• Monday, December 04, 2023
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Citizenship by investment: A comparison of the Caribbeans

Citizenship by investment:  A comparison of the Caribbeans

The Residency and Citizenship-by-Investment RCBI industry is globally one of the fastest-growing investment industry in the world since it was introduced in the 1980s. RCBI programs are designed to offer individuals many amazing benefits and an opportunity to gain a second citizenship and passport in countries around the world.

Among the first countries to offer the RCBI program is the St Kitts and Nevis Citizenship Program, launched in 1984. The Caribbean country was seeking to utilize its strong passport, which allows for visa-free travel to over 150 countries including the Schengen Area. They launched the CBI program to offer global investors a passport that enables convenient global mobility, business investment amongst other benefits and in return invest in their economy.

In subsequent years, other Caribbean countries, with the same visa-free travel privileges, also began launching their CBI programs and the industry witnesses an expansion globally. By 2010, the Caribbean had arguably the highest geographical concentration of such programs in the world, offering the best established and most trusted investment schemes to its beneficiaries.

Becoming a Caribbean citizen entitles you too many benefits, including greater mobility around the world, tax invasion policies, business expansion and the opportunity to relocate yourself and your family to some of the most beautiful islands in the world, whenever you need to.

In the initial phase, the programs were designed based on the policies of their governments, but as the industry expanded, more attention was shed on these programs as institutions like the European Union and the United States began to introduce more streamlined policies to protect their interests.

During the pandemic in 2020, there was a steep increase in the CBI industry, particularly in the Caribbean but also in the Europe. As expected, the Russian war in Ukraine constituted a turning point for these programs, as the U.S. and EU countries moved to ensure cutting Russian oligarchs’ access to their borders, and preventing these programs from becoming unchecked backdoors into their territories.

The U.S. Deputy Assistant Secretary for Global Affairs Anna Morris has announced that her government, along with those of five Caribbean nations, will be committing to six fundamental CBI principles for screening RCBI applications to enhance the integrity, transparency, and security of their respective CBI programs.

Beginning from June 2023, the five Eastern Caribbean states will successfully implement all agreed-upon principles. These principles includes

In-person or virtual personal interview with the CBI applicants, this aims to enhance the due diligence process and further assess the eligibility and intentions or prospective investors.

Collective agreement on the treatment of denials among the Caribbean states, not to process applications from individuals whose CBI submissions have been denied in another participating jurisdiction.

Additional checks on each application by involving their respective Financial Intelligence Units, to strengthen the scrutiny of applicants and to mitigate potential financial risks to identify potential money laundering, terrorism financing or other illicit financial activities tied to prospective investors.

Regular audit of their RCBI programs to maintain the transparency, credibility and effectiveness by identifying areas of improvement, ensuring compliance with relevant regulations.

Retrieval of revoked or recalled passports due to fraud, criminal activities, or other reasons are no longer able to exploit the benefits associated with their previously granted status.

Banning citizens from Russia and Belarus from gaining access to the passports in light of the recent geopolitical developments and concerns.

These principles are expected to alleviate the concerns of the United State and the EU – both of which have stated they don’t intend to end the industry in those countries but rather regulate it.

I have listed and provided a breakdown of the best performing Caribbean countries with the most popular and successful RCBI programs and their benefits.

Grenada CBI program

The Grenada CBI program established in 2013 provides individuals and their families with a range of investment options. One main advantage of this program is that it allows passport holders with access to Schengen Countries, EU, Singapore, the E-2 visa to the U.S. and now Canada – however, in this case, they need to take up permanent residence in Grenada for three years at minimum.

The Grenada citizenship by investment program offers several investment routes, including:

National Transformation Fund (NTF): This is a contribution to the National Transformation Fund, and by this, individuals can qualify for citizenship. The minimum investment required for a single applicant is $150,000. The NTF is designed to finance important national development projects, including sustainable tourism initiatives and infrastructure development.

Real estate investment: Investors can invest in government-approved real estate projects, such as luxury resorts and hotels. The minimum investment threshold for this option is $220,000, and the property must be held for a minimum of four years. The Grenada National Resort is an ongoing real estate project for investment.

US E-2 Treaty Connection: In addition to similar advantages offered by other Caribbean programs that include visa-free travel 146 countries and favorable tax regimes, the Grenada passport stands out in that it offers a route to the E-2 investor visa to the United States. The E-2 treaty allows Grenada citizens, after at least three years of permanent residence in Grenada, to establish and operate businesses in the United States.

Saint Kitts and Nevis’ program

As one of the first CBI program to be introduced, St Kitts and Nevis, also the Federation of Saint Christopher and Nevis, is a dual-island nation nestled between the Atlantic Ocean and the Caribbean Sea. Recognizing the potential economic advantages of attracting foreign capital, pioneering the concept of citizenship acquisition through investment.

