By Samuel Tessier, CFA, CAIA, RCIC - Investment Advisor at iA Private Wealth Inc. and Regulated Canadian Immigration Consultant (RCIC)
Investment migration encompasses various citizenship and residence by investment programs, offering individuals the chance to gain citizenship or residence rights in return for investments in their host countries. These programs have become increasingly popular among high-net-worth individuals (HNWIs) and are emerging as a significant niche within alternative investments. This article aims to provide finance professionals and charter holders with a comprehensive overview of investment migration, including its benefits, key programs, industry trends, and potential risks involved.
The Appeal of Investment Migration
Investment migration programs offer a range of benefits to investors, including:
Enhanced Mobility: Citizenship by investment (CBI) and residence by investment (RBI) programs often provide access to visa-free or visa-on-arrival travel to many countries. For instance, a Cypriot passport allows visa-free travel to over 170 countries.
Diversification of Assets: These programs enable investors to diversify their holdings by investing in real estate, government bonds, or other financial assets in different jurisdictions.
Tax Optimization: Many investment migration programs offer favorable tax regimes, including no tax on global income, wealth, or inheritance tax, which can be highly beneficial for wealth management.
Safety and Security: For individuals from politically or economically unstable regions, obtaining a second citizenship or residence can provide a safety net and ensure personal and family security.
Education and Family Fulfillment: For individuals looking to relocate partially or move part of their family for a period, investment migration can facilitate access to top-tier universities while fulfilling citizenship residency requirements.
Key Programs and Their Investment Requirements
Residence by Investment (RBI)
Canada: Canada and the province of Quebec offer permanent residency in exchange for a private equity investment of $220,000. This is one of the most affordable RBI programs in North America and grants almost all the same benefits as citizenship.
Portugal: The Portuguese Golden Visa program requires an investment of €500,000 in real estate or €350,000 in scientific research, among other options. It offers a pathway to citizenship after five years of residence and allows visa-free travel within the Schengen Area.
United States: The EB-5 Immigrant Investor Program requires a minimum investment of $900,000 in a targeted employment area or $1.8 million in a non-targeted area, leading to permanent residency (Green Card) for the investor and their immediate family.
Citizenship by Investment (CBI)
Antigua and Barbuda: This Caribbean nation offers a popular CBI program, requiring a minimum donation of $200,000 to the National Development Fund or a real estate investment of at least $400,000. The program grants visa-free access to over 150 countries.
Malta: Malta offers citizenship through a combination of donations, real estate investments, and bonds, with the total investment amounting to approximately €1.15 million. The program provides access to all EU member states, making it highly attractive for investors.
Economic Impact and Popularity
Investment migration programs contribute significantly to the host countries' economies. For instance, the Portuguese Golden Visa program has attracted over €5 billion in investments since its inception in 2012. Similarly, the Quebec Immigrant Investor Program generated over $11 billion (USD) between 2009 and 2019, creating or preserving approximately 17,000 jobs in the province and generating more than $1 billion in interest income.
The demand for these programs is on the rise, driven by geopolitical uncertainties, economic volatility, and the increasing mobility needs of global citizens. According to a 2022 report by Henley & Partners, the number of HNWIs seeking investment migration solutions has surged by 20% annually over the past five years.
Risks and Considerations
While investment migration programs offer numerous benefits, they also come with certain risks and considerations:
Due Diligence: Host countries conduct rigorous due diligence checks to ensure applicants have clean backgrounds. However, the level of scrutiny can vary, leading to potential reputational risks.
Regulatory Changes: Investment migration programs are subject to political and regulatory changes, which can impact their attractiveness and stability. For example, the European Commission has been scrutinizing CBI programs within the EU for potential misuse.
Financial Risk: Different countries offer different benefits to match investors' objectives and a variety of financial products even within the same country. The investment choices offered are in line with the economic requirements of each country but may include a variety of investment vehicles to reflect the risk tolerance of investors. Standard investment options used by governments include real estate investment, purchase of specific government bonds, bank deposits, capital investment in approved funds, establishing or purchasing private businesses, and non-refundable contributions to government development funds.
Conclusion
Investment migration programs present a unique opportunity for alternative investors and finance professionals seeking to diversify portfolios, optimize taxes, enhance personal mobility, and improve the quality of life for themselves and their dependents. However, it is crucial to thoroughly understand the benefits, requirements, and risks associated with each program. As the landscape of global mobility continues to evolve, staying informed and strategically leveraging these opportunities can yield significant advantages for HNWIs and their advisors.
References
"Citizenship by Investment in Cyprus," Henley & Partners, 2023.
"Residence and Citizenship by Investment Report 2023," Global Citizenship Review.
"Tax Benefits of Investment Migration Programs," Investopedia, 2022.
"Safety Through Investment Migration," Financial Times, 2023.
"Malta Individual Investor Program," Government of Malta, 2023.
"St. Kitts and Nevis Citizenship by Investment Program," SKN Citizenship, 2023.
"Portugal Golden Visa Program," Portugal Immigration Services, 2023.
"Greece Golden Visa Program," Greek Ministry of Migration Policy, 2023.
"Economic Impact of Portugal's Golden Visa Program," Portuguese Immigration and Borders Service, 2023.
"Malta's Individual Investor Program: Economic Contributions," Malta Financial Services Authority, 2023.
"Henley Global Citizens Report," Henley & Partners, 2022.
"Due Diligence in Citizenship by Investment Programs," Transparency International, 2023.
"EU Scrutiny on Citizenship by Investment Programs," European Commission, 2023.
"Real Estate Risks in Investment Migration Programs," PropertyWire, 2023.
"All posts are the opinion of the contributing author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CAIA Association or the author’s employer."
About the Author:
Mr. Tessier is a dedicated Investment Advisor with many years of experience in multiple roles. He specializes in guiding high-net-worth individuals, entrepreneurs, and top executives through their financial journeys. His expertise lies in tailoring personalized investment strategies for clients in the accumulation phase, fostering resilient financial growth and long-term stability.
He has had the privilege of assisting over a hundred high-net-worth families, providing expert advice on wealth management and investment strategies. This extensive experience has given him a deep understanding of the unique challenges and opportunities faced by affluent families internationally, enabling him to offer tailored and effective financial and immigration solutions.
As an entrepreneur himself, Mr. Tessier is uniquely positioned to understand the realities of business families. He comprehends their challenges, asset allocation needs, and family objectives. This allows him to tailor personalized plans to achieve their financial goals while considering their family objectives, international mobility, education, and the security of their loved ones. His role as a specialist in complex situations enables wealthy families to navigate and access global opportunities seamlessly.Over the past 10 years, Samuel Tessier, CRIC CFA CAIA has had the privilege of assisting over a hundred international high-net-worth investor families with their applications for permanent immigration to Canada through investment immigration programs for investors and entrepreneurs.
About iA Private Wealth
iA Private Wealth offers tailored wealth management solutions through a network of more than 460 independent Investment Advisor teams. With over $50 billion in assets under administration, they are the partner of choice for discerning investors across Canada.
iA Financial Group, the parent company of iA Private Wealth, is one of Canada’s largest insurance and wealth management firms. Founded in 1892 and publicly traded since 2000, iA Financial Group manages over $205.6 billion in assets and serves more than four million clients.
About Immigration CAST
As a co-owner of Immigration CAST, a boutique firm specializing in investment immigration consulting, Mr. Tessier, along with his team of seasoned Regulated Canadian and Quebec Immigration Consultants (RCICs), provides top-tier services for investors and entrepreneurs. The firm assists clients with immigration advice, documentation management, interview preparation, and more.