European citizenship after Brexit impacts many EU nationals living and working in the UK. What has been considered as one of the major accomplishments of the EU integration – citizenship of the Union – is now jeopardised with the probability of restrictions related to rights and free movement of people.
There is no clarity on the future status and security of British nationals and the 3 million citizens of other EU countries who live, study and work in the UK. People who came to Britain on legitimate basis, who have built their lives in the UK and contributed to British prosperity and culture have no way of knowing if they will continue to reside in the UK and the terms and conditions following Brexit.
British nationals are less likely to retain the right to free movement in the EU after Brexit, and vice versa. These developments mean that some people who have moved across national borders are now faced with uncertainty. The en masse loss of citizenship is connected to a reduction or stripping of rights affecting not solely the former Union citizens but also second country nationals in the UK.
The European citizenship right to free movement is incorporated into the UK law by the European Communities Act 1972 and is transposed by domestic secondary legislation. However, following Brexit, legal uncertainty may impact UK citizens living in the EU which would be considered third country nationals. This opens many questions such as which rights can be kept, restricted or stripped off completely and also who gets to withdraw the status of citizenship amongst others. Some EU nationals may be asked, for instance, to renounce their original citizenship, since their country of origin does not allow dual citizenship.
UK nationals trying to lessen the existing risks related to European citizenship after Brexit are increasingly acquiring a second passport in an EU state and seeking dual nationality. Reports show that more and more UK nationals are applying for second citizenship in the EU. The good news is that the UK does not impose any restrictions on dual nationality and will not normally affect their tax status, which in most countries is determined by residency and not nationality.
Naturalisation is the most common way through which a person could acquire European citizenship after Brexit. This could be done by moving abroad and living, studying, working, and being integrated in an EU country in most of the cases for minimum period of 5 years.
In relation to this, the Vienna convention states that if a person is to move to another nation before any official legislation relating to UK citizens’ rights were to change, then one could be saved from being asked to leave at a later stage.
Ireland, for instance, has reported the biggest number of Britons applying for Irish nationality. This is due to the possibility of retaining EU citizenship through Ireland. France and Germany have also reported big flows in the number of Britons seeking citizenship, albeit on a smaller scale.
European citizenship after Brexit can also be obtained through the various citizenship by investment programmes available. Countries such as Malta, Cyprus and Austria have successful citizenship by investment programmes which enable high net worth individuals to invest in these countries and in exchange acquire the desirable fast-tracked route to European citizenship.
For example, the Malta Citizenship by Investment Programme was the first EU approved citizenship Programme. It offers a second citizenship option to families wishing to relocate their personal or business affairs to an EU country.
Private wealth is a relatively new phenomenon in Russia however, according to New World Wealth, Russia is the country with the sixth largest outflow of individuals with a net worth of over $1 million. Unlike other regions, Russia is experiencing its first generation of High Net Worth Individuals,ever increasing the demand for second citizenship.
The Moscow School of Management Skolkovo Wealth Transformation Centre has carried out a qualitative study on 39 High Net worth Individuals, two of whom were women, to identify who is the typical Russian HNWI.
According to this survey, the typical Russian HNWI is a married male entrepreneur with two children who started his business in the early 90s. On average, these individuals are forty-eight years old.
According to Forbes Insights, Russia’s wealthy are, on average, 15 years younger than their counterparts in the U.S., U.K. or Germany. Moreover, a staggering 100% of HNWI studied by Forbes in 2011 were all self-made.
According to the response given by 43% of the respondents in the study carried out by the Skolkovo Wealth Transformation Centre, the most common fields of business for affluent Russian individuals are finance, investment and insurance, while 27% are involved in commercial real estate development or management. 58% of these HNWI do business in Europe, and a 71% majority invests in property alongside running their main business, which would already start to explain their demand for second citizenship.
To understand why Russian HNWIs are increasingly considering a second passport as an attractive option, it is imperative to understand their attitude towards investments and as well as what they consider to be in the best interest of the family.
The appeal of second citizenship is to pave the road for opportunities which were previously inaccessible to investors and their families, as well as their businesses.
