Passport Anxiety Rising Over No-Deal Brexit Outcome
High value citizens and investors shop the world for citizenship-friendly locations to use as anchors
August 19, 2019
With just 10 weeks to go until the end of October and the looming Brexit deadline, Brits are becoming increasingly concerned about the potential decline in their passport power. As millions return from their visa-free summer holidays abroad, and the more than five million British passport holders living permanently outside the UK anxiously consider their alternative citizenship options, there is a growing acknowledgement that the British passport may soon not be what it used to be in terms of global mobility and settlement freedom.
“Hard” Brexit, “soft” Brexit, no deal, or even a second referendum all could result in radically different and largely unpredictable implications for British passport holders, from the ease of doing business and travelling abroad, to the ability to live, work, and study anywhere in the EU.
Over the past 14 years, the UK has consistently held one of the top five places on the Henley Passport Index. However, with its exit from the EU now imminent, coupled with ongoing confusion around the terms of its departure, the UK’s once-strong position looks increasingly uncertain, with the British passport falling out of the top five on the global ranking for the first time this year.
Dr. Juerg Steffen, Chief Executive Officer of investment migration firm Henley & Partners, says they have seen a 200% increase in British nationals applying for residence- and citizenship-by-investment programs over the past two years.
“We have seen a significant spike recently in enquiries about investment migration options from both Brits as well as Hong Kong high-net-worth-individuals (HNWIs). Affluence alone is not a guarantee of personal and financial freedom and security. This might not have been intuitive for British HNWIs who have thus far enjoyed the luxury of possessing bulletproof citizenship, but for HNWIs from less stable jurisdictions, the idea of managing risks and creating opportunity through alternative residence and citizenship is well understood.”
For British HNWIs without the ancestral connections to join the well-documented spike in German, Irish, and other European citizenship applications, there are numerous options available. For an investment of between one and two million Euros, Malta and Cyprus offer the most popular citizenship-by-investment programs in the EU at present. Along with the majority of other EU member states, they both also offer residence-by-investment at a lower price point. The Portugal Golden Residence Permit Program and the Greece Golden Visa Program, where the minimum investment in property begins at EUR 350,000 and EUR 250,000, respectively, are also increasingly popular and include the opportunity to apply for full citizenship after five years.
Dr. Steffen points out that many residence- and citizenship-by-investment programs around the world include this real estate option that enables investors to include a property purchase in their application.
“With the real estate market in Europe currently flourishing, acquiring property-linked citizenship or residence is a safe and sensible investment. Investment migration programs have an inbuilt volatility hedge, in that there is a wider value equation that is separate to the standard real estate metrics — everything that comes with enhanced mobility. It remains an affordable and viable means of mitigating the risk factors on every side of the Brexit debate.”
Meanwhile, a new CBI Index ranks all the active citizenship by investment (CBI) programs around the world against seven pillars deemed most important to investors seeking second citizenship.
A total of 13 countries were examined in this year’s study, carried out by independent researcher James McKay: Antigua and Barbuda, Austria, Bulgaria, Cambodia, Cyprus, Dominica, Grenada, Jordan, Malta, St Kitts and Nevis, St Lucia, Turkey, and Vanuatu. Overall, the central industry trends of transparency, experience, and enhanced security saw the Caribbean nations carry their success from past years into 2019, outperforming their peers in five out of seven pillars.
Dominica emerged as the country with the world’s best citizenship by investment program, combining extensive due diligence with efficiency, speed, affordability, and reliability. St Kitts and Nevis maintained its upward trajectory regarding visa-free and visa-on-arrival offering and demonstrated its commitment to enhanced due diligence. Grenada also increased emphasis on program due diligence but benefited most from its improved citizenship timeline. St Lucia surpassed Antigua and Barbuda for the first time, the southern island improving its scores under freedom of movement, citizenship timeline and due diligence.
Demand for Caribbean citizenship continues to grow, as high net worth individuals’ needs are shifting. The study has found that many Middle Easterners do not want to come to the US, just as Europeans don’t want to go to the UK anymore because of Brexit. Most citizenship seekers come from politically volatile jurisdictions and are seeking CBI as a plan C or D in case of an “escalation of insecurity or an outright war.”
“Wealthy individuals and their families seek second citizenship for a number of reasons, while the benefits for nations offering CBI schemes can be considerable,” says editor Yuri Bender, part of the editorial team at the Financial Times, which published the Index in its Professional Wealth Management (PWM) magazine.
In 2019, the CBI Index also provided a platform for tax and legal experts to discuss the distinction between citizenship and the duty to pay tax. Specialists from Ernst & Young, Smith and Williamson, and Queen’s Counsel Balraj Bhatia unanimously agreed that citizenship and residency confer different sets of rights and obligations on individuals.
The full 2019 report is available here: www.cbiindex.com .