The market for global residence and citizenship through investment programmes has been heating up for some time. The popularity of these schemes – offering long-term residence and second passports by making a specific level of investments – has been fuelled by a combination of the demand for easier travel and political and economic security and the need for cash-strapped countries to redress their balance sheets.
There is now significant global competition for these wealthy investors. A number of countries are revisiting their existing schemes to see whether they remain competitively priced; but just as the United Kingdom is reviewing its own Tier 1 investor visa category for wealthy foreigners, a small Mediterranean island has entered the fray and launched its own offering. No eyebrows would normally be raised – after all, many small islands around the world have run these programmes for years and sold their passports on the basis that these provide wide visa-free travel to wealthy families.
However, eyebrows have now been raised, because the latest offering is from Malta – an EU member state – which in return for an investment (effectively a donation) of €650,000 will issue an EU passport within three months without the need for any period of physical residence in Malta itself.
In the present market, this new scheme is something of a bargain. While second passport schemes outside the European Union are of limited value (as they offer only more visa-free short-term travel), existing EU schemes require either significant physical presence in the country for five or six years before a passport can be obtained or much higher investment levels. Malta is now unique in providing an instant, high-value passport, which allows worldwide travel and long-term residence in 28 EU countries. To many wealthy investors making a cost-benefit analysis, the entry price would be viewed as pin money. It is very likely that these Maltese passports will go like hotcakes.
The United Kingdom should now be worried about the longevity of its investor scheme. Those acquiring these new EU passports will have little interest in living in Malta. As new EU citizens, they will be able to live in the United Kingdom – an already popular destination for the rich global elite – with no restrictions and more importantly, without having to make any financial investment in the United Kingdom that could benefit the UK economy. The United Kingdom issues visas to over 500 investors a year, meaning that it could lose £500 million in investments each year.
This is unwelcome news for the government at a time when the debate on EU immigration (or 'free movement', to give it its correct name) is already high on the agenda. The United Kingdom can do little about the new scheme and the European Commission has confirmed, rightly, that it has no jurisdiction to intervene in the area of citizenship, which does not fall within the EU Treaty.
Part of the present review of the UK scheme is to look at whether there is scope to increase its investment thresholds from £1 million to £2 million. The United Kingdom should think seriously before it prices itself out of the market.
For further information on this topic please contact Nicolas Rollason at Kingsley Napley by telephone (+44 20 7814 1200), fax (+44 20 7490 2288) or email (firstname.lastname@example.org). The Kingsley Napley website can be accessed at www.kingsleynapley.co.uk.
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