Research shows that wealthy Russian HNW families value high-quality education as an important requisite to ensure that children have unfettered access to the best education possible is very often a decisive factor when wealthy Russians choose their place of residence. Indeed, programmes such as European Citizenship by Investment Programmes such as those offered by Malta and Cyprus are becoming increasingly popular since they grant the right to live, work and study within any of the European Union’s 28 member states, thus allowing HNWI the chance to relocate to Europe and enrol their children in some of the top educational institutions and universities. Russia’s notorious lack of respect for various civil liberties and human right breaches are very often considered as a deterrent to personal growth and go against the right to self-determination which saw the vast majority of these self-made millionaires and billionaires amass their fortunes.
Living in Russia together with one’s family is also a bone of contention for most HNW families. 56% of the respondents of the Skolkovo research prefer Russia as the place of residence for the family, however various respondents showed considerable scepticism towards a secure future in Russia.
The Skolkovo study elaborates on the attitude of Russian HNWIs towards living in Russia and the children’s education. Some respondents stated that although they want to live in Russia, they have to send their children abroad if they want to experience living in a free country. Another commented that education is very important and Russia does not offer the right educational environment. Therefore in order to access top educational institutions the family is considering to relocate abroad, which can be done through the obtainment of a second citizenship.
From a business perspective, there are several drivers behind the increasing demand for second citizenship which are interlinked with Russia’s socio-political and economic situation. Russia scored poorly for corruption (ranking as the 131st least corrupt nation out of 175 countries in 2016), and most Russians feel that Russia’s political circle is widely corrupt which stifles investors’ attitudes towards investing in Russia. Moreover, the Russian economy suffered considerable damage following Russia’s annexation of Crimea and the resulting asset freezes, travel bans, arms embargos and financial restrictions. As a result, Russia has been dealing with a recession which was further worsened by the decline in the price of oil which in turn had adverse effects on the Rouble, the Russian currency. Thus the current climate further pushed investors out of Russia.
The 2017 Wealth Report carried out by Knight Frank identified the top five factors which Russian and CIS clients are mostly concerned about when it comes to wealth management and making investment decisions as: capital growth (58%), privacy (68%), protecting wealth from political interference (54%) income return (50%) and portfolio diversification (50%).
When comparing the above data with the current investment climate in Russia, it becomes considerably clearer why Russians are increasingly opting for a second passport, very often by carrying out an investment in a state that offers citizenship by investment programmes.
One of the major advantages of citizenship by investment lies in the fact that there is a programme available for every type of investor, depending on the goal of their investment strategy or personal requirements.
With concerns growing over the economic changes and political instabilities in a number of different countries, people all over are looking into different ways to protect themselves and their families. One of the ways that some are going about this is through the acquisition of a European citizenship. This is especially beneficial if their current citizenship offers them limited mobility and if their country of residence is no longer deemed to be safe.
Acquiring second citizenship can be done through a number of different ways, the most common being; descent, marriage, adoption, naturalisation and through citizenship by investment programmes (CBI) in which individuals gain citizenship through substantial investment. Different countries around the world offer these programmes for high net worth individuals who are willing to invest in economic citizenship in order to direct investment into their economies and stimulate growth. The 2 main regions that offer these forms of programmes include the Caribbean islands and Europe. This article will evaluate and compare the benefits, requirements and costs of the three European countries that offer Citizenship by Investment programmes; Malta, Cyprus and Austria. Although the Maltese and Cypriot programmes are well defined, the Austrian programme is highly secretive as it considers these applications as state secrets by this country and so certain comparisons will not be possible due to a lack of clear guidelines, as this functions on a case by case basis.
Another common benefit in all three countries is that of a very high standard of living and services, with an exceptional level of education, healthcare and environment. According to the World Competitiveness Index’s 4th Pillar, which measures the level of a countries Health and Primary education, Malta, Austria and Cyprus feature 11th, 22nd and 39th, respectively. Although all are highly regarded worldwide, Maltese Citizenship comes out on top mainly due to having more desirable characteristics where citizens have access to both free universal Healthcare and free education from childcare to a university first degree. Having a second passport will also be beneficial for conducting overseas business ventures and for creating new investment opportunities, which would have otherwise been very difficult to conclude with the investor’s original passport. Moreover, another benefits for all three European Citizenship by Investment programmes also includes the ability for the Citizenship to be transferred to future descendants, and the ability to include children and parents.
