CITINAVI Winter 4th Quarter 2018
IREIS Citizenship Expo-Abu Dhabi 1st-3rd november 2018 *To the Analysis Guidance Issued by OECD on R/CBI Programmes * Malta 2nd workshop - 19th oct. 2018 Malta Blockchain island, RCbI programmes
Global Residency & Citizenship Navigation by Investment Europe, Caribbean Islands & EB-5, Canada
Monaco Yacht Show 2018
IREIS 2018 to Host Global Citizenship and Residency Industry Players 4th edition Adnec-Abu Dhabi, UAE – 1st-3rd November, 2018
News Highlights: - IRIES 2018 will feature the International Residency and Citizenship by Investment Expo - Country Presentations highlighting their Residency and Citizenship Programs - UAE is an ideal hub for worldwide second citizenship prospects
Editor’s Preface INVITATION to IREIS Abu Dhabi, 4th edition Global Residency and Citizenship Programs provides a comprehensive analysis and benchmarking of world's most relevant investor migration-immigration and citizenship by investment options. IREIS Citizenship Expo Abu Dhabi 2018, together with a distinguised panel of global industry leaders : immigration and citizenship lawyers, economics, experts and other specialists of RIF Trust-Latitude, Arton Capital, CS Global Partners, Bayat Legal, Chetcuti Cauchi etc produces an overall global view and markets of the different investment migration programs on offer. As countries tighten their borders to immigrants, the secondcitizenship industry is working and growing to bypass those restrictions and move into peaceful regions. International events including the decision by Britain to leave the European Union, Policy changes of USA and legal restrictions on travelling to other regions are driving new interest to second passport industry. The UAE, which hosts more than 8 million (88%) expatriates, is an ideal hub for second citizenship and residency prospects for countries in Europe, America, Canada, the Caribbean and Australia – who attract wealthy investors and skilled immigrants through business and investment immigration programmes offered to boost their economic growth. The UAE residents from Syria, Yemen, Lebanon, Saudi Arabia, Bahrain, Kuwait, Oman, India and Pakistan have increased demand for Caribbean citizenship to 51 per cent, especially to St. Kits & Nevis, Dominica, Grenada, Antigua & Barbuda and St. Lucia – the highest in the world - according a report released The 10th of the International Real Estate & Investment Show (IREIS 2018), targets investors and consumers rather than trade visitors, will feature a dedicated pavilion to help visitors aspiring for dual citizenship, residency and international investment opportunities gain the right advice and information from leading immigration experts..
Arun Bose, IREIS project manager
Arun Bose project manager exhibitions says that International Residency and Citizenship by Investment Expo’, will offer professional guidance and consultancy for those looking to buy 2nd citizenships in return of investing in properties or donating abroad through government bonds. Citizenship and Residency Expo Pavilion at IREIS 2018 is set to help the large number of High-Net- Worth-Individuals (HNWIs) from around the world in finding their dream destination and investment opportunities. Even since the introduction of the segment in 2016 The show has grown with major exhibitors throughout the Globe promising dedicated services to potential investors As part of the event agenda, IREIS 2018 will host International Conference to discuss various Citizenship opportunities. The Developer-Agent Meet will carry an intensive day of carefully coordinated one-toone meetings and informal networking sessions to showcase international property projects and facilitate partnerships between foreign property suppliers and local agents Seasoned consultants will assist on the complex decisionmaking, documentation and application process for a second citizenship and residency options across regions and countries including Canada, Cyprus, St. Kitts & Nevis, Dominica, Grenada, Antigua & Barbuda and St. Lucia Spain, Singapore, Malaysia, Portugal, New Zealand, Thailand, the USA and the UK, etc Welcome to the IREIS 4th edition of Citizenship Expo by Investment, Adnec ABU DHABI - your resource for Global Residency and Citizenship Programs.
Editor in chief : Hyong-Jin KWON, Paris 4th Quarter 2018 - 3
Citizenship Navigation winter 2018 www.citinavi.net
IREIS 2018 to Host Global Citizenship and Residency Industry Players 4th edition Abu
3 Dhabi........................................... p.3 Investment Migration Council Responds to the Analysis and Guidance Issued by the OECD on Residence-/Citizenship-by-Investment Programmes ................................ p.6-7 RIF TRUST / LATITUDE, IREIS 9 Expo - Abu Dhabi 2018 ............... p.9
Monaco Yacht Show 26-29 september 2018 ........... p.10-17
Legal considerations before buying a super yacht by Janet Xanthopoulos ...................... p.18-19
2nd Annual Malta Workshop:
Advancing the Residency & Citizenship by Investment Dialogue ................. p.20
Malta as a Center for Wealth Management Solutions, Kenneth Farrugia, Chairman, Finance Malta 18 ............................................... p.21 MALTA, BLOCKCHAIN ISLAND KYC-Chain, SelfKey and Blockchain, by Edmund J. LOWELL ......... p.22 Chris Borg .............................. p.23
CANADA, The Quebec Immigrant Investor Program (QIIP) / The Manitoba Provincial Nominee Program (MPNP) by Julien Tétrault ................................. p.35
MONTENEGRO, Good Things Come to Those Who Wait ........................ p.38-39 Anguilla’s $150k Residency Program Path to Citizenship to Open Soon ... p.41 Caribbean CBI Investment Programs, Antigua & Barbuda, Dominica, Grenada p.42-43
FRANCE, THE NEW STAY "TALENT PASSPORT" .......................................... p.48 LUXEMBOURG, New 3rd Country Resident Visa "Quality Investors" p.52-53
HUNGARY Golden Visa ................. p.56 Thailand Elite programs ..............p.57-59 The Growth of Citizenship and Decline of Duties by Kochenov ..... p.60
Overview of Global Real Estate for HNWI 2017. Effects of CBI and RBI on Real Estate Markets, Presentation for IMC Malta workshop by Anastasia Yianni .................................. p.26-27
IRELAND happy to be nowhere near the residence-for-investment list ... p.64 IRELAND, The Place to do Business By Pearse Trust Limited ....................... p.65
Advertisement : email@example.com Asso. Onsaemi Worldwide 29 Boulevard Grande-Duchesse Charlotte, 1331 Luxembourg
The Commodification of Citizenship and the Ethics of Human Rights by Prof. Hussein Abbass .................p.46-47
Portuguese Golden Visa Programs by António Paula Varela ....................... p.62
EB-5 : Hurry Up and Wait: Indian Foreign Nationals Facing Immigration Backlogs by Karuna Chandani Simbeck ........ p.28
Citizenship by Investment in Bulgaria by Ivan Petrov ............................ p.36-37
CYPRUS, The recent changes to the Cyprus Investment Program (CIP) p.25
If you would like to be considered for submitting an article, please contact : CitizenshipNavigation@gmail.com
4 - Citizenship Navigation
EB-5 Bridge Financing: A Study of Market-Driven Applications & Definitions, David Hirson & partners, LLP ..... p.30-33
3 Countries Make up 84% of Europe’s €5 bn-aYear Golden Visa Market by Christian Nesheim ......................................................... p.67
Graphic designer : Rina Asanuma Social Media, Website Seo/Sem Planner : Nan Qin Market Research : Ke XU Vietnam : Vy Trieu Le / China : Baihui XU Advertising marketing : Ryoici Kosaka
Le Trieu Vy
4th Quarter 2018 - 5
to the Analysis and Guidance Issued by the OECD on Residence-/Citizenship-by-Investment Programmes Geneva, 23 October 2018
The Investment Migration Council (IMC) understands the motivation behind the OECD’s recent analysis and guidance regarding the purported circumvention of the Common Reporting Standard (CRS) in both residence-by-investment (RBI) and citizenship-by-investment (CBI) programmes. We entirely agree that individuals should be stopped from using such programmes to avoid accurate CRS reporting or, even worse, to engage in financial crimes, including money laundering or terrorist financing. The IMC as well as the firms and governments that the IMC represents does not support any form of abuse of investment migration. However, it is important to be clear about four important facts: Scale: Only a very small percentage of residence or citizenship statuses legitimately obtained through RBI or CBI programmes are at issue. For the vast majority of applicants seeking alternative residence or citizenship through these programmes, tax is not in fact an issue, as most applicants either do not in fact change their tax residence or move completely to their new place of residence and then are tax residents there. Within the European Union, the European Economic Area and Switzerland, the freedom of establishment means that any citizen of these European countries can freely move to any other one of these countries and does not have to use any of the RBI or CBI programmes to establish their tax residence The movement of EU citizens actually accounts for a large part of the global movement of individuals for tax purposes. It seems strange not to look at appropriate statistics to assess what proportion of taxpayers subject to CRS are, in fact, under any RBI/ CBI programmes. RBI/CBI programmes are only a fraction of the immigration options available to individuals. Most residence permits and citizenships are in fact obtained under options other than investment migration programmes. For example, while in Europe on average about 800 citizenships are granted annually under CBI provisions (mainly in Austria, Cyprus and Malta), the 28 member states of the European Union grant nearly one million citizenships every year for other reasons, including ancestry, residence, special merit, marriage, etc.  All of these can be equally used or abused for circumventing CRS, while citizenships obtained through EU CBI programmes account for less than 0.1% of all the citizenships granted in the EU. It would be good to understand what is being done to assess the risk, and to take appropriate measures, with regard to potential CRS abuse under other immigration and citizenship options. Of those nearly one million citizenships granted by the EU each year (and a similar number in North America), among the top non-EU origin countries are many high-risk nationalities, and in far greater numbers than through CBI programmes. These include Pakistan, Ukraine, Algeria, Russia, Nigeria, and Somalia, which pose a much more real danger to the international community in terms of criminal activity in the financial system, including money laundering and terrorist financing, which in our opinion should be the main focus of enhanced due diligence by financial institutions. The abuse of CRS is contrary to the strategic rationale for and specific design of all RBI and CBI programmes and no doubt should be stopped. The IMC fully supports all efforts to achieve this. The IMC cannot, however, support the OECD’s apparent solution to the challenge, as the issue is not these programmes per se. Neither RBI nor CBI programmes have a direct connection with tax residence. These are fundamentally different legal concepts. RBI and CBI programmes are designed to facilitate – following a detailed and intensive due diligence process that goes far beyond other forms of granting residence or citizenship rights – the legitimate movement of capital and people, which is essential to the contemporary global economic model. They furthermore enable individuals and families to obtain residence and/or citizenship rights in other, more desirable countries for a variety of reasons. For the most part, these are not tax reasons but instead pertain to mobility, business and life opportunities, schooling for children, and personal security. 6 - Citizenship Navigation
We urge the OECD to review and strengthen the CRS due diligence requirements for financial institutions in terms of the tax residence aspects of clients, but not with a sole focus on RBI/CBI programmes, as this makes no sense and cannot be justified by any means other than a direct intent to hurt specific countries, including many OECD member states. The focus should instead be placed on the individuals themselves who seek to misrepresent whatever status they obtain – through RBI/CBI programmes or otherwise. There is a need for enhanced training within both financial institutions and wealth and legal advisory firms. This is an inherently complex operating environment, and decisions are often made by individual relationship managers in banks. Relationship managers are in many cases the only effective link between financial institutions and their account holders. They must be given the necessary support to ensure accurate investigation and decision making by the clients of financial institutions, together with their compliance departments. We also suggest that the relationship manager test be changed to a more objective standard: we cannot see any basis on which a relationship manager should be held to a lesser standard of obligation than the financial institution for which they work in monitoring account holder compliance with the CRS. Finally, the individual naming of countries leaves out many countries that would be included if the same standards were applied to them, and thus such naming and “blacklisting” appears biased. We fully understand that in doing so the OECD is trying to provide advice and guidance that is easily understood and able to be implemented by financial institutions subject to CRS reporting. However, we would caution that the selective naming of individual countries creates the very unfortunate and presumably unintended impression that the countries in question are in some way complicit in furthering CRS avoidance. If the OECD’s declared standards of analysis were applied in an unbiased way, many more countries would need to be included in the list of jurisdictions that “potentially pose a high-risk to the integrity of CRS”, including many OECD member states that have low or no tax on foreign income under their tax rules, including the United Kingdom, Spain, Belgium, Italy or Canada. We ask the OECD to clarify what will be done to properly assess the risks emanating from those countries, if there are any. In the interests of positive dialogue, we have laid out our detailed commentary on the issue below and would welcome the opportunity to engage in conversation with the OECD and its wider stakeholders on these matters. So far, other than a general public consultation, the OECD surprisingly has not engaged with the stakeholders of the RBI/CBI industry, as would be expected from an international organization in any other sector. In fact, the interests of the IMC are aligned with the OECD and the international community, in that we believe strongly that any abuse of investment migration programmes should be avoided and that measures should be taken to ensure these cannot be used to circumvent, for example, CRS. The real issues, however, lie elsewhere and should be equally addressed. Bruno L’ecuyer, CEO of the IMC, commented: “We understand the OECD’s concerns and share them ourselves. This is why our members have signed up to a binding code of ethics and professional conduct and have invested significant time and capital in developing due diligence processes that are effective in protecting both the industry and the sovereign states that offer investment migration programmes. Investment migration creates value for both the global economy and global society. While we obviously agree that sovereign state regulation must be of the highest standards, we believe that the emphasis should be on those who acquire residence or citizenship rights – by whatever means – and on the institutions that are embedded within the global financial system and are best placed to make a judgement.