The St Kitts and Nevis citizenship by investment program offers two primary investment options for prospective applicants:

Sustainable Growth Fund (SGF): The SGF is a government fund established to support sustainable development initiatives in St Kitts and Nevis. By contributing to this fund, applicants gain eligibility for citizenship. The minimum investment required for a single applicant is $150,000, with additional fees for dependents. The St Kitts government is currently making a limited time offer that reduces the amount to $125,000 until June 31, 2023.

Real estate investment: The real estate option allows candidates to qualify for citizenship by purchasing property valued at $400,000 or more from a CBI-approved real estate developer. In the case of multiple applicants, they can jointly apply for CBI by investing in the same property at the threshold of $400,000. However, each applicant must contribute a minimum of $200,000 towards the investment to meet the eligibility criteria.

St Kitts and Nevis citizenship offers a range of benefits for global investors. With visa-free or visa-on-arrival access to over 156 countries, including the Schengen Area, the United Kingdom, Singapore, and numerous Commonwealth nations, citizens enjoy seamless travel opportunities. Moreover, St Kitts and Nevis allows dual citizenship, providing the flexibility for individuals to retain their current citizenship while reaping the advantages of St Kitts and Nevis citizenship.

Another notable advantage is the favorable tax regime. St Kitts and Nevis operates on a territorial tax system, exempting citizens from personal income tax, wealth tax, inheritance tax, and capital gains tax. This tax environment fosters business growth and facilitates wealth preservation.

Saint Lucia CBI program

Launched in 2015, Saint Lucia’s CBI program offers individuals the opportunity to obtain second citizenships in St. Lucia through various investment options. The program was established to attract foreign capital and boost economic growth. The program has attracted more than $130 million in investments until 2021, and received 1,134 applications between 2016 and 2021.

The Saint Lucia citizenship by investment program offers several investment options:

National Economic Fund (NEF): The NEF is a government fund designed to finance public projects and stimulate economic development in St. Lucia. By making a financial contribution to the NEF, applicants can become eligible for citizenship. The minimum investment required for a single applicant is $100,000, with additional fees for dependents.

Real estate investment: Investors have the option to invest in pre-approved real estate projects in St. Lucia. The minimum investment threshold for this option is $200,000, and the property must be held for a minimum of five years.

Enterprise project investment: This option encourages direct investment in approved enterprise projects, such as specialty restaurants, boutique hotels, or agribusinesses. The minimum investment amount for this option is $3.5 million, and creation of at least 3 jobs is mandatory to qualify.

Much like St Kitts’ program, the St. Lucia CBI program offers similar benefits for individuals and families – primarily visa-free access to 146 countries, including the Schengen Area.

The country also has a favorable tax environment and access to regional markets. High quality of life and developed educational and healthcare infrastructure also make it an attractive option for investors.

Antigua and Barbuda CBI program

Launched in 2013, the Antigua and Barbuda CBI program has been quite successful. It has attracted over $200 million in foreign investment since its launch. Initially, the most popular route to citizenship – the donation route –used to cost $200,000. However, in 2017, it was reduced to $100,000 to boost the program’s competitiveness in the region.

The program offers three routes to citizenship:

The National Development Fund: The twin-island’s most popular CBI route offers families of up to four individuals citizenship in exchange for a $100,000 donation to the nation’s National Development Fund. There is a $15,000 fee for any extra dependent, which may include offspring or elderly parents, and the application process entails an extra $25,000 in processing fees.

Real estate purchase: Investors can secure citizenship through Antigua and Barbuda’s program by investing a minimum of $200,000 in qualifying real estate projects, predominantly comprising condos, hotels, and resorts. In addition to the investment, a $30,000 fee applies for families of four or fewer, with an additional $15,000 per extra dependent. It’s important to note that property resale is restricted for at least five years following citizenship acquisition. Over 40 development projects have received CBI funding, offering a range of attractive opportunities for prospective investors.

Business investment: Obtaining citizenship through business-related investments is also an option, requiring a minimum investment of $1.5 million. Investors can reduce costs by pooling their investments; multiple investors can achieve citizenship through a single business venture, provided they collectively invest at least $5 million, with each investor committing a minimum of $400,000 to the project.

Similar to real estate investors, business investors must pay $50,000 in processing fees for a family of four, plus $15,000 for additional dependents. Moreover, divesting from the investment is prohibited for at least five years after obtaining citizenship.

Antigua and Barbuda citizenship comes with a number of advantages including virtually no income or inheritance tax, no residency requirements, a well-developed infrastructure and good quality of life, and a passport that grants visa-free entry to over 150 countries worldwide, including the Schengen Area, Singapore, and the UK.

Olumide writes via [email protected]