Malta, Cyprus and Austria have very different requirements in terms of being eligible for the different citizenship by investment programmes. Although the applicant must be over 18 for all programmes, individuals with citizenship from Iran, North Korea and Afghanistan are not eligible to apply for the Malta Programme, a restriction not present in Cyprus. Spouses, parents and children can be joined to applications in both programmes with age restrictions being placed on parents (over 55 years old) and children (up to 26 years old) in Malta and children (up to 27 years old) in Cyprus.
The most noticeably distinguishable feature is the set up of the programmes themselves which differ on all fronts; from the way they are modelled, the assets contributed, and the amount of investments needed. As previously mentioned, the Austria Programme is not well outlined and is quite secretive, however it is known that through article 10(6) of the Austrian Citizenship Act the Government can reward foreign persons with citizenship in the event of extraordinary merit. There is no clear-cut definition of the term ‘extraordinary merit’ and is therefore completely at the discretion of the state as to what amounts to ‘extraordinary merit’. The economic criteria together with an extraordinary contribution such as bringing new technologies into the country or by creating a number of new jobs are two of the criteria the Government of Austria requires. Passive investment such as government bonds and real estate do not qualify for the citizenship by investment programme. The amount of economic investment has to be between 2 million to 10 million in order to be considered for an application.
The Malta program has 3 different investment criteria that all need to be fulfilled; a contribution, government bonds and real estate. The main applicant must make a contribution of €650,000. The applicant must also invest in a property in Malta via one off the two options available. They may purchase a property for a minimum value of €350,000; or enter into a rental agreement for a minimum value of €16,000 a year, both of which must be kept for a minimum period of 5 years. Furthermore, the applicant must invest a minimum of €150,000 in government bonds or shares which must also be kept for a minimum of 5 years.
On the other hand, the Cypriot programme is more based on real estate investment, however an alternative investment option which combines real estate and an investment in funds is also available. in residential property. The Cyprus Citizenship by Investment Programme offers two main investment options. The first option being an investment in residential real estate of €2 million (plus VAT of 0%, 5% or 19%) which must be held for a minimum of 3 years, after which the investment may be reduced to €500.000 in residential real estate, which must be held indefinitely. The second option is a combination of real estate and/or other investments with a minimum investment of 2.5 million, such as a 3-year investment of €2 million in an eligible real estate, which includes residential, commercial, infrastructure and land, provided that there is a development plan in place.
The processing time for CBI applications varies between the 3 different programmes, Cyprus has the fastest application process in which the residency permit is granted in 5 days and within the following 2 to 3 months the Citizenship by investment application is processed, due diligence is carried out and the in principle approval is also issued. After 6 months from the date of application the Certificate of naturalisation and passports are issued. In the case of Malta, the process takes a little bit longer, with the residency car received in between 1-3 weeks and the approval in principle letter issued in 6 months from the date of application. The total time for the applicant to obtain citizenship in Malta is 12 months. The longest process is that of Austria were for a successful applicant to obtain citizenship, it usually takes around 24 to 36 months
More information can be accessed in the programme pages for Malta and Cyprus respectively or by speaking to one of our advisors directly.
Dual citizenship arises when a person holds two or more citizenships simultaneously.
Originally, Italy was one of the signatories to the 1963 Strasbourg Convention on the Reduction of Multiple Nationalities. However, Italian law was amended in the early 1990s to allow dual nationalities, both for Italians who wish to obtain a different citizenship in addition to their Italian citizenship, and foreigners who wish to obtain Italian Citizenship. Currently, the law regulating Italian Citizenship is found under Act 91 of 5 February 1992, highlighting the manners in which a foreigner may obtain Italian citizenship and the restrictions imposed on Italian citizens when acquiring a foreign citizenship.
According to Article 11 of Act 91 of 1992, an Italian citizen who has acquired foreign citizenship will still retain Italian citizenship. Such an individual may lose his/her Italian Citizenship upon renunciation or if there is an international agreement preventing the individual from retaining the Italian Citizenship in particular situations. Article 12 of the same Act stipulates specific circumstances where an Italian Citizen will lose his/her citizenship, including:
Italy dual citizenship may be attained for persons who are originally Italian citizens through several methods:
It is important to note that certain countries do not recognise dual citizenship, and therefore, the individual may not be able to acquire it in the first place. Countries which do not recognise dual citizenship include, amongst others, Liechtenstein, Slovakia, Singapore, Saudi Arabia and United Arab Emirates.