Concentrate on the Root Cause of the Problem We urge the OECD to concentrate on the root cause of the problem: dishonest individuals who seek to misrepresent their tax residence status to financial institutions. We also urge the OECD to review and strengthen the CRS due diligence requirements. We suggest that the relationship manager test be changed to a more objective standard: we cannot see any basis on which a relationship manager should be held to a lesser standard of obligation than the financial institution for which they work in monitoring account holder compliance with the CRS. Relationship managers are in many cases the only effective link between financial institutions and their account holders. We urge the OECD to undertake a comprehensive review of the CRS due diligence rules, processes and procedures, including which documents may be accepted as “Documentary Evidence”, and avoid what may appear to be an ad hoc approach to countering perceived abuses. Strengthen due diligence measures for all individuals subject to CRS We would urge the OECD to consider more inclusive methods for identifying individuals who seek to misreport their tax residence. One method could be to simply make the additional account holder questions indicated in the guidance to financial institutions (under the heading “What should Financial Institutions do?”) compulsory for all future self-certificates. We cannot see any logical reason for these questions necessarily following only where an account holder has indicated a tax residence in a listed “high-risk” jurisdiction. As an alternative, and something we mentioned i n o u r su b m i ssi o n to th e OEC D p u b l i c consultation “Preventing Abuse of Residence by Investment Schemes to Circumvent the CRS”, the CRS due diligence procedures might be amended to introduce the concept of a “highrisk” account holder, where recently issued documentary evidence is used to establish tax residence status; for these purposes, “recently issued” could be within the last 3 years, with a requirement placed on financial institutions to determine whether the account holder retains a tax residence status in any other jurisdiction(s). We would caution that it is possible for account holders to retain dual tax residence, if only for an interim number of years, by not satisfying the strict “exit” requirements of their prior jurisdiction of residence. This can occur without the involvement of a “high-risk” jurisdiction. The problem is in fact wider than the perceived abuse of RBI/CBI programmes, and we therefore urge the OECD to take a more inclusive approach to countering the ability of individuals to misreport their tax residence status.
Is residence in a “high-risk jurisdiction” equivalent to a change in circumstances? We would ask the OECD to urgently clarify whether the published answer to the frequently asked question “What should Financial Institution do?” is intended to direct financial institutions to treat all self-certificates and documentary evidence from account holders resident in any of the listed “high-risk” jurisdiction as unreliable and therefore subject to further review, in line with the additional questions contained in the guidance. In summary, for existing account holders, is residence in a “high-risk” jurisdiction equivalent to a change of circumstances and therefore subject to re-review by the relevant financial institutions in which the accounts are held? We strongly urge the OECD to clarify this point in order to avoid confusion across all implementing jurisdictions and their domestic financial institutions. Adopt open and transparent blacklisting policy We note the recent removal of Monaco from the list of “high-risk” jurisdictions, on the grounds that Monaco spontaneously exchanges information regarding all applicants to their prior jurisdictions of residence. We ask the OECD to set out the criteria that would allow the remaining jurisdictions to be removed from the “high-risk” list; we also urge the OECD to be sensitive to the real reputational damage to a jurisdiction in its being singled out as a “highrisk” jurisdiction in the context of CRS avoidance and its natural counterparts: tax evasion and criminality. From a rule of law and transparency point of view, it is only fair and appropriate that affected jurisdictions be given the opportunity to be removed from the list and that this process be clear.
Investment Migration Council Responds
There are dozens of everyday products that could be used to cause damage if placed in the wrong hands but that nonetheless create significant economic and social value. A truck in the hands of terrorists becomes a serious weapon that can kill people – yet should we stop producing and using trucks to transport goods? We request that developers and marketers of investment migration programmes be treated the same way as industrial manufacturers or service providers of any kind, and we encourage more positive engagement between international regulators and the investment migration industry, which provides enormous societal value particularly for smaller states with limited means of attracting foreign direct investment.”
C o n f i r m implementation of Mandatory Disclosure Rules leads to “nonrisk” status No objective basis to single out Malta and Cyprus in the EU
We note that both Cyprus and Malta are included in the list of “high-risk” jurisdictions. As the OECD will be aware, following Council Directive (EU) 2018/822 (Directive), both jurisdictions are subject to the EU equivalent of the OECD Model Mandatory Disclosure Rules for CRS Avoidance. Annex IV Part II D (f) to the Directive contains the specific hallmark dealing with arrangements designed to undermine the effectiveness of exploiting weaknesses in CRS due diligence procedures. This means that the use of RBI/CBI programmes in either Cyprus or Malta to further CRS avoidance arrangements would be subject to mandatory disclosure – this is effective from June 2018. In the circumstances, it is not clear why Cyprus and Malta have been identified as “high-risk” given the very extensive reporting provisions contained in the Directive and the experiences of other jurisdictions that have implemented mandatory disclosure rules, such as the Disclosure of Tax Avoidance Schemes (DOTAS) in the UK, which has proved to be a significant deterrent to the promotion of avoidance arrangements. We urge the OECD to evaluate jurisdictions on an entirely objective basis and not only on the
basis of whether they offer RBI/CBI programmes that are subjectively and without any evidence marked as “high-risk”. The assessment basis for CRS-related matters must be the basis of the respective countries’ CRS anti-avoidance regime along with similar, objective aspects. Whether or not a country operates an investment migration programmes is simply irrelevant in this context. Confirm methodology and provide data to support the level of risk We ask the OECD to confirm the methodology used in determining the list of “high-risk” jurisdictions. Section 2 of the prior consultation, “Preventing Abuse of Residence by Investment Schemes to Circumvent the CRS”, sets out the basis on which RBI/CBI programmes are assessed as “high-risk”: was this method adopted to determine the final list? In both the public consultation and the recent “high-risk” jurisdiction list announcement, the OECD bases its decision to act in this area on “information released in the market place and obtained through the OECD’s CRS public disclosure facility”. We ask the OECD to provide statistical data to confirm the level of risk. In the contribution submitted to the public consultation by one of our founding members and one of the major firms in this field, the results of an internal review of their clients’ reasons for pursuing RBI/ CBI programmes were published. The firm found no meaningful data for the use of such programmes to avoid CRS reporting; instead, they found that 22% of their clients are looking for better visa-free travel, 20% for better career opportunities and 19% for better security and safety. We would ask, again, that the OECD confirms the basis on which jurisdictions have been selected for the “high-risk” list and the extent to which jurisdictions have been placed on the list based on disclosures to the CRS public disclosure facility. We also expect the OECD to carry out independent and representative assessments to confirm the review submitted by a major firm in the industry, or else to arrive at alternative findings and publish the same. With more than 400,000 financial institutions implementing the CRS globally, reporting on an estimated 1 billion accounts, it in the public interest that the OECD publishes the factual basis on which “high-risk” jurisdictions have been selected. Confirm implementation of Mandatory Disclosure Rules leads to “non-risk” status We ask the OECD to confirm whether a “highrisk” jurisdiction that implements the OECD Mandatory Disclosure Rules for CRS Avoidance would be re-assessed as being not “high-risk” and taken off the list, given the very extensive reporting obligations and strong deterrent effect of the Mandatory Disclosure Rules. Confirm regarding the OECD Commentary to the Standard for Automatic Exchange of Financial Account Information in Tax Matters Paragraph 23 of page 133 of the OECD Commentary to the Standard for Automatic Exchange of Financial Account Information in Tax Matters, Second Edition, provides that “Reporting Financial Institutions are not expected to carry out an independent legal analysis of relevant tax laws to confirm the reasonableness of a selfcertificate”. We would ask the OECD to confirm that this will remain the case, notwithstanding the additional questions to be asked of account holders seeking to establish tax residence in “high-risk” jurisdictions, or if not, how this commentary is intended to be amended, and if so, by when.. 4th Quarter 2018 - 7
RIF TRUST / LATITUDE
IREIS Expo - Abu Dhabi 2018
Q1) Your views on Global residency and citizenship ; In the last decade, both the demand and the supply sides of the investment migration industry have significantly shifted upward and we expect this growth to continue for the foreseeable future. Holding dual citizenships or resident status in another country is now an integral and prudent part of one’s global legacy. Q2) what are the recent political and economic impacts on migration towards your prospective Caribbean countries, and other countries ;
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Citizenship-by-Investment Programs (CIP) play a crucial role in the participating countries’ economic growth and stability. In the past, many of these Caribbean countries have been heavily reliant on tourism as their main economic driver. CIPs represent new opportunities to attract foreign capital for both private and government projects that will further stimulate and diversify their economies. Looking outside of the Caribbean, with the impending consequences of Brexit, many UK Nationals are looking at their EU residence options as they will most likely not have the same unfettered access as they previously had. We are seeing many more enquires from the UK for residence programs offered by Portugal, Malta and Greece etc. Q3) what are your predictions about residency and citizenship trends in 2018 and 2019 ; Both the residency and citizenship markets will continue to grow in terms of demand as well as the number of participating countries. In fact, the Government of Anguilla recently announced the signing of a Memorandum of Understanding with RIF’s parent company, Latitude Consultancy, tasked with the design, implementation and promotion of Anguilla’s
new inward investment agency, which will include the creation of two new residence programs. Montenegro is a country boarding the Adriatic Sea that is on the short list to join the European Union by 2025 and they have also recently announced that a CIP that will most likely launch in early 2019. In addition, Moldova plans to launch a CIP soon. Even Turkey, which has a CIP in place, will be makingchanges to their program to make it more competitive on the world stage. Q4) what are your thoughts on Dual citizenship as a strategy for global upward mobility ? In today’s ever-changing world, dual citizenship is no longer a privilege for a select few. With the variety of programs now available to the market, and their affordability making it accessible to many more families, alternative residence and citizenship has become a necessity for families looking to provide their loved ones with greater freedom, safety, health and educational opportunities. At the very core of it, dual citizenship enables parents to provide their children with more opportunities in life – a global legacy so to speak. Q5) Which are your two top programs? Kindly explain investment range, period and processing formalities in brief ; St Kitts and Nevis is one of the top options in the Caribbean. They offer two different qualifying investment options: the purchase of real estate priced from US$200,000, or a contribution to the Government from US$150,000. Our clients are being approved in as little as 2-3 months and receive a passport with visa-free travel to over 150 countries. For those with the financial means, Cyprus
offers an exceptional program which is tied to the purchase of real estate priced from €2 million. While certainly more costly than the Caribbean options, a Cyprus passport affords the right of establishment in other EU countries and visa-free travel to over 170 different countries. We are seeing applications processed in the 6-12 month range. Q6) What would be your advice on individual wealth planning in terms of investments in citizenship and migration ? It is important to look at a client’s objectives as well as understand both their short- and long-term goals before recommending a specific program. For example, does the client want to continue living in their home country or are they looking at physically moving? For some clients it may be the freedom to travel around the world, and for others a better overall quality of life which includes worldclass education and access to better healthcare for their children. Therefore, it is important to understand what exactly the client wants to achieve so that we can offer the best solution to ensure their goals are accomplished. Q7) What are the impacts of taxation on migration, residency and citizenship by investment ? High levels of taxation may encourage some of the wealthier citizens to move elsewhere, even to territories that are not yet part of the CIP market. The well-known French actor Gérard Depardieu is an example; he moved to Russia and took Russian citizenship to avoid what he considered to be high levels of tax in France. Some countries even offer tax residency programs to help attract high net-worth families to their shores. In fact, Anguilla is developing a tax residency 4th Quarter 2018 - 9
TOTAL VALUE OF THE SUPERYACHTS
Not only a well known staple amongst Mediterranean cruising grounds, the Principality of Monaco itself has long been the destination of choice for superyacht owners and guests, rendering it a natural home for the unique agship event that is the Monaco Yacht Show. Though the stunning location has seemingly always gone hand in hand with an enviably > glamorous superyacht lifestyle, the development of the Show to the level in which it currently rests has been a long process, requiring the brightest minds in yachting to work tirelessly round the clock to constantly improve, innovate and expand.
