Citizenship by Investment and Residency by Investment
EU regulators jokingly refer to Citizenship by Investment (Cbi) and Residency by Investment (RbI) programs as Jus pecunia; rights based on payments instead of an existing birth-right (jus soli/sanguinis) or naturalization.
Both Cbi and Rbi programs offer great benefits for persons with money to spend.
A percentage of persons utilizing these programs are genuine investors benefiting the host country tremendously.
Others interested in these programs are a mixed group of people ranging from persons who look for a plan "B" in case of disaster, a means to increase mobility, expanding economic options etc.
In varietate concordia
Cbi and Rbi programs are offered by many countries, however when they are offered by EU members states they are particularly of "value" because rights issued in one country expand to all EU member states, in particular CbI.
Citizens of EU countries (except to those who are not in Schengen) enjoy the "Four Freedoms". Residence permit holders enjoy them to an extent (depending on the type of permit and the issuing country)
The "Four Freedoms" of the EU's single market are:
- Free movement of persons;
- Free movement of goods;
- Free movement of capital;
- Freedom to establish and provide services.
Citizenship by Investment
There are three EU countries offering Citizenship by Investment: Malta and Cyprus and Bulgaria. Their roughly costs (May 2022): €400,000 for Bulgaria, €1,150,000 for Malta, and €2 million for Cyprus.
Bulgaria is not in Schengen area, meaning even with Bulgarian citizenship you still need a visa to travel throughout most of Europe.
Residency by Investment
We can distinguish two formats here: programs that require an active investor and programs with passive investors.
• Active Investor
Most EU countries offer some form of Residency by Investment. Commonly these EU countries require an active investment: the applicant invests a large sum in a newly formed company in that EU country, actively works in the organization and employs local professionals.
• Passive Investor
Few countries require solely a passive investment; the applicant only has to invest in real-estate, perhaps a government fund and, and this is the important part: they only have to be present sporadically in the EU country for the residence permit to remain valid. This is also referred to as a "Golden Visa".
Notable RbI countries are Portugal, Greece, Estonia, Italy, Ireland and Latvia. These countries offer none to very low physical presence requirements For example: Portugal’s RbI program requires an investment of 400k euro to get the residence permit. For the permit to stay valid you only need to be in Portugal seven days per year.
Path towards Citizenship
Make no mistake; a residence permit sets you on a path to citizenship. A temporary residence permit is followed by a permanent one, a permanent one by citizenship. RbI is only a "slower" path towards citizenship than direct citizenship through a Citizenship by Investment program.
The European Union is an interwoven community: residence rights issued to a person in one country impacts the Union as a whole.
The European commission main concerns lie with countries offering Citizenship by Investment and countries that offer Residency by Investment that require the applicant to act solely as passive investor.
The concerns are two-fold. First there is a common recognition that citizenship should bind a person to a country historically; a person should have a bond with the country, either through birth or through an ancestor born there, or a person has lived there for a substantial amount of time in that particular country (naturalization). Obviously this "bond" is lacking with these programs.
Second concern is that these programs may attract individuals with lacking scruples who use these programs as a means to avoid legal trouble in their home country or setup tax arrangement that would benefit the individual disproportionately over the community.
With rights from one country "flowing over" to the Union as a whole, it can undermine the Union’s economic and social integrity. The latter concern is, to a degree mitigated, by means of thorough background checks. The European commission actively monitors Malta, Cyprus and Bulgaria in particular.
What to expect in the Future
There will always be a place in the EU for foreign investors who seek to contribute to the bloc’s prosperity. The European Commission is expected to continue wielding pressure on countries in order to make sure EU citizenship is not regarded as a commodity for sale.