals and families. The firm also runs a leading government advisory practice. For more information, speak to your Moore Stephens consultant or email Maria Burley-Smith at maria.burley-smith@henleyglobal.com www.henleyglobal.com
Programme Overview
Best for Future-Proofing the Family
Malta Individual Investor Programme
Advantages:
- Citizenship can be passed down unlimited family generations
- Visa-free travel to 167 countries, including the US
- The right to live, work, study and retire anywhere in the EU
Requirements: A contribution to the National Development and Social Fund, as well as a (mixed) investment of EUR 880,000, to be held for five years.
Processing Time: From six months
Best for Job Creators
Portugal Golden Visa residency permit
Advantages:
- Visa-free travel to 171 countries, including the Schengen zone
- A total stay of just 35 days is required during the five-year investment period
- Six years as a resident creates eligibility to apply for citizenship
- Attractive taxation system
Requirements:
- A five-year capital investment of EUR 250,000 into an approved scheme; or
- A property acquisition of EUR 350,000; or
- The creation of ten or more new jobs
Processing Time: three – eight months
Best for Travel on Demand
Grenada Citizenship-by-Investment Programme
Advantages:
- Visa-free access to 124 countries, including the UK, the Schengen area, and China, plus eligibility for a US E-2 Investor Visa
- Dependent parents and grandparents over the age of 65 may be included
- No visitation requirements
- Citizenship can be passed down to future generations
Requirements:
- A government-approved property acquisition of USD 350,000, to be held for three years; or
- A non-refundable contribution to the National Transformation Fund (NTF) of USD 200,000
Processing Time: three – four months
Best for Tax Incentives:
Malta Residence Visa Programme
Advantages
- Residence rights in the 40th most competitive economy in the world
- No inheritance, gift or wealth tax
- Non-domiciled residents are only taxed on two types of income: Maltese-sourced income and capital gains, and foreign-sourced income, but only to the extent that it’s remitted to Malta
- No minimum presence is required
- Family members can be included
Requirements:
- A five-year EUR 250,000 investment in government bonds and a property purchase of between EUR 270,000 and EUR 320,000 (area dependent) for the same period; or
- A five-year property lease of between EUR 10,000 or EUR 12,000 per year (again, area dependent) and a non-refundable contribution of EUR 30,000
Processing Time: Approximately three months
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1.©H&P-Maria Burley-Smith, Client Advisor, Henley & Partners SA-1 & 2
Maria Burley-Smith, Client Advisor at Henley & Partners, a leading residence- and citizenship-planning firm with offices around the world
2.© H&P_Generic passports
Visa-free access to global markets remains one of the key reasons South Africans seek alternative residence or citizenship
3.© H&P_ Generic mobility 1
With visa-free access to just 98 countries, many South Africans apply for dual residence or citizenship in order to enhance their international mobility
4.© H&P_ Generic mobility 2
An alternative residence or citizenship offers greater mobility, access to international opportunity, and future security
5.© H&P_ Our Lady of Mt Carmel Church, Malta
Our Lady of Mt Carmel Church in Malta, where EU citizenship can be passed down unlimited family generations
6.© H&P_ Blue Lagoon at Comino, Malta
The famous Blue Lagoon in the Maltese archipelago, where residence grants settlement rights in the 40th most competitive economy in the world
7.© H&P_Port Louis, Grenada
Port Louis in Grenada, where citizens enjoy visa-free access to 124 countries around the world
8.© H&P_ St Georges Harbour
St George’s Harbour in Grenada, where, despite the island nation’s appeal, citizenship can be obtained with no visitation requirements at all