Over the past few decades, countries have steadily embraced citizenship by investment (CBI) programs to attract foreign direct investment, and they continue to grow in popularity. However, the CBI industry is still relatively young and evolving. Economic factors such as employment and gross domestic product (GDP) growth rates can significantly influence a country's overall immigration policies. These circumstances can prompt rapid changes in CBI policies, as recently illustrated by the broad set of regulations adopted by several Caribbean countries in 2023.
Today, we’re seeing CBI programs pivot away from the types of passive investment options that spurred their popularity. Many CBI programs have begun implementing higher investment thresholds and longer residency requirements. Rather than solely permitting passive investments for citizenship or residency qualification, countries are adopting policies to encourage active business participation in a CBI investment. Portugal, for instance, recently dropped real estate as a qualifying investment for its Golden Visa program.
What does this mean for individuals seeking to obtain secondary citizenship or residency in another country through an investment? The rise in active CBI programs means that entrepreneurs and business leaders should find plenty of opportunities today in active CBI programs, and the active requirements can benefit the right investors. However, there are still plenty of passive opportunities available for those who wish for a more “hands-off” approach to CBI. In this article, we will look at both active and passive opportunities today.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Active investments: Opportunities for entrepreneurs and business owners
Active CBI programs typically require an investor to be present and participate in the host country's economy. This involvement can take various forms, such as starting a business, creating jobs or making direct investments in local enterprises. Active investment programs often require a longer-term commitment to the host country compared to passive investment programs.
One of the primary reasons for the trend toward active investment programs is to spur job creation. Entrepreneurs who actively invest in businesses or start their own enterprises contribute to job creation, which benefits the local economy while strengthening the entrepreneur's ties to the community.
This direct involvement allows entrepreneurs to take a hands-on approach to managing their investments, giving them greater control over their business’ success. A higher level of commitment can lead to increased market presence, higher revenues and potentially greater returns on investment compared to passive investments.
Active investment programs also often provide attractive tax incentives for entrepreneurs who actively engage in business activities within the host country. These incentives may include lower corporate tax rates, tax exemptions or deductions for certain types of investments or business activities and other tax breaks designed to encourage economic development and investment. By employing these tax benefits, entrepreneurs can maximize their returns on investment and enhance the profitability of their companies.
The maturation of active CBI policies can benefit investors in the technology and cryptocurrency sectors due to the additional transparency and reliability that robust regulatory policies create. With a more predictable environment, investors and entrepreneurs on the cutting edge of their industries can tap into growing tech cultures globally while taking advantage of policies created to help them succeed.
Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives. Learn more >
Plenty of opportunities remain for passive investors
While active CBI programs are gaining traction, there still are numerous opportunities for passive investors, particularly in the real estate sector.
One of the primary appeals of real estate investment for passive investors is its relatively low level of involvement compared to active business participation. With real estate, investors can take a more hands-off approach, relying on property management services to oversee their investments while they enjoy the benefits of citizenship or residency.
The Caribbean region, with its paradise-like environment and thriving tourism industry, continues to attract investors seeking second citizenship or residency. Many Caribbean nations continue to offer CBI programs with real estate investment options, allowing investors to acquire citizenship or residency by purchasing property in designated developments. Investing in Caribbean real estate can help investors diversify their portfolios. The region's stable property market and its appeal as a tourist destination provide a steady source of rental income and potential for capital appreciation over time.
Many Caribbean nations, as well as other countries that offer real estate CBI programs, have low tax rates and offer a high quality of life, making them attractive destinations for individuals and families seeking to diversify their citizenship or residency portfolio.
Beyond ROI: Investing in your future
When exploring CBI opportunities, it's crucial to recognize that the benefits extend far beyond financial returns. The potential for return on investment (ROI) is undoubtedly important, but there are numerous nonfinancial reasons to pursue CBI. One significant aspect is the sense of security it provides, offering individuals and families a robust plan B in an increasingly uncertain world. Whether as a hedge against political instability and economic downturns or simply to expand personal and professional horizons, CBI offers a tangible pathway to a more secure future.
CBI is playing a larger role in wealth-building in the broader landscape of alternative investments. Beyond traditional asset classes, obtaining second citizenship or residency opens doors to new opportunities for global mobility, business expansion and access to world-class education and health care systems. It's a strategic move to be evaluated both in financial terms and on how it positions investors in a rapidly evolving global economy.
Finding the right program for every client
As the CBI industry evolves and grows in complexity, the role of qualified legal advice cannot be overstated. Experienced immigration attorneys can help ensure compliance with regulations and maximize the benefits of a significant foreign investment. Qualified legal counsel will understand the evolution and nuances of CBI programs while considering a client’s unique circumstances and goals. By providing personalized guidance tailored to individual needs, experienced legal professionals help ensure that investors make informed decisions that align with their long-term objectives before they commit time and capital to a potentially life-changing investment.
Related Content
- International Stocks: Time to Explore Investments Abroad
- How to Invest With Skill
- Active vs Passive Investing … Which Path to Take?
Disclaimer
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
-
Why Uber Stock Is Volatile After GM's Cruise AnnouncementUber stock is swinging this week following news that General Motors is restructuring its Cruise unit. Here's what you need to know.
-
UnitedHealth Stock Falls as Lawmakers Eye Insurers, PBMsUnitedHealth stock is continuing to fall Thursday after the introduction of bipartisan legislation targeting PBMs and healthcare giants. Here's what to know.