MONACO YACHT SHOW
26 29 SEPTEMBER 2018
121 SUPERYACHTS 106 NUMBER OF MOTORYACHTS 14 NUMBER OF SAILING YACHTS 42 NEW BUILDS 49.5 METRES LOA (AVERAGE LENGTH) 45% OF THE FLEET IS <2 YEARS (INCL NEW REFITS)
MONACO YAC MONACO YACHT SHOW
26 >29 SEPTEM 26 >29 SEPTEMBER 2018 THE LARGEST MOTORYACHT AQUARIUS (FEADSHIP) - 2017 : 92M THE LARGEST SAILING YACHT SYBARIS (PERINI NAVI) - 2016 : 70M THE LARGEST NEW MOTORYACHT DAR (OCEANCO) - 2018 : 90M THE LARGEST NEW SAILING YACHT ALL ABOUT U (ADA BOAT YARD) - 2018 : 50M
8 - Citizenship Navigation 10 10--Citizenship Citizenship Navigation Navigation
4th Quarter 2018 - 911
THE NEXT WAVE - The Super Yacht 26-29 September 2018
How do we attract a new wave of superyacht owners? All eyes are on emerging UHNWIs, and the yachting industry is busy engaging with the priorities of millennials in the hope they will take to the water like the previous generation did. A study led by the International University of Monaco (IUM) in association with the Italian shipyard Rossinavi researches the likes and dislikes of the emerging millennial yachting market. Te c h n o l o g y, i n n o v a t i o n a n d t h e environment were just some of the priorities to emerge from the study, which Rossinavi factored into a series of superyacht concepts speci cally aimed at younger owners. Younger owners are going to appreciate adventure and sports more than mahogany and cigars. Luxurious comfort is less important to them than owning something new and surprising. For young, self-made millennials still growing their business interests, yachting is an occasional pastime rather than an enduring passion. The yacht being only part of their fast-moving lifestyles. They don’t think of a yacht as an end in itself, but as a sort of oating pied-à-terre for attending events like the Monaco Grand Prix or the Cannes Film Festival. They’re not interested in huge cabins, but they are into water sports and lots of exterior space for entertaining large groups of friends. They might spend a weekend on board in Sardinia, go back to work, and then join the boat the following weekend in Ibiza. It’s a di erent concept from the traditional two-week cruise in the summer. With the focus on open-air socialising, water sports, gym and spas, formal dining rooms and salons will be even less relevant in the future. This shift in 12 - Citizenship Navigation
how yachts are used is driving designers to look afresh at conventional general arrangements. But there is a risk involved in designing yachts for a speci c demographic. De ning what distinguishes one generation from another is not an exact science and grouping millennials into a single homogenous group is unlikely to result in solutions that suit everyone. Another generalisation is that millennials value life experiences more than material possessions. They will still want the use of superyachts, but will be less interested in owning the asset. In fact, they may even see ownership as a restriction. We are going to see a time when the traditional idea of yacht ownership starts to follow the same path as carsharing services: more convenient than a traditional taxi, and a real alternative to owning a car. There are huge challenges ahead, but also huge opportunities for those companies that nd the right balance in the evolving market. Fractional ownership is not a new concept, but has enjoyed only limited success in the yachting world. According to the study, the Millenials are going to do things di erently and the product will have to be re-packaged, but the yachts will not change that much and the ownership concept will not go away anytime soon. They will want their own product like the rest of us. Things change, but human nature stays the same. ‘Re-packaging’ the product further involves how the industry communicates and interacts with the emerging market. In the past, owners were typically introduced to designers or shipyards at boat shows or via yacht brokers. Today, rst contact is more often made directly through social media channels. It’s a much more immediate and personal form
of communication: seeing their photos on Facebook means we can get a pretty good idea of their interests and tastes and it makes understanding their needs or preferences that much quicker and easier. Social media and messaging apps are also a ecting the way yacht brokers do business with owners. A broker, and an active vlogger, also confesses that most of his business leads, especially amongst younger clients, come from his YouTube channel. More and more clients who contact him through direct messaging on Facebook or with Whatsapp— and they expect an immediate response. The average age of superyacht owners is decreasing, but whether millennials will ll the generation gap remains to be seen. Research is ongoing, but records show that self-made owners under the age of 40 make up only a tiny fraction of the total.
THE SUPERYACHT FLEET What is a superyacht? A superyacht is a motor or sailing yacht that is at least 30-metre in length. Apart from this minimum length, we use a fairly generous interpretation when it comes to de ning what is a superyacht and what is not. For example, privately owned research vessels and yacht support vessels are included in the superyacht Fleet.
This is not surprising when you think that they’re still busy with their businesses and owning a superyacht is not yet a priority. The important thing is that they charter yachts, and the industry has to be very clear about what it costs to run a yacht. In some cases, you can buy a large yacht relatively cheaply, but the running and maintenance costs over a period of ve years can be much higher than the initial purchase price. The charter sector is strong and getting stronger, which suggests that prospective owners appreciate the yachting lifestyle and are checking out the market, possibly as a preamble to buying. (Text extracted from the article «The Next Wave» written by Justin Ratcli e for the 2018 edition of MYS Summer Magazine).
MONACO Super Yacht Show
As of early August 2018, the world’s eet of operational superyachts over 30m amounted to 4,889 yachts. 278 yachts were out of service. Some of those are conversion projects which have been stalled for so many years that it is unlikely that they will ever be nished. Some yachts out of service are severely damaged and awaiting their fate, while other yachts have been laid up for a very long time. At SuperYacht Times, we have tracked 165 yachts since World War Two which we have classi ed as complete losses. The actual number of complete losses is probably higher, as tracing the nal fate of old or abandoned yachts can be extremely di cult. 85% of the operating eet or 4,170 yachts measure between 30 and 50m. 597 yachts have a length between 50 and 80m, leaving just 123 very large superyachts over 80m. Out of the entire operating eet, only 780 yachts, or 16% of the eet, are sailing yachts. In recent years, the share of sailing yachts in newbuild deliveries has been around 10%, so their share of the total eet has gradually declined. Close to one-third of the operational eet (1,524 yachts) is over twenty years old. A similar number of yachts (1,465) are eleven to twenty years old. However, no less than 1,811 yachts were completed in the last ten years (2008-2017), which illustrates how eet growth has accelerated. Not only has the eet grown, the average size of yachts has grown too. Two-thirds of the 20+-year-old eet measures between 30 and 40m in length, while that share is is very similar for the eleven-to-twenty- year-old eet. For the yachts completed during the last
ten years though, the share of 30- 40m yachts is only 57%, even though in terms of numbers of vessels, the size of the 3040m market remained roughly the same throughout this time period (approximately a thousand yachts per ten years). So, the extra growth of some 300 yachts over the past ten years has come from the larger yachts. Average yearly newbuild deliveries (both motor and sailing yachts) have hovered around the 140-150 mark in recent years. So far in 2018, we have already recorded 94 deliveries with another 126 yachts still planned for delivery this year, although in all likelihood quite a few of those boats will be delayed until next year. Nevertheless, the number of 180 deliveries for 2018 which we forecasted in our 2018 IQ Report still seems to be achievable. The construction book currently amounts to 429 yachts, including 39 projects which are on hold but have a good chance of construction resuming in the near future. This means that the number of yachts in the construction book is slightly less compared to the 440 projects we counted at the end of 2017. What will the total at the end of 2018 be? It all depends on how new yacht sales perform throughout the remainder of 2018. More about new yacht sales later on. Would you like to know more about the construction book of superyachts? Our SuperYacht Times IQ report 2018 o ers extensive information about the construction book and all the other subjects touched upon in this Monaco Yacht Show 2018 Intelligence Report.
4th Quarter 2018 - 13
A NEW TEAM OF MODERN-DAY ULYSSES !
Ulysse Nardin announces a new crew of mavericks, innovative explorers and real-life heroes. Joining Fred Buyle and Alex Caizergues, the armada of “Ulysses” widens with Sebastien Destremau and Mathieu Crépel.
About Sebastien Destremau, French-Australian sailor and navigator
French/Australian skipper and navigator Sebastien Destremau, winner of the 1998 Sydney-Hobart race – considered by some to be the most difficult sailing race in the world – decided to try an even greater challenge in 2016; the Vendée Globe, the supreme challenge of the sport’s most daunting around-theworld solo race. Overcoming technical troubles, lack of food and even a cracked hull, he accomplished his goal, crossing the finish line 124 days later at Sables d’Olonne to a conquering hero’s welcome. The five-time world champion has also represented France at the Olympic Games. - 5 times America’s Cup competitor - 124 days alone at sea for the 2016 Vendée Globe Ocean Race - One Sydney-Hobart victory - One Olympic participation aboard the Flying Dutchman - One solo victory aboard the Calero Solo Transat 2016
14 - Citizenship Navigation
About Mathieu Crepel
French snowboarding champion, real-life waterman and mountain/ocean explorer. World Champion snowboarder and French athlete Mathieu Crépel was invited to take part in the Arctic Challenge at the tender age of 15. He went on to win the Crystal Globe competition, becoming the first of his nationality to earn a half pipe world title. At the 2007 World Championships in Arosa, Switzerland, he became the first person ever to land a switch backside 1260 in competition, distinguishing him from all other snowboarders in history. He also represented France at the 2006 Olympic Winter Games. Mathieu Crepel is a real-life « waterman »: aware of Nature, water cycles and the seasons, his passion for surf has become as important as snowboard and he now splits his time between mountain and ocean, snowflakes and waves.
- 2006 TTR world champion - 2007 2 times FIS world champion - 2010 X games silver medalist - 2016 winner of the legendary banked slalom 4th Quarter 2018 - 15
Monaco SuperYacht Show News (MYS) 2018 M/Y Irisha
M/Y Elandess (credit: Tom van Oossanen) There is simply no show on the international circuit that compares to the Monaco Yacht Show (MYS). Sure, it’s not the largest or the most focused by any stretch, but it delivers a range of quality products, designs, technologies and ideas like no other, and it’s a spectator sport for the competition between the world’s best shipyards to present their best wares. Understandably, it’s the largest boats in the show that perennially draw the most attention, so it was ill-fated that the two largest exhibits, 95.2m Kismet and 90m DAR, were denied entry for the opening period of the show due to choppy seas. While the former never actually made it into the show – through no fault of the exhibitor – DAR did, and with her imposing, glass-laden exterior profile, the majority in attendance appreciated the impressive craftsmanship by Oceanco and exterior designer, DeBasto Designs.
of show attendees said it was the most impressive boat they had ever set foot on. The art collection; communal spaces; lounge underneath the swimming pool waterline; and underwater viewing lounge are but a few of the boat’s highlights. The experienced, hands-on owner, yard and designer have created a truly impeccable product in which every fine detail has been thought through.
M/Y Elandess (credit: Tom van Oossanen) The 88.5m Illusion Plus, built by Chinese shipyard, Pride Mega Yachts, has some fantastic spaces to offer – you really do get a sense of the sheer volume (3,642gt) in the double height salon and staterooms when you walk through the boat. That, for me, is the main selling point of the yacht as it stands, because the finishing touches are yet to be made. I’m not so sure the quality is up to the standards of her Northern-European counterparts, however, at €35,000 per gross ton, she looks to be priced where she should be.
M/Y DAR (credit: Francisco Martinez) Further along the dock was Elandess, the 74.5m Abeking & Rasmussen build, designed by Harrison Eidsgaard. Compliments of this boat were aplenty – in fact, a number
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M/Y Illusion Plus
The 72m Solo proved to be a very popular boat in the show and was built on the technical platform of its predecessor – and sistership – 69.3m Suerte, at Tankoa Yachts. Suerte had been a great success upon delivery in 2015 – so popular with one charterer, in fact, that he embarked on a four-month charter, which eventually turned into ownership. Consequently, the seller returned to the yard to build Solo and it has been rumoured that another larger project could eventually be in the pipeline for this owner. My impression is that Tankoa has really put itself on the map with Solo. The dark, chic Francesco Paszkowski interior has some great spaces, quirky artefacts and a homely feel. It was announced during the show that the yard is developing a full-custom division, which could prove to be a lucrative move if Solo is anything to go by.
M/Y Solo Moving further down the size scale, the now awardwinning 51m Heesen, Irisha, proved to be an efficacious showcase of Heesen’s full-custom division. Built on one of the yard’s successful platform hulls, she features a sleek and sporty exterior design by Harrison Eidsgaard, which is characterised by complex, curved glass running from the bridge to the upper deck. Her clean and classy
interior, also by Harrison Eidsgaard, puts the finishing touches to a laudable collaboration. M/Y Irisha Last but not least, I thought the 49m Rossinavi fullcustom build, Flying Dagger, drew admirers for its narrow, sporty superstructure, which was designed by Enrico Gobbi of Team For Design. The sprawling sun deck features a metallic and woven metal canopy that opens and closes to provide a sunny or shaded space. Further performance-driven features include a shallow draft and a water-jet propulsion system, allowing her to reach a top speed of 21 knots.
