The number of High Net Worth Individuals around the world is on the rise, reaching a record high of 143,872,37 in 2016 and is expected to continue to grow, increasing the demand for second citizenship.
High Net Worth Individuals (HNWI) are identified as individuals who have more than $1 million in assets, usually excluding permanent residency. These are further subdivided into wealth categories including multi-millionaires who have over $10 million in assets, ultra-high net worth individuals with assets exceeding $30 million and billionaires who have a net worth of over $1billion.
The 2017 Knight Frank Report shows that from 2006 to 2016, the total number of HNWI increase from 105,317,49 to 143,872,37. This is an average upsurge of 40% and is expected to continue to rise to 19,741,422 by 2026.
In order to continue to grow and develop their wealth, an increasing number of HNWI choose to diversify their wealth by investing overseas and broadening their portfolios. A survey of Middle eastern HNWI has revealed that over 60% are interested in investing in international real estate as a way of having more secure investments.
Overseas investment is also occurring because high net worth individuals and their families are becoming more mobile with business interests expanding beyond national boundaries by establishing both their business and families internationally. With this being said, the acquisition of a second citizenship is a worthwhile investment for HNWI as it makes the above a much easier process. In fact, there are a number of different factors which are encouraging this investment;
One classic benefit for HNWI through the acquisition of a second citizenship is the ability to travel to different countries without the need to obtain a Visa. This makes travelling for both business and pleasure much easier, especially if the individual comes from a country with a passport that offers very limited visa free travel destinations. Through acquiring Maltese citizenship for instance, an individual would gain visa-free travel to 167 different countries including the EU Schengen Area and the US.
Unfortunately, different parts of the world are going through a number of political and economic instabilities which place a level of uncertainty on both the HNWI and their wealth. Having a second citizenship mitigates the risk as it acts an insurance policy if any major security issues arise.
Expanding businesses and working in the EU
Together with visa-free travel, having a second citizenship within an EU country, mainly Malta and Cyprus, also comes with the ability to live and work in any country within the European Union. This makes both the expansion of business and investments easier as one would be afforded the same rights as any other EU Citizen.
Double tax agreements and a favourable tax regime
Another feature which attracts HNWI to attain a second citizenship and/or economic residency elsewhere is the ability to live somewhere with more favourable tax regimes. This is especially true for both the Caribbean and the European Citizenship by Investment programmes, many of which do not charge tax on worldwide wealth unless remitted to the country. The European countries have also numerous multiple double tax agreements which saves the individual from having to pay double tax on the same earnings.