Act 91 of 1992 stipulates three main ways in which an individual may acquire Italian Citizenship:
Automatic Acquisition
Acquisition by claim
Naturalisation
After spending a specific amount of time within Italy, a person may qualify for Italian citizenship, however, these depend on the situation of the individual. The Act stipulates the following:
In 2017, a new scheme was introduced by the Italian Government which has presented itself as one of the most interesting investment residence schemes in the EU. The scheme is similar to others of its kinds offered around Europe, including the Spain Golden Visa, the Portugal Golden Visa, and the Greece Golden Visa. The Italy Golden Visa Scheme specifically, allows investors to choose from the following investments:
The aforementioned funds must be available and transferrable to Italy, where, within 3 months from entry into Italy, the funds must be duly invested.
Once the application for the Golden Visa has been approved, the residence permit will be valid for 2 years, however, the Italian government has the power to revoke the permit before its expiration if the applicant fails to make the investment.
Upon obtaining a Visa, the holder may be accompanied by family members, however these must fall under one of the following criteria:
The residency permit may subsequently be renewed for an additional period of 3 years once the 2-year limitation has passed.
A resident in Italy may subsequently acquire Italy dual Citizenship if he has satisfied the relevant criteria for naturalisation as previously stipulated. Whilst Italy dual citizenship has several benefits, it is mainly based on family connections or lengthy periods of time within the country. With the recent introduction of various citizenship by investment programmes (CBI) around the world, various Italian and foreign investors have made use of the programmes due to the far-reaching advantages they offer.
On a European level, the Citizenship by Investment Programmes offered are those in Malta and Cyprus. Having experienced high success rates within the limited time during which they have been put in place, various HNWI have now obtained Maltese or Cypriot Citizenship under these schemes. Once all the criteria necessary are satisfied, applicants will have access to Schengen area and will also be able to benefit from the freedoms enjoyed by European citizens, including freedom of goods, capital, services and labour. Individuals who prefer more flexibility in their investment options might also be interested in the Caribbean citizenship by investment programmes, offered by St Kitts and Nevis, Saint Lucia, Antigua and Barbuda, Grenada and Dominica.
Individuals who have successfully acquired dual citizenship through one of the aforementioned Citizenship by Investment Programmes are exposed to several benefits, mainly the following:
Over the past decade the Asian region, and more specifically China, has seen rapid growth in private wealth and in the number of High Net Worth Individuals (HNWI), causing an increasing interest in second citizenship.
As reported in the 2017 China Private Wealth Report by Bain Consulting and China Merchants Bank, Private wealth has increased exponentially, from 26 trillion RMB in 2006 to 165 trillion RMB in 2016. This has subsequently led to an almost 9-fold increase in the number of HNWI with investible assets of least 10 million yuan ($1.47 million), which rose from 180,000 in 2006, to 1.6 million in 2016.
Although the Hurun report 2017 cites slightly more conservative figures, reporting 1.35 million HNWI in 2016, the report also discusses the rapid increase in private wealth due to a variety of reasons including the opening up of the Chinese economy, the willingness to invest in multiple avenues and an increase in the use of different financial service professionals to help with wealth management.
Although the number of HNWI has increased, recent instabilities in China have created an unfavourable environment for them to live, work, grow and preserve their wealth in. These include, but are not limited to, lack of freedoms (civil liberties and freedom of the press), environmental pollution (both air and water), stalling economic growth, capital control measures, high levels of state control and a number of restrictions in foreign direct investment (FDI).
These factors have led many Chinese HNWI to look at other alternatives in order to better secure their future in the form of emigration, most notably through the possibility of acquiring either residency or a second citizenship through various residency and citizenship by investment programmes found globally.
A second nationality can have a number of benefits for a HNWI including gaining a better passport, increased visa free travel, access to new markets, safety and security and better opportunities for the whole family in terms of health and education, amongst others.
The Hurun Report 2017, ranked the most popular emigration destinations for Chinese HNWI, taking into consideration a number of factors; including education, ease of investment, immigration policy, property investment rules, taxation, medical care, visas and ease of adaption for Chinese immigrants. Although the United States, Canada and United Kingdom where the three most popular countries mostly due to their good reputations with Chinese HNWI, countries with second citizenship programmes like Malta, Dominica and Antigua, and countries with golden visa programmes like Portugal and Spain can also be found of the list, further increasing the popularity of the economic investment route in acquiring a second citizenship.