M/Y Flying Dagger I don’t think it’s fair to call them ‘dark horses’, but it was good to see some mid- to upper-league shipyards turning heads this year and proving that they are in the mix with the best shipyards in the world. While I’ve only focused on the latest new builds in this feature, the quality extended right through the brokerage boat line-up, which showcased some impeccably maintained yachts and some wonderful opportunities for buyers. MONACO YACHT SHOW 4th Quarter 2018 - 17
Legal considerations before buying a super yacht
New build If you buy a new yacht you definitely need the expertise and advice of a maritime lawyer to review the design and build agreement and possibly a technical manager to coordinate the work of the designer, naval architect, builder and external suppliers. Type of builds: Three categories of yachts can be identified within the new yacht market: production yachts, semi- custom yachts and custom yachts. Production yachts are generally cheapest and fastest to deliver. There is very little margin to personalise the yacht. The sale and construction contract is typically presented to the buyer in a standard form and there is very little margin for variation or negotiation. At the other end of the scale, custom yachts are built in most cases completely according to the yacht- owner requirements. A close collaboration and regular visits to the yard during the design and construction of the yacht will be required by the owner and his team. Seeking assistance from a qualified surveyor or project management company is recommended to ensure the project proceeds on time and on budget. When ordering a new build, and more specifically a custom or semi-custom yacht, reviewing the provisions of the building contract is a MUST. Clauses to consider:
Having taken the decision to make a major investment in a yacht a number of important decisions must be taken to plan for successful and stress-free ownership and operation in future years. In this article we look at what questions should owners ask themselves and what legal aspects need to be considered at the outset? Do I buy in my personal name or do I buy through a company? Registering the yacht in the name of a company, whether located onshore or offshore, to own and operate a yacht, not only provides some privacy to the ultimate owner, but will also limit liability in the event of a claim, when compared to the alternative of registering the yacht in the name of the individual owner. The use of a suitable yacht owning company may also facilitate legitimate tax mitigation, as well as providing asset protection and estate planning. Yachting professionals frequently advise owners to set up a Single Purpose Vehicle, ‘SPV’, on the acquisition of the yacht, for the owners to enjoy the benefit of limited liability and not to jeopardize their other asset and business. 18 - Citizenship Navigation
Do I buy a new or a second hand yacht? Yachts will either be bought or sold as new builds or on the pre-owned second-hand market. In the case of a yacht purchase as a new build the terms of the sale and purchase (and the documentation to be supplied) will be covered by the detailed contract including the detailed technical specification of the yacht. On the purchase of a pre-owned second hand yacht, the main commercial terms will, typically, be agreed through the yacht broker. A Memorandum of Agreement (“MOA”) will usually be signed by the parties reflecting the agreed terms. The MOA is a legally binding agreement executed by the parties to buy and sell the yacht. Accordingly, it is highly recommended that the parties seek legal advice before entering into the MOA to ensure they are protected and they buy the yacht they want. Several standard forms of MOA are available. The most commonly used for yachts is the Mediterranean Yacht Brokers and the Royal Yachting Association forms. For larger yachts an amended version of the Norwegian Sale Form (typically used for commercial vessels) could also be used.
Specification and plans: especially if the yacht is of a non-standard design with specific requirements in terms of design, quality and performances and its interior fittings and layout. These terms will generally be included in a schedule annexed to the main contract. Contract price / variation in the costs Payments: In most cases the first instalment of the purchase price will be payable as a down payment before construction starts. Subsequent instalments will then become due following completion of particular stages of construction (i.e. keel laying, hull completion and launching) confirmed by a classification society surveyor with a final instalment due on delivery or on particular dates regardless of the stage of construction reached. Sub contracting / suppliers (ie: engines and navigation systems) Failure to meet performance criteria Risks (yard insurance during the construction) Security (refund guarantees for the owner / payment guarantee for the yard (personal guarantee or bank guaranty)) Trials The contract should specify the trials and tests to be carried during and following construction and the buyer should be entitled to have a representative present who can comment on the construction, in addition to the Classification Society. Documentation and Delivery The contract will need to specify both the time and procedure for the delivery of the yacht and the documentation that will be provided by the builder upon delivery, in
exchange for the final instalment of the purchase price. Warranty period Default Dispute resolution Arbitration remains the favoured procedure in contracts of this type and an arbitration provision will be agreed in most circumstances. Choice of law Second hand yacht: You see the yacht, you like it, it seems in good condition....often it is a “coup de Coeur”. Make sure though, before you buy that the key matters below have been considered to avoid bad and expensive surprises: Survey: ‘I saw the yacht, it seems in good condition, the Seller told me that she is in perfect condition, why should I appoint a surveyor to confirm the same?’ An extra cost? Yes, but the survey would save a lot more hidden costs in the future. Always appoint a surveyor to carry out a pre-purchase survey or what we call a condition survey and sea trial. You need to know exactly what you are buying and have an idea of the likely level of future costs you will face. If the yacht is in perfect condition, fine at least you will be 100% sure, if she is not.... you will either be in a position to negotiate her price or negotiate so that the defects and above all those defects affecting the seaworthiness of the yacht are fixed at the Seller’s costs before you take delivery. Review of the MOA / Documentation and Delivery The contract will need to specify both the time and procedure to be followed on delivery of the yacht and the documentation that will be provided by the Seller upon delivery in exchange for the balance of the purchase price. Ensure that the contract covers the points below: Price and mode of payment (usually 10% down deposit on signature and the balance on delivery in exchange of the documentation agreed) Special conditions (ie: the purchase is subject to obtaining suitable finance, defects identified and accepted by the Buyer without the possibility to renegotiate the price, ...) Sea trial and condition survey (to give more protection to the Buyer than the “as is, where is basis” clause) Dates for the sea trials and conditions survey, acceptation and/or rejection of the yacht and delivery; Place of delivery VAT status of the yacht Methods of rejection of the yacht Defects and consequences as far as deposit paid by buyer, payment of the broker’s commission, cancellation and damages are concerned The Law applicable to the contract Ensure that the main documents below are listed and originals will be delivered on completion: Inventory (listing all engine, deck and
interior elements which are included in the sale that are available on board and which are to be agreed and signed for before delivery) Bill of Sale Builder certificate and if available previous Bills of Sale Yacht certificates (will depend upon the flag, vessel size, type of registration, tonnage and whether the yacht is classed or not) All log books, plans,blueprints, handbooks, manuals, technical documentation, instructions etc. concerning the yacht and her equipment that are currently in the possession or control of the Seller, which will be transferred on board the yacht A general assignment of all current warranties for the yacht and its equipment and components; Corporate documentation showing that the company is in good standing etc. Minutes, Shareholders Resolutions and Power of Attorney for the purchase/sale and delivery VAT paid certificate or statement from the beneficial owner of the Seller confirming the date on which the yacht entered the EU under Temporary Admission for pleasure yachts or the import document for commercial yachts -as may be applicable Invoices for the tenders, jet skis and other toys that are sold with the yacht Personal guarantee, ideally from the Ultimate Beneficial Owner guaranteeing the yacht’s title and lien free status (it might be difficult to obtain but a guaranty must be obtained) Transcript of the Register, issued a few days before delivery showing that the vessel is free from registered encumbrances If the yacht is classed, class confirmation issued a few days before delivery, that is free of any recommendations or notations Confirmation from the yacht’s registration authority that there are no outstanding fees or other charges owed to the Registry in respect of the yacht Crew release letters confirming that they have no claims against the Seller Undertaking for the deletion of the yacht if deletion certificate is not available on delivery Commercial invoice Protocol of delivery and acceptance The information is for general purposes only and should not be relied upon as a legal advice. Specific guidance should always be obtained on ownership structuring, registration and operation of a yacht.
F o r m o re i n f o r m a t i o n c o n t a c t J a n e t X a n t h o p o u l o s , Ya c h t O w n e r s h i p & Administration Dpt Manager, Rosemont Yacht Services at firstname.lastname@example.org Rosemont Yacht Services: yacht ownership, registration and administration experts 4th Quarter 2018 - 19
Malta as a Center for Wealth Management Solutions Kenneth Farrugia, Chairman, Finance Malta Centrally located in the middle of the Mediterranean Sea, Malta and its sister island Gozo lie virtually midway between Europe and North Africa, some 90 kilometers south of Sicily (Italy) and 300 kilometers north of Libya. This positions the island as an excellent gateway for businesses between Europe, Africa, the Middle East, and Asia. The capital city, Valletta, is both the administrative and business center of the country. Since becoming a member of the EU in 2004, Malta has experienced accelerated growth across all sectors of its financial services industry. With the introduction of passport rights — allowing companies to establish a branch or provide services not only in any other EU country but also in the countries of the European Economic Area (EEA) — many new business opportunities have opened. Establishing a business in Malta now provides instant access to 31 EEA economies.
Malta, being the smallest country in the EU with over 70 double tax treaties worldwide, has laid the foundations for a strong economy and an International Finance Centre of repute. A range of emerging sectors and business opportunities will help it retain its competitive position. Since its accession to the EU back in 2004, Malta has been one of the most exciting countries to invest in. A number of niche areas such as Igaming, financial services, and now Blockchain has made the Island stand out from the rest. Even during the turbulent times of the financial crisis back in 2007, Malta was one of the least counties to be effected. This was basically due to our very attractive tax regime, which was approved by both the EU and the OECD, and our robust financial system and banking regime. Malta has always been open for business, and with a diverse ecosystem and deep pool of talent from around the world, has made Malta one of the most sought out jurisdictions of its kind. (Christopher Borg) About the Workshop The investment Migration Council and the Office of the Prime Minister hosted its 2nd Annual Malta Workshop on the 19th October 2018. Following the success of last year’s event, the programme has been specifically tailored to address issues which the industry is currently facing as well as updating delegates on industry developments. Highlighted Topics Overview and Comparison of European Residency & Citizenship-by-Investment Programmes The Global Real Estate Market for High Net-worth Individuals Moving Forward – Malta and the Individual Investor Programme The Future of Investment Migration and EU Citizenship Building a Framework of Professional Standards and Education Industry Perspective from an Academic’s Point of View The Multiple Layers of the Due Diligence Checklist Role of the MRVA Concessionaires 20 - Citizenship Navigation
Despite the presence of a diversified economic base, Malta has solidified its place among Europe’s finance centers and its global appeal continues to grow. Viewed by industry players, investors, and regulators as a particularly business-friendly location, the Mediterranean island has become a favored entry point into the EU because of its robust, EU-compliant regulatory framework, diverse financial ecosystem, and deep talent pool. In fact, Malta — as the smallest EU member state — has created a finely tuned regulatory regime that provides confidence in the quality of supervision while ensuring that the demands of the investment community are met. As the global wealth management sector is in transition, Malta is well positioned to respond to client expectations that are constantly being reshaped by new market and regulatory realities. The country adheres to EU and Organisation for Economic Co-operation and Development (OECD) guidelines. In addition, the high standard of Malta’s service providers and its diversified economy have served to shield the country from the ravages of the global financial crisis. Specialist wealth managers and family offices are now servicing a growing number of clients and, with some 150 trustees and 150 investment services firms registered in Malta, the sector is rapidly evolving. Firms serve clients across the entire wealth spectrum, and while thus far the country has been a European wealth management hub, the industry is expanding its ties to increasingly manage the assets and interests of Asian, American and Middle Eastern clients. Malta’s financial regulatory framework is one of the most robust in the world and is fully harmonized with EU and OECD rules. It offers a flexible platform for the financial services
industry. Malta pays close attention to the design of its financial framework to ensure that regulations are risk-based and meet regulatory objectives without over-regulating in a way that inhibits growth and innovation. The Malta Financial Services Authority (MFSA) is the single regulator for all financial services in the country. The MFSA aims to meet the needs of service providers, family offices and wealth managers but also applies a rigorous due diligence process. It adopts a firm stance in regulating the industry yet is highly accessible to professionals and companies seeking to discuss bespoke solutions for the needs of their clients.
2nd Annual Malta Workshop: Advancing the Residency & Citizenship by Investment Dialogue
Malta’s financial regulatory framework is one of the most robust in the world and is fully harmonized with EU and OECD rules.
