Investment Citizenship

Analysis of Residency Investment VS Citizenship Investment

Updated: 10 July 2021

When looking for options abroad, one of the questions that are frequently asked is: which one is better, residency investment or citizenship investment? Although there may be attempts to provide the question with a satisfying answer, it is very unlikely. Because the spectrum of investor profiles worldwide is a highly variable one with so many different interests and purposes. On a topic that depends highly on individual needs such as this one, it is quite hard to settle on a single answer that applies to every possible scenario.

Rather, it is a more logical approach to try to sort out the ambiguities on the topic. Most applicants do not know their needs and how to connect the perks of these programs with their own needs. An immediate setback at this point is an abundance of confusing and conflicting information about the distinction between residency by investment programs and citizenship by investment programs. Therefore, it is a good idea to first clearly distinguishing these programs from each other. After, analyzing each option with its advantages and disadvantages becomes much easier. Moreover, having a well-rounded understanding of the boundaries, characteristics and the qualities of these programs provides individuals with clear objectives and a clearer route in achieving their goals

What are the Residency by Investment Programs?

Residency by investment programs come in different forms offering different methods. Generally, these programs offer residency in exchange for substantial investment. The methods for investment may vary. While some programs demand donations into governmental bonds, some programs accept investments that promise returns. For instance, many residencies by investment schemes around the world accept real estate investments that may provide rental or sale yields for the owner. Although this option is quite popular, it is best to check the requirements and the specifics of the program since some programs do not allow renting out the property bought as an investment method. Another case on this topic is the sale of the property which might be not allowed during temporary residency. Several programs require investors to hold their property during their residency period.

Depending on the particular program that is applied to, investors might have a little bit more flexibility like joint investments or providing job opportunities or starting businesses as a form of investment. These methods can be used to reduce expenses or gain returns after the initial investment.

Residency by investment programs often provide investors with travel advantages. If the applied country is an EU member state, for example, the main applicant and their dependents, upon achieving resident status, become eligible to live, study, and work in any EU member state. Some of the most popular residency by investment programs around the world are by the USA, the UK, Portugal, Greece, Spain, and Canada.

What Are Citizenship by Investment Programs?

As the name suggests, citizenship by investment programs offer citizenship in return for substantial investments. When compared to residency by investment programs, these programs are more extensive. By giving citizenship to foreign individuals, citizenship by investment programs endow these individuals with every right the passport provides, but also with every responsibility; and this is the point where most people have different points of view. Although citizenship by investment programs, at first sight, seems to involve everything that residency by investment programs have, and more; the overall picture might be trickier than that. Logically, the assumption that citizenship by investment programs contain residency rights within themselves is accurate. However, these programs, as mentioned, also bring together responsibilities which are sometimes financially undesirable for applicants.

Mostly, an investor who receives another country’s passport becomes a dual citizen. Dual citizenship means holding two passports including the main country passport. It often provides individuals with valuable benefits like extensive healthcare options, visa-free travel perks, vast opportunities in education and employment, a better and larger network of people, etc. Yet, it might also load the downsides of two countries onto one’s back. For instance, many high net worth individuals pay large sums of money as taxes, and they usually look for options to reduce their expenses. Although residency by investment options often provide investors with flexibility on this topic, citizenship by investment programs usually subject applicants to more taxes. Understandably, this downside may be a deal-breaker for many investors.

Which One Should You Choose?

There are many factors that the answer to this question relies on as specified throughout the article. Essentially, what it boils down to is the personal interests and purposes of the applicants. If the applicant is aware of their needs and priorities, the decision is not that hard to make. The country with better healthcare is the perfect option for some people while for others education opportunities are far more important. While some people prefer two years of residency for business activities, others go for lifelong interests that necessitate citizenship. Once the personal priorities are set clearly, it just becomes a question of the advantages and disadvantages that are easy to compare.

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