Maltese Legal System
Corporate structuring has long been an integral part of Malta’s service offering. The Maltese legal structure is a hybrid system of civil and common law. While it is based on the civil law pattern of continental Europe, most administrative and fiscal legislation is based on the British model. This offers Malta a particular advantage in company formation, as practitioners enjoy a cultural affinity with both systems and can easily bridge the gap between continental European and Anglo (UK) legal frameworks. There are many reasons why an individual may wish to establish corporate entities in Malta, ranging from the simple creation of a company or owning a holiday residence, a yacht or a private aircraft, to the more complex set-ups required in the structuring of Islamic Finance transactions. As more high net worth investors and family offices are warming up to investing in private equity and hedge funds, Malta’s reputation as an Investment Fund Domicile is rising fast. With some 600 funds established on the island, the country’s fund administrators and managers have a solid track record in setting up and managing different investment vehicles for institutional and individual investors. Asset management companies in Malta have launched fund platforms that are exclusively open to family offices and thirdparty managers to provide them with an efficient and cost-effective solution to enter the market.
Malta is one of the few jurisdictions that cater for both trusts and foundations. While trusts are particular to systems of law based on common law and are not generally found in civil law countries, civil law in Malta is an exception to this rule. Both structures allow the creation of customized solutions that will fit the most diverse personal and business needs, ranging from succession planning to estate management. Malta’s legislation recognizes all forms of trusts that one would find in other jurisdictions, such as discretionary trusts, accumulation and maintenance trusts, fixed-interests trusts, and spendthrift and charitable trusts. A legislative update of the Trusts and Trustees Act in 2014 also introduced the Private Trust Company (PTC), which offers interesting opportunities to high net worth individuals and families who favor tailor-made trustee solutions. A family trust can hold assets to the benefit of one specific family, whereby the trustee must be a company that only provides services to that specific family trust. Structured Solutions Malta offers a number of made–to–measure structures, supporting tools and investment vehicles to structure the wealth of individuals and families. Many of these structures have been successfully used for many years, while others have been established more recently. However, Malta does not offer off–the–shelf products, and the island’s service providers have a strong track record in structuring customized solutions and adopting innovative approaches. Malta’s sound credentials have also bolstered the growth of its wealth management industry, which is built on a foundation of transparency and accountability. Its banking sector has been ranked as the 15th most sound banking system in the world by the World Economic Forum’s Global Competitiveness Report 2015-2016. Within this context, the country has created a very dynamic marketplace for asset managers and family offices, which benefit from innovative products, experienced professionals, and a strong and transparent regulatory framework as well as personal and cost-effective services. Malta has honed its expertise in many areas of finance, including banking, investment funds, and corporate structuring, while investors can protect their assets through the establishment of trusts and foundations. The country is now targeting an even greater presence in the wealth management sector and is distinguishing itself from traditional wealth management hubs by branding itself as a holistic lifestyle and citizenship-byinvestment destination for high net worth individuals. 4th Quarter 2018 - 21
MALTA, BLOCKCHAIN ISLAND KYC-Chain, SelfKey and Blockchain
MALTA, The Blockchain Island
Edmund J. LOWELL
KYC-Chain, SelfKey and Blockchain Know Your Customer (KYC) is becoming an increasingly important topic for governments and service providers a c r o s s m a n y d i ff e r e n t i n d u s t r i e s . Currently, KYC is kept in silos, with each government and service provider requiring individuals and businesses to go through separate KYC processes. Despite completing the KYC process of bank A for example, bank B will require another, separate KYC procedure. The same is true of governments, banks and startups. Not only is this inefficient, but its also illogical. With the proliferation of online services, individuals and businesses are no longer limited by space, but can instead enjoy the services of companies located all over the world. In terms of KYC, this adds a layer of regulation to contend with. There is no international agreement on KYC standards, meaning each legal jurisdiction typically enforces its own set of requirements. With increasing complexity, comes increasing cost. As a result, KYC has become the thorn in the side of governments and regulated businesses in many industries. More specifically, the cost of securely collecting and maintaining highly personal data is extremely expensive. With the onset of GDPR, companies now stand to pay 4% of their annual revenue as a fine for mishandling or losing the data of European customers. Unfortunately, many companies don't have the infrastructure or resources to handle data in a GDPR compliant manner, in the first place. Essentially, these institutions must collect (and later, if audited, prove to regulators that they have sufficiently collected) documents that prove the identity, address and wealth of their customers. 22 - Citizenship Navigation
The exact standards for these documents are less important, and they vary slightly according to different jurisdictions. They are: Proof of identity: Usually, a passport or government-issued ID, which should be certified or displayed in person. Proof of residency: Usually, a utility bill or address that clearly lists the customer’s name and is current within 60 days Proof of wealth: Letter of recommendation from a banker, accountant or lawyer who knows your financial affairs and can certify that your wealth was acquired by legitimate means. For a company, the following are usually requested for KYC purposes: Standard Charter Requirements for a company KYC Certificate of Incorporation Memorandum and Articles of Association Directors list Registered Agent Registered Address Utility bill for operating address KYC for signatories and UBO over 10 percent and above of the registered shares
KYC for any company that is a shareholder What does this mean for global mobility? As our ability to travel cheaply and conveniently increases, so does our desire move to new places. Immigration and social mobility are becoming more common, but poorly defined methodologies, result in lengthy and costly application processes. KYC-Chain has the power to vastly improve the current situation, by providing an endto-end KYC management system for governments, banks and startups. More specifically, KYC-Chain provides an intuitive and easy to use interface for teams to collect, maintain and
evaluate customer KYC data. With the help of KYC-Chain service providers can vastly cut down on their customer onboarding time, increase efficiency and drive up revenue. Just as importantly, the user enjoys a convenient sign up and evaluation experience, significantly improving customer satisfaction.
What is the SelfKey Marketplace The team behind KYC-Chain's sister company, SelfKey, will soon be launching a blockchain-powered marketplace. This marketplace will bring service providers from the immigration, financial, legal, and crypto industries together with a large volume of potential customers. Supported by the KYC-Chain software, the marketplace will become the easiest way to discover, compare and sign up for services all over the world. In the not too distant future, users will be able to register with a listed service provider within seconds. This is possible, because once a user has completed the KYC process of one service provider, the same documents can be used for any other service provider. Instead of wasting a large amount of time submitting the same documentation to many different platforms, the marketplace only requires the KYC process to be completed once. As soon as it is completed, it can be used for all listed platforms. KYC-Chain is designed therefore, to make the collection, maintenance and evaluation of KYC documentation much easier and cheaper. In combination with the SelfKey Marketplace, this mission is almost nearing its completion. Edmund J. LOWELL, Founder & CEO On behalf of KYC-CHAIN LIMITED
In the dynamic world of FinTech and RegTech, Malta is positioning itself as a leading innovator and as the first country to regulate Distributed Ledger Technology and virtual financial assets. The government of Malta wants to mirror image the success the iGaming industry has brought to the Maltese economy with the new Blockchain technology. Earlier this year, the Maltese Parliament approved three bills establishing the first regulatory framework for blockchain, cryptocurrency and distributed ledger technology (DLT). Malta is the first country to provide a regulated environment for operators in the blockchain, cryptocurrency and DLT space. The first law, establishes Malta Digital Innovation Authority (MDIA) to promote consistent principles for the development of technology innovation and to exercise regulatory functions regarding DLT platforms, smart contracts and related services. The second law, known as the Innovation Technology Arrangement and Services Act, sets out the regime for registration of Technology Service Providers and certification of DLT Platforms. The third law is known as the Virtual Financial Assets Act and establishes the regulatory regime governing ICOs, cryptocurrency exchanges, wallet providers, etc. Malta is the jurisdiction of choice since it has: International Finance Centre Malta is
now an internationally recognised financial services hub. Due to the sector’s traditional and conservative approach, it never experienced a real financial crisis. Low corporation tax A long-standing, full imputation tax system has existed in Malta since 1948. The rate for corporate taxation in Malta stands at 35%; however, upon the distribution of dividends, shareholders may qualify for a refund generally equivalent to 6/7th of the tax paid, thus resulting in a paid tax rate of 5%. Excellent ICT infrastructure Malta’s fully liberalised and developed ICT infrastructure has certainly contributed to the island fast becoming a regional centre of excellence in ICT and financial services. Malta has managed to attract the major players in the industry to its shores, with the likes of Binance, Neufund, OKEx, and Bitbay all publically stating their relocation to Malta. In this regard we are receiving many requests from across the globe. CSA is positioning itself as a leading advisory practice in this area and is currently assisting a number of global players in their relocation to Malta. As a multi-disciplinary advisory firm, we can assist in the following services: - regulatory advice, - whitepaper review, - company incorporation, - pre and post ICO advisory, - blockchain strategy advisory, - tokenomics, - taxation advice, - AML & compliance advisory.
Together with our international partners, CSA is also able to provide a broad range of services including payment services, digital marketing for ICOs and blockchain technology development. At Charles Scerri & Associates we provide assistance and advisory throughout the setting up stage as well as mundane activities of the business. It is emphasised that the above is intended only as general information and cannot substitute any professional advice on the matter in respect to particular situations. -----------------------------------------
Charles Scerri & Associates
CSA Malta is a Member firm of IAPA international, a global association of independent accounting, law and business advisory firms who provide accountancy, audit, tax advisory, legal and business consultancy services. We are committed to providing a personal, sustainable service to our clients, offering global expertise and support through our individual experience and local knowledge. Combining our international capabilities and local market knowledge with an extensive range of skills and industry expertise, we are able to provide a one-stop shop for all your accounting, audit, legal, management consulting and corporate finance needs.
Partner | Tax and International client service email@example.com 4th Quarter 2018 - 23
CYPRUS The recent changes to the Cyprus Investment Program (CIP) The scheme for Naturalisation of Investors in Cyprus by exception has proven to be very attractive and popular among high-net-worth-individuals and entrepreneurs from all over the world. The program has introduced specific terms and conditions along with a straightforward procedure for applicants who wish to obtain the Cyprus citizenship. Taking into account the strong interest by investors, the Cyprus Government has established and revised the “Cyprus Investment Program” on the basis of subsection (2) of section 111A of the Civil Registry Laws of 2002-2017, with specific incentives, criteria and control procedures to prevent abuse. On the one hand, the revisions aim to further encourage the Foreign Direct Investment by attracting individuals to settle and carry on business activities in Cyprus, to further boost the Cyprus economy and to create added value for the country and the investors. On the other hand, the changes intend to enhance the scheme, regulate the procedures and the service providers, and essentially protect the reputation of Cyprus.
THE CHANGES It is notable that the economic criteria and the terms and conditions have not been altered essentially.
MALTA RESIDENCE & VISA PROGRAMME (MRVP)
The revisions of the scheme have been approved by the Council of Ministers’ Decision dated May 21, 2018, effective as of June 15, 2018 when the Decision was published in the Government Gazette. The main changes are the following: The name The scheme of Cyprus Citizenship by Investment will be renamed to “Cyprus Investment Programme” (CIP). The Cap
A|R|Q Group Ewropa Business Centre, Level 3 – Suite 701, Dun Karm Street, Birkirkara BKR9034, Malta E firstname.lastname@example.org T +356 2549 6000
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A limitation of 700 applications per year takes effect from 2018. The cap refers to the main applicants but not the applicant’s family members. The number of the approved applications will be taken into account, without any limitations to the number of the submitted applications per year.
Code of Conduct
In cases where the investment involves the purchase of property or properties under construction for which the Town Planning Permit has not as yet been obtained, the mandatory three-year period of maintaining the investment will commence on the date that the Town Planning Permit is issued. This clause applies for applications submitted on or after June 15, 2018.
The newly established Code of Conduct intends to enhance and maintain the trust of the applicants in the CIP as well as to protect the CIP itself. All members of the Registry of Service Providers and their professional associates should comply with the Code of Conduct which sets the parameters for the provision of services to applicants. Moreover, the Code of Conduct sets the guidelines for the promotion and advertising of the CIP.
The expected timeframe for examining any application submitted in accordance with the CIP is six months.
Registry of Service Providers All CIP applications should be submitted on behalf of the applicants by natural or legal persons who are registered with the Registry of Certified Service Providers. The registration of new members will be examined and approved by the Committee of Supervision and Control which is consisted of representatives from the Ministry of Finance, the Ministry of Interior and Invest Cyprus. The Registry will be published on July 31, 2018 on the websites of the Ministry of Finance, the Ministry of Interior and Invest Cyprus (CIPA).
A thorough due diligence will be conducted on the applicants and a due diligence report, issued through an internationally accepted database will be required to be submitted together with the application of the main applicant and the main applicant’s spouse and parents. As per the Decision of the Council of Ministers, the Minister of Finance is authorized to carry out an evaluation study on the CIP and its effects on the economy. The Committee of Supervision and Control will undertake possible revisions from time to time to further improve the implementation of the CIP. Eleni Drakou, Associate and Director of Business Development of Michael Kyprianou and Co. LLC by email at email@example.com or by phone at +357 25 363685. 4th Quarter 2018 - 25
Overview of Global Real Estate for HNWI 2017. Effects of CBI and RBI on Real Estate Markets
And finally, moving from real estate to alternative citizenship subject, we can clearly see that having one or more alternative citizenship apart from the birth nationality is a growing trend if not already a necessity. 34% of the world’s richest already have at least one alternative citizenship, while 21% are planning to obtain one
Presentation for IMC Malta workshop by Anastasia Yianni
Real estate is a subject that is of vital interests to most people. We live in houses, we rent houses, we invest in houses and commercial properties. Real Estate investments still form large share in the portfolio of many investors. Construction and Real estate sectors are very important for the economies of the countries, they form large part o f G D P, c r e a t e n e w j o b s , e m p l o y people. So it is no wonder that real estate investment forms essential part in many Citizenship and Residency by Investment programmes. It is also no wonder that Citizenship and Residency programmes are of interest to High Net Worth Individuals of the world. Today we will try to provide a brief analysis of the HNWI tendencies around the world, their real estate preferences, and will talk about three European countries, which introduced Citizenship and Residency programmes with real estate component. We will see what influence the citizenship programmes introduction had on each country’s Real Estate Market. Overview of the Global Market for HNWI 2017 was a very good year for a real estate. Sotheby’s International realty network achieved record number of sales of 108 bln US dollars. This represents almost 14% increase in comparison with 2016.
This year wealth data expert Wealth-X conducted an extensive research for Knight Frank Wealth Report. In their report they have analysed number of Millionaires (net worth more than 5 mln USD), Ultra High Networth Individuals (net worth from50 mln USD) and demibillionaires (net worth from 500 mln USD). 26 - Citizenship Navigation
property investment portfolios.
The figures in itself do not mean much – we need to understand what are the tendencies. 2017 saw a 10% rise in the number of HNWI. It is a pretty impressive figure if one takes into account that for the previous 5 years the cumulative increase was just 18%. Asia leads the pace with some analytics saying that the number of HNWI in China will more than double in the next few years.
Wealth-X also provides information on the wealthiest countries of the world, i.e. the number of UHNWI per 10.000 population. It is no wonder that Monaco, Hong Kong, Switzerland and Singapore are at the top of the rank. Cyprus stands at No 28 sharing its position with Russia and Portugal.
For is 2018 edition of Wealth Report Knight Frank analyzed number of houses that HNWI own around the world. It is interesting to see that wealthy people from countries with more volatile political and economic situation tend to own more properties. It is important to remember that the data is provided only for the individuals and family offices, not for
Where do UHNWI plan to invest in Real Estate in 2018? Within their country or abroad? Knight Frank Attitude Survey provides following information – there is an appetite for investing abroad. UK and US remain the most popular counties for the purchase of Real Estate
The average price index increased 2,1% overall in 2017. The previous year the increase constituted 1,4% due to political instability. In the current rating most cities showed positive trend while 11% of them doubled the rate.
Another interesting and useful piece of statistics comes down to a simple question – how many square meters you can buy for a 1 million USD in different countries of the world. The investor can get a clear picture as to space-to-location correlation and weigh it all up before making his decision.
Having established the trends among the world’s HNWI, which are, obviously, the main participants of the investment programmes, let’s have a look at how these schemes influence the receiving countries’ real estate market. We have chosen the 3 most popular European countries programmes and analysed their statistics, kindly provided by our colleagues from the Malta Sotheby’s International Realty, Portugal Sotheby’s International Realty and our own Cyprus Sotheby’s International Realty
Portugal Real estate transactions have grown in Portugal by 25% in value and 17% in units between 2014, when the programme was introduced, and 2015 (Portuguese Institute of Statistics), in Lisbon the increase was 42% in value and 31% in units. The years 2016 and 2017 showed a new increase of 20% in number of transactions and 2018 is expected to meet a similar growth. With the introduction of residency programme with its real estate component of €500 000 the property prices have gone up, as a lot of foreigners are eager to invest. The main clients come from France, UK, Brazil, China, Italy, Sweden, South Africa and Middle East. There is currently more demand than supply in the main cities, Lisbon, Porto and Algarve. 70% of Portugal SIR clients are foreigners and overall 1 in every 5 clients is a foreigner. Portugal Sotheby’s International realty has an €900 000 average sales transaction while the national average stays at around €150 000.
Malta According to the fourth annual statistical report from Malta’s Office of the Regulator of the Individual Investor Program (ORiip), 46 main applicants naturalized through the MIIP between July 2016 and June 2017 spent a total of €35,284,168 on real estate on Malta and Gozo, an average of €767,047.15 per property. Since 2014, MIIP-participants have spent a total of €71,190,233 on real estate. • only 46 opted to buy (12%) during July
2016 and June 2017 • The rest 340 (88%) opted to rent (please see chart below from ORiip)
Property prices have increased by 5.5% in 2016 and 5.3% in 2017. The rate of increase in prices in Malta has been slightly higher when considering the EU’s average, at an increase of 4.3% in 2016 and a further increase of 4.4% in 2017. The IIP is not the main reason why real estate prices have soared. Rather, it’s the economic growth of Malta and the fact that this has attracted upwards of 35,000 foreign workers in need of a residence. IIP applicants are at the higher end in terms of real estate portfolios, so the program’s impact on property prices are restricted to this upper end of the market. Individuals applying for citizenship by investment through Malta’s Individual Investor Programme increasingly buy upmarket properties in the country and are not affecting the housing market’s affordability for low-income earners or first time buyers The majority buy in Sliema and St. Julian’s (the case for our HNWI clients as well). On average, they’ve spent €868,173 on real estate in Malta, some 2.5 times the mandated minimum of €350,000 since the program opened in 2014. It is Malta’s economic growth that is causing real estate prices to rise, not the purchase requirement for Malta’s investment programmes.
From 2014 onwards, there were signs of improved confidence in the Cyprus economy and real estate market, leading to increased transaction activity in the market. A further significant increase was recorded in 2016 (43%) with a subsequent increase of 24% in 2017. The total number of contracts during 2017 reached an eight-year high of 8.734 (2016: 7.063). General number of transactions We see increase in transactions amongst foreign buyers as well.
The number of transactions is increasing. However, it is very important to pay attention to the fact that foreigners have always been buying properties in Cyprus and we are far below the numbers of 2007 when 11.281 foreign transactions have been registered.
In 2017 we have seen the following developments • 45% increase in sale contracts for high-end residential properties (>1,5 mln) • The number of building permits increased by 7% in 2017 – number of building permits is the main indication of future supply • The value of new building permits issued in 2017 increased by 49% on an annual basis across Cyprus • The Cyprus Statistical Service (CYSTAT) has announced that prices for houses and apartments in Cyprus rose by an average by 0.6% in the second quarter of 2018 compared to the first quarter in its latest House Price Index (HPI). The HPI also reports that residential property prices in Cyprus have risen by 1.2% on an annual basis. The increase in real estate property transactions and prices was largely driven by: • The introduction of property tax incentives • Business incentives which attracted multiple new businesses to Cyprus • The launch of the investment programme, which has attracted foreign, mainly non-EU (Chinese, Russian, Indian and UAE) buyers; • Increased demand from the domestic sector • General improvement of the island’s economy To conclude, we can clearly see that CBI and RBI programmes have very positive influence on the real estate markets of the countries. They increase demand for properties as well as foreign direct investments which in turn stimulates economic growth, improves real estate markets, increases employment and general wellbeing of the population, and otherwise has an overall positive effect in all the countries. 4th Quarter 2018 - 27
Hurry Up and Wait: Indian Foreign Nationals Facing Immigration Backlogs
BY KARUNA CHANDANI SIMBECK Immigration paths for many foreign nationals are being methodically deterred by the current administration in Washington, but citizens from India seem to have a multitude of barriers to continue living and working in the U.S. after completing their college education. By way of background, foreigners wanting to pursue an education in the U.S. are issued F-1 visas. Upon completion of studies, the F-1 student has limited options to pursue employment in the U.S. One of the most popular options available to a student on an F-1 visa, especially for those studying and working in the fields of science, technology, engineering or mathematics (STEM) is to use OPT (optional practical training) for temporary employment after graduating. This gives a student one year (up to three with extensions available to those in a STEM field) to work in the U.S. on a temporary basis. Participation in the OPT program has grown exponentially in the last decade, but recent restrictions have been implemented by USCIS in limiting the experience to only inhouse and on the employer’s own worksite, which greatly limits opportunities for consulting in business or tech. While the current administration is actively working to restrict OPT, it stays in litigation in federal court. Once a student’s OPT expires, their next step is often trying to obtain H-1B status. H1B status requires the foreign national’s employer to sponsor the petition. And even then, the foreign national only has about a 25% chance of being selected in the lottery which is capped at 65,000 for those who hold a bachelor’s degree, with an additional 20,000 available for those who have a U.S. master’s degree or higher. If a foreign national is lucky enough to be selected in the lottery, recent processing changes implemented at the beginning of 2017 have made the adjudication process much more restrictive and the likelihood of approval much more difficult. These restrictive adjudications are targeted at occupations that attract many Indian nationals, including the IT field. A specialty occupation has been redefined to exclude many IT related jobs that may have more than one related degree. Many positions suffering this scrutiny are in the fields of data or analytics, often in emerging occupations where there are not specific degrees offered simply because the field of study is so new. For any Indian national that currently holds a very coveted and difficult-to-obtain H-1B visa, he has no guarantee he will be able to remain in that job in the future. In the second half of 2017, USCIS eliminated prior guidance to adjudicators to give deference to petitions for an extension of an H-1B visa, meaning these petitions would get as much scrutiny as if petitioning for the first time, resulting in more RFEs which would have previously been unplanned for. After all that, in order to plan for a permanent future in the U.S.,
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the Indian foreign national’s employer would need to sponsor him/her for a green card through the PERM labor certification process. Then the foreign national’s application would be “waitlisted” to receive a green card through the EB-2 or EB-3 quota explained below. A conservative estimate to receive a green card for an Indian National in these categories is over 12 years. While waiting those 12 or more years, the foreign national cannot leave their employer, or even get promoted, because then they would have to start the process all over again. The Visa Office in the Department of State (“DOS”) allocates green cards based on a series of eligibility requirements under the provisions of U.S. immigration law, specifically the Immigration and Nationality Act (INA). Employment-based (EB) immigration is divided into five preference categories, EB-1 to EB-5. A backlog means that there is a waitlist for green cards in the relevant preference category, so even where the government has approved the initial petition, the foreign national has to wait before he/she can apply for a greencard based on that approval.
NEW YORK MANHATTAN
About 140,000 EB green cards become available every year and when the visa numbers in one category is expected to be issued in one fiscal year, the DOS institutes a per-country restriction for that category. This means that no country can receive more than 7 percent of visas allocated in that entire category.
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Since 2005, there has been a multi-year backlog for most foreign nationals applying under the EB-3 category, and for Chinese and Indian nationals applying under the EB-2 category. Given all the hurdles Indian nationals face through the OPT and the wait list in the EB-2 and EB-3 categories, two other options often pursued by Indian nationals are EB-1 (multi-national executive/manager or alien of extraordinary ability) and EB-5 (investment of $1,000,000 or $500,000. With more Indian nationals relying on these two categories, it’s no surprise that a visa cutoff date of January 2012 was established for EB-1 India in April 2018, and a backlog is predicted for EB-5 India around June 2019. Possibly the worst effect is on the Indian national’s children, who if born outside the U.S. will be forced to leave the country when they are too old to be included in as derivatives of their parent’s applications. The rules regarding a child aging out are hyper-technical and will not be covered in this article. The road to green cards is paved with challenges and delays; It could take decades for an Indian national to receive his/her green card. Most Indian nationals only start considering their long-term immigration options after they have graduated from school or when their OPT is about to expire. Given the quota backlogs, Indian nationals should start the process much earlier than they would have in the past, weigh all available options, and map out a plan for their future in the U.S. ALM Media Properties, LLC
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EB-5 Bridge Financing: DAVID HIRSON, ESQ. MANAGING PARTNER / NIMA KORPIVAARA, ESQ. PARTNER / PHUONG LE, ESQ.PARTNER, DAVID HIRSON & PARTNERS, LLP
DAVID HIRSON, ESQ.
In this article we explore the evolution of bridge financing in EB-5 projects and the role the United States and Citizenship and Immigration Services (“USCIS”) has played in de ning the acceptable parameters and uses for the EB-5 industry. We will trace the USCIS’ position since it o cially stated in its May 30, 2013 EB-5 Policy Memorandum that projects could use bridge financing and still be credited with job creation. From there we present a modi ed de nition along with an analytical framework to bridge the understanding between policy and application, so we can explore the current parameters of what USCIS considers acceptable bridge financing for the purposes of job creation1.
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NIMA KORPIVAARA, ESQ.
A MODIFIED DEFINITION & ANALYTICAL FRAMEWORK: While the general definition of bridge financing is largely unchanged since the May 30, 2013 EB-5 policy memorandum,2 h e r e ’s a m o d i f i e d d e f i n i t i o n that may be a useful way of understanding USCIS’ intent/ adjudication: Generally, the JCE can use EB-5 funds to repay the JCE’s shortterm or temporary funding that is necessary for completion of a project. This is true regardless of when the JCE contemplated the need for bridge financing at the beginning of project development. While not clearly defined, absent any other compelling factors, USCIS has referenced 1-2 years as an acceptable “short-term” to be approximately 1-2 years.
PHUONG LE, ESQ.
As we will further explore below, while bridge financing was adopted by USCIS as a pragmatic solution to allow projects to overcome unexpected delays and obstacles, the general definition provided by USCIS is best analyzed in conjunction with how the EB-5 market applies adjudication standards to real life situations. 1 For simplicity’s sake, below, we use the term Job Creating Entity (“JCE”) to refer to the entity that is ultimately responsible for receiving/using the EB-5 funds for project development and job creation. It may be the developer, an afiliate of the developer, or the Special Purpose Entity formed to build/ own a particular project. However, this distinction is critical because it will ultimately decide whether a project’s temporary or short-term nancing will be eligible for replacement with EB-5 funds. 2 e current de nition can be found at USCIS Policy Manu- al, Volume 6, Part G – Investors, Chapter 2(D)(1) -- “Eligibil- ity Requirements” – Section D.1. “Bridge Financing” (August 23, 2017) (available at https://www.uscis.gov/ policymanual/ HTML/PolicyManual-Volume6PartG-Chapter2.html#S-D).
A. WHAT IS THE “NEXUS” TO THE PROJECT As a preliminary matter, perhaps most importantly for bridge financing to be acceptable, the “short-term” financing that is being repaid with EB-5 funds must have been spent on expenditures related or necessary to the project for the EB-5 investors to receive credit for job creation. In other words, complete this sentence. “But-for this funding, the project could not have been completed because____________.” Two factors to consider are: (1) where the supposed bridge financing fits into the project’s overall capital stack; and (2) when was it necessary. On one end of the spectrum, a shortterm loan to pay for construction costs in advance of the EB-5 loan closing is uncontroversial. On the other hand, USCIS and the Immigrant Investor Program Office (“IPO”) has specifically rejected (including during the recent November 2017 EB-5 Stakeholders Teleconference in New York) the use of EB-5 funds to buyout developer/ owner equity when it appears that it was not contemplated as a short-term contribution or to pay down permanent financing. This makes sense if we look at it from an economic policy standpoint. The first situation has a direct nexus t o t h e p r o j e c t ’s d e v e l o p m e n t a n d thus creates economic benefits to the surrounding community. The second situation provides no economic benefit or jobs to the community because of a lack of project- related nexus and EB-5 is being used to facilitate a paper transfer of wealth or to refinance and help lower the cost of capital for a project. Any understanding of bridge financing will thus depend on the facts or circumstances and the underlying terms, which should always be explained by the JCE. While USCIS has stated that there is no specific memorialization needed to qualify bridge financing, as a best practice it is advisable that the bridge financing be disclosed to both USCIS and
the EB-5 investors whenever possible. If bridge financing was contemplated before the EB-5 off ering went to market, the business plan and offering documents should include descriptions and disclosures of the funding being replaced. If the bridge financing occurred after the project went to market, at a minimum the JCE should provide the bridge financing documents to both the NCE and EB-5 investors and a statement explaining the circumstances and need for the shortterm financing and the project-related nexus.
A Study of Market-Driven Applications & Definitions
(1) Which entity is repaying bridge financing? (2) Which entity is legally obligated to repay the bridge funds?
B. EB-5 FUNDS MAY ONLY BE USED (1) BY THE JCE (2) TO REPAY THE JCE’S BRIDGE FINANCING It is critical to understand that even if it is a necessary project cost, EB-5 funds can only be used by the JCE to repay the JCE’s bridge financing. The two key questions to keep in mind are: (1) Which entity is repaying bridge financing? (2) Which entity is legally obligated to repay the bridge funds? While seemingly straightforward, this is an issue that can easily be overlooked that brings devastating consequences. Recently we conducted a peer review of a project with afiliated entities. A parent company (not the JCE), takes out $3 million from a revolving line of credit to help purchase land necessary for completion of the project. But-for the land, another buyer would purchase the land. EB-5 funds are then used to repay the $3 million line of credit. Is this acceptable?
• Potentially risky, because the bridge financing belongs to the parent company instead of the JCE. This is a common pitfall in projects with afiliated entities. Here, it is likely that this would be categorized as both short-term financing and necessary to the project. However, it could be denied because the bridge financing that is being repaid is not the JCE’s—it is the parent company. Note it would be acceptable if the JCE first sought a short-term loan from the parent company to purchase the land and then the JCE repaid with EB-5 funds In another similar situation, the parent company took out a bridge loan on behalf of the JCE, who then uses it for projectrelated hard construction costs. The NCE raises EB-5 funds and then pays o the bridge loan. Is this ok? • No. While the bridge loan may have otherwise qualified for repayment with EB-5 funds, the case would be denied if the NCE paid off the bridge loan directly. For EB-5 investments to qualify as fully at-risk, all EB-5 capital contributions raised by the NCE must be made fully available to the JCE before it can be used on the project. Here, it would have been acceptable if the NCE had simply issued the entire amount of the EB-5 loan to the JCE before the JCE repaid the bridge loan. The above distinctions must be understood because both scenarios could easily have been avoided with simple planning.
C . W H AT I S “ S H O R TTERM” OR “TEMPORARY” FINANCING? Aside from a project-related nexus, pay careful attention to the underlying terms of the bridge facility being repaid. To paraphrase an adage, if it looks, smells, and acts like a permanent loan, then it will likely get adjudicated (and denied) like one as well absent a compelling credible explanation. Substance—not labels—matter.
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EB-5 P R O GR A M
+84 93922210 Ngan Luu LetrieuvyGlobal@gmail.com INVESTMENT AND IMMIGRATION PROCESS
Ho Chi Minh City
CIVITAS TRADITION FUND III, LP
Civitas Alternative Investments provides qualified individuals the opportunity to invest in a range of real estate assets with top-tier developers in the U.S., in categories like hospitality and multifamily. Some of the funds are conservative and income-oriented, others are more aggressive. All the funds are designed to target above-average returns on a risk-adjusted basis. To learn more, please contact us at LetrieuvyGlobal@gmail.com.
Civitas EB-5 Capital manages Regional Centers throughout the United States. As a professional investment manager, Civitas performs rigorous institutional-quality financial analysis of each potential EB-5 project, screening a wide range of potential investments to ensure those we select meet stringent criteria. Civitas is one of the few regional center manager that has successfully help multiple investors obtain unconditional permanent United States residency and repayment of their investments. * *Making a qualifying investment alone does not guarantee a successful completion of the EB-5 program as there may be other independent grounds for inadmissibility to the United States.
EB-5 Investment Opportunity Civitas Texas Regional Center
The simple reality is that there is no such thing as a standard short-term or temporary financing arrangement. Thus, it is critical to analyze and explain the underlying substance and nature of the short-term financing arrangement. For example, during the recent November 2017 EB-5 Stakeholders Teleconference mentioned above, it was remarked that there are multiple exotic flavors of short-term financing in the world of real estate development. Sometimes bridge financing terms run for 3 years or longer. is may be true, but then the analysis cannot end there. It is necessary for a project to explain the need and context. Consider this scenario: A project costs $120 million and acquires $20 million in debt that is set to mature in 5 years. The project is set to be completed within 5 years. Could this qualify as “short-term” financing eligible for repayment of EB-5 funds? The answer is “perhaps” depending on the underlying terms; the difference can be like night and day: • On one hand, if the $20 million loan was acquired from an institutional lender at standard market rates, then this probably would be rejected as an attempted re financing of long-term debt with EB-5 funds. • On the other hand, it would be much different if the JCE raised $20 million by issuing preferred shares in itself, and the underlying terms include economic incentives or restrictions to accelerate repayment of the preferred equity, such as punitive escalator clauses that double the preferred return unless the JCE buys out the preferred shareholders within two years. As illustrated above, the answer is fact-dependent and not always straightforward. This is compounded by the fact that in the world of finance, you can find an endless menu of creative options for whatever your heart desires. Other factors that may trigger scrutiny because they resemble permanent financing (and thus need careful explanation) are loans that comprise a large amount of the capital stack and maturity dates that are over two years or coincide with project completion. Thus, when a JCE anticipates USCIS may
question whether the bridge financing’s terms qualify as temporary, it may be advisable to provide an explanation of why it qualifies as “temporary” to preempt a Request For Evidence or Denial. Another option, if possible, is to include provisions in the documents memorializing the bridge financing that state that the funds have been issued in contemplation of repayment by EB-5 funds.
D. EB-5 FUNDS CAN BE USED TO REPAY SHORTTERM EQUITY? SO I CAN BUY MYSELF OUT RIGHT? (NOT SO FAST) One final area that causes confusion is what constitutes acceptable “shortterm equity” for replacement with EB-5 funds. While USCIS has yet to issue clear guidance on this issue, when a developer or project asks whether their equity may qualify as “short-term,” we typically advise them to proceed with caution because it will likely invite increased scrutiny from both USCIS and the EB-5 investors. A specific situation that would be an acceptable example of “short-term equity” is when the developer is the JCE and raises funds to purchase land by issuing preferred equity in itself. Say the preferred shares include restrictions that block any development of the project before they are retired and also include a put option that kicks in after X years that doubles the preferred return. While the JCE was able to purchase the land, it is clear from the underlying terms that they have every economic incentive to retire the preferred shares as soon as possible.3 On the other hand, say a JCE that provides $20 million in land for project development and later claims it was short-term equity to be replaced with EB-5 funds may run into problems with both USCIS and the EB-5 market. Absent a compelling or credible explanation, in most scenarios USCIS would likely reject this as a creatively disguised early cash out of the JCE’s own equity. Moreover, at a minimum, it should be disclosed in the EB-5 and o ering documents that
the JCE intends to replace their shortterm equity with EB-5 funds. If there is no other equity in the project, this could be self-defeating for marketing purposes and completely turn away agents or investors. While it requires a fact-based analysis based on the project, practically speaking, absent a compelling or credible reason, in most instances if the JCE is attempting to replace short-term equity it will likely be dfficult unless it is the equity of other shareholders in the JCE, rather than the JCE itself (e.g., project owner or developer), unless it can be established that the equity was contemplated as short-term or temporary.
CLOSING THOUGHTS While the above is based on our experience advising projects across the U.S., it is neither gospel nor is it static. Like any market-driven definition, the only guarantee is that the parameters of what is acceptable bridge financing will continue to evolve as the EB-5 industry incorporates it into its projects and USCIS issues further guidance to shapes its application. However, the above framework will hopefully allow our industry to understand not only the past five years, but to adapt together as it continues to change over the next five. 3 Preferred equity comes in many flavors and can easily be the subject of its own article. However, for another real-life (albeit non-EB-5 example) of preferred equity that would likely qualify under this criteria, see Vornado’s stake in Jared Kushner’s 666 Fi h Avenue: https://therealdeal. com/2017/09/20/ behind-kushners-record-deal-for-666- h- an-unusualappraisal/
DAVID HIRSON & PARTNERS: EB-5 IMMIGRATION ATTORNEYS David Hirson & Partners, has over three decades of experience working on EB-5 cases. Managing Partner, David Hirson, has been handling cases in the EB-5 program since it was first put into effect in 1991. The attorneys at David Hirson & Partners are frequently called upon by trade groups, investors, projects, and universities to serve as subject-matter experts on the topic of EB-5 investment visas. In addition to the attorneys at David Hirson & Partners, the firm’s highly trained and knowledgeable staff are able to quickly and accurately produce Source of Funds and project documents, which are key to providing eligibility for the EB-5 visa.
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CANADA When it comes to quality of life, best countries where to raise a child, best country where to live and work, safest country, best financial system, Canada stands in the top five year after year. No wonder Canada regularly has 3 cities in the top 10 best cities to live worldwide. In 1986, Canada was one of the first countries to launch what has become today a global trend: permanent residency by investment. The province of Quebec was able to launch its own Immigrant Investor Program (QIIP) the same year, under an agreement with the federal government which grants the province jurisdiction to select immigrants, while the federal government retains jurisdiction to grant permanent residence in Canada. Although the federal program closed in 2014, the province of Quebec still continues with its QIIP.
The Quebec Immigrant Investor Program (QIIP): The Quebec Immigrant Investor Program is a two-step process: Applicants apply for a Certificate of Selection from the Province of Quebec, and then proceed to Federal government for medical and police clearance before getting the Canada permanent residence. They have to meet the following requirement: • have a net worth of at least 2,000,000 CAD, obtained legally; • have at least two years of management experience acquired in the 5 years preceding their application; • intend to settle in Quebec and sign an agreement to make a passive investment of 1.2M CAD with a financial intermediary authorized by the Quebec Government.
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Once selected by Quebec, applicants are asked to transfer the investment funds, following which they are issued a Selection Certificate. The investment is guaranteed by the Quebec government, and full amount will be reimbursed, interest free, at the end of 5 years. Financing options are available to investors and obviously, this has an impact on the amount of funds to be reimbursed: “The possibility to make the investment after being selected, t he G over nm ent guar ant ee on t he investment, and the possibility to finance this investment at a fraction of the 1.2Mil
are three (3) huge advantages over similar programs, such as the US EB5”, says Julien Tétrault, President of JTH Lawyers Inc. Then begins the second step of the process: applying to the Canadian federal immigration authorities for permanent residence in Canada. Permanent residence will be granted if the applicants meet the health and safety requirements of Canada. In recent years, the government of Canada has been under pressure to review the conditions related to medical inadmissibility. This resulted in a reform announced last May 2018 that will make it easier for people to be admissible under Canada’s health regulations, including people whose medical condition is managed primarily with prescription drugs. The Canadian government has also made some changes to the definition of dependent children, thereby including children who are less than 22 years old and are neither married nor in a common law relationship. They do not have to be students. Children over 22 are admissible only if they have depended primarily on their parents’ financial support since before the age of 22 because of a physical or mental condition. Since 1986, tens of thousands of families from all over the world have chosen the Quebec Immigrant Investor Program to become permanent residents of Canada, a pathway towards Canadian citizenship. Quebec is an Algonquin word meaning “where the river narrows”. The province has several national parks and a multitude of outdoor activities all year round. But it is also a bustling province offering a safe environment, a great education system, public medical insurance, striving diversified economy as well as a rich and diverse cultural life with clothes, music, literature, theatre, food – Quebecers’ favourite! – from across the globe. Interested investors can participate in a free 3hr session with Investissement Quebec to learn more about Quebec, its education system (free until college, then heavily subsidized), universal health care system, economy, real estate, tax, etc. For the 5th year, Quebec has maintained a quota system limiting the intake of new applications to 1,900 per year, including a maximum of 65% for Chinese applicants. “The quota system was imposed to curb the high demand for this program, but it
also has increased the quality of files that are now being submitted. I am honoured that thanks to our 15+ years experience in QIIP, several Canadian financial institutions have asked us to select the best possible files to fill their quotas”, says Julien Tétrault. The QIIP is the only passive investment program in Canada. Other provinces have immigration programs aimed at attracting business men and women but they require active participation in the daily management of a business located in the province, whether it be an existing business acquired in whole or in part, or a new business created.
The Quebec Immigrant Investor Program (QIIP) The Manitoba Provincial Nominee Program (MPNP)
t h e E n t re p re n e u r Pathway for people who wish to open a business or invest in an existing business in Manitoba
The Manitoba Provincial Nominee Program (MPNP): For instance, the Manitoba Business Investor Stream wishes to attract qualified international business investors and entrepreneurs. Candidates submit an initial Expression of Interest explaining their background, their abilities and their plans. There are two options: (1) the Entrepreneur Pathway for people who wish to open a business or invest in an existing business in Manitoba; (2) the Farm Investor Pathway for people interested in operating a farm in rural Manitoba. In both cases, the investors will sign a Business Performance Agreement stating the conditions they have to meet within the first two years of their arrival in Canada. They will receive a temporary work permit, and once the conditions of the Business Performance Agreement have been met – within 6 to 18 month –, they will be nominated for permanent residence in Canada. Carol Hilling & Julien Tétrault, President, Ex-Board Member AHQ (Quebec Lawyers Abroad), Founder and ex-Section Head of the AHQ-Immigrant Investor Section JTH Lawyers Inc. 4th Quarter 2018 - 35
Citizenship by Investment in Bulgaria Overview and advantages
Bulgarian law provides a fast-track route to citizenship by investment. This is an accessible, transparent and respectable gateway into the European society, way of life and economy.
STUDY IN EUROPE
The qualifying investment size is low, at approx. EUR 500,000 (Standard Track) and approx. EUR 1 million on the Fast Track. The investment may be financed with borrowed funds. The requirement is to invest, rather than donate to a government fund. The investor expects to get back the principal, together with any return.
A wide range of qualifying investment classes are eligible. You are not limited to real estate; there is no requirement to create a minimum number of jobs. The fast track process leads to citizenship within approx. 18 months of investment. The investments made must be kept for two years from the date on which you become a citizen.
Bulgaria Citizenship Fast Track Timeline Initial Investment
Further to the investment, applicants are eligible to apply for Visa D at the Bulgarian Consulate in the country of permanent residence. We oversee the application process and assist investors with the relevant supporting documentation.
Permanent Residence Application
The qualifying period for obtaining Bulgarian Citizenship depends on whether the applicant has chosen the Fast track or Standard track procedure: Fast track : one year from PRP. Standard Track : five years from PRP.
The procedure is finalised by obtaining a citizenship certificate which allows investors to obtain a Bulgarian Passport.
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In order to qualify for the Fast track procedure, applicants shall make their second qualifying investment at that stage. For the purpose of expediency, the second investment may be done on or before the end of the first year of their permanent residency.
SOFIA OFFICE email@example.com
Access to investment funds to complete the investment.
Prior to applying for a Residence Permit in Bulgaria, applicants must obtain a visa at a Bulgarian Consulate abroad. The visa application may be lodged depending on the applicant’s current citizenship and residence. As a permanent resident, the applicant must not terminate or convert the investment into an ineligible investment class.
Applicants are required to apply in person for the Permanent Residence Permit (PRP), pursuant to which they are issued with a Bulgarian ID card which allows them to travel freely in and out of Bulgaria.
Bulgaria has E2 reciprocity with the US, and its citizens can therefore qualify for US permanent residence. Bulgaria is a mid-sized European country with a beautiful nature, an interesting history and good food, Its economy offers continuing opportunities as it expands faster than the rest of Europe. Local universities are attractive to international students in a number of areas of study and Bulgarian qualifications are automatically recognised across Europe and beyond. Bulgarian citizens studying elsewhere
Practical aspects 3 Requirements, steps, finances
A statement (and sometimes evidence) of the sources of the investment funds (e.g., sales of other investments, sale of business, inherited wealth, etc). Police check reports from home country (and sometimes others).
The applicant executes the chosen qualifying investment and receives a investment certificate.
Bulgaria joined the European Union in 2007. Its citizens can live, work, study and travel freely in all of the EU’s 28 member states. Bulgarian passport holders can travel visa- free to over 140 countries and territories. Within the EU, Bulgarian citizens cross borders through priority EU citizen channels and are not subject to immigration control.
You must retain a qualifying investment for two years after you become a Bulgarian citizen but may be able to switch from one investment into another, as long as each is a qualifying investment. ADVANTAGES Applicants are not expected to spend any time in Bulgaria: it is enough to show available accommodation.
Citizen investors are not required to speak the Bulgarian language. Obtaining Bulgarian citizenship does not result in additional obligations (such as national service in the army, jury service or others). By acquiring citizenship, an investor does not automatically become a Bulgarian tax resident. There is therefore no need for tax structuring in advance of becoming a citizen, as there may be when acquiring U.S. citizenship. Citizenship does enable investors to become resident for tax in Bulgaria, however. This may be attractive: Bulgaria has personal and corporate income tax of 10% – the lowest in the European Union. Bulgarian law allows for dual citizenship. Clients can thus retain their existing nationality when they acquire a Bulgarian one, and can acquire further ones at a later time. Bulgarian citizens studying elsewhere in the EU benefit from being treated as domestic students (with free tuition and other privileges). The investment can be made in secure investment classes (such as government bonds). The investor therefore receives the principal funds invested back in full at
in the EU benefit from being treated as domestic students (with free tuition and other privileges).
STANDARD AND FAST TRACKS TO CITIZENSHIP
On the Standard Track, having invested approx. EUR 500,000 or more in one of the qualifying investment classes, an investor acquires a permanent resident status, Having held this status for 5 years, a permanent resident investor qualifies for citizenship. An investor using the Fast Track initially makes a qualifying investment (as above, this needs to be of approx. EUR 500,000 or more), identical to an investor on the Standard Track above, At the end of the first year from acquiring his or her residence, he or she makes a second qualifying investment (once again, of approx. EUR 500,000 or more). This makes the investor immediately eligible for citizenship, without having to wait the 5 years to run out.
the end of the holding period. INVESTMENT AMOUNT An investment of approx. EUR 500,000 (USD 576,000) or more must be made. An investor may acquire, e.g: a) shares of a company admitted to trading on the Sofia stock exchange; b) bonds, related instruments or their derivatives, issued by the Government of Bulgaria or by Bulgarian local government, with at least 6 months to maturity; c ) B u l g a r i a n i n t e l l e c t u a l p r o p e r t y, including patents, trade marks, service marks and industrial designs; d) the capital of private Bulgarian corporations (in this case an investment of at least (approx. EUR 3 million, USD 3.5 million) is required). We would be happy to discuss your investment plans and to help you make an investment that suits your needs, and is eligible. If you are already considering an investment in Bulgaria – or indeed elsewhere in the EU – you may find that it also qualifies you for citizenship: we are happy to advise. Most of our existing clients choose government bonds, which are perceived as safe. 4th Quarter 2018 - 37
Montenegro Good Things Come to Those Who Wait - GLOBAL CITIZEN QUEST by Armand Arton -
Why Montenegro currently boasts the best new citizenship by investment program on the market
the one holding it. Instead, Montenegro decided to hire external partners that play a significant role for the program’s success, but must still work for their reward. I am happy to say that Arton Capital is among their number.
I first wrote to the Government of Montenegro about eight years ago – a copy of the letter is still in my archives – suggesting that a citizenship-by-investment program would be a favourable way to bring foreign direct investments into the country. It is to the government’s credit that they did not leap at the suggestion, but instead took their time to assess the best available options.
For those who see the big picture, Montenegro’s positioning is spot on and highly competitive. With a starting investment of €250,000 in property and €100,000 in government donation/fees, it is comparable to the Caribbean’s real estate offerings, but with one aggressive advantage: it is payable in euros. The euro is relatively low against the dollar at the moment, and payment in this currency avoids many difficulties that investors face when required to transfer in dollars. In this industry, offering a peace of mind and ultimate convenience, takes the winning bid; something currently valued at €2 million in Cyprus. If you foresee the longterm benefits, investing in Montenegro will prove that good things come to those who wait.
While they pondered, much changed in the citizenship world. Then, there were just two European countries offering a residency/ citizenship route; now there are eight. Cyprus and Malta offer the clearest and swiftest path to immediate European citizenship, but Malta’s program has been imbued by controversy, leaving Cyprus as the clear favourite. But, at a starting price of €2 million, it is not for the faint-hearted. Montenegro’s decision to delay proved to be a favourable one, and in doing so, avoided various traps that can await a government. Deciding against offering a company with a monopoly to help market and process the program, for instance, was a well-executed choice. Arton Capital has consistently opposed monopolies, as it can easily be subjected to accusations of dishonesty and chicanery. A monopoly only helps one person:
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Meanwhile, the country has increased in stability. It is now a member of NATO, and on track to join the European Union within about five years. Investment has already flocked to the country, from the UAE, Russia, and other European nations. Additionally, there is already a high-end property market to invest in, and it has become quite the popular destination for tourists and travellers. American magazine Architectural Digest has just dubbed the country ‘the next French Riviera’, saying that it is a ‘must-visit
destination for deep-pocketed travellers looking for an untapped getaway’. If you compared the former with Moldovathe fellow program which came on stream at about the same time- Montenegro is undeniably the better option. Moldova is not even a NATO member, and although eligibility into the European Union is not impossible, it is very unlikely that it would even be considered for another 15 years. Additionally, it has given its citizenship program monopoly to one company. If they manage the program as they have managed Malta’s, the country may never join the EU. Where else compares to Montenegro in Europe? Portugal and Greece are both attractive, though they only offer residency which potentially turns into citizenship in five years. By then however, the rules could change, and residency does not give you the same level of mobility, nor a new passport and nationality as Montenegro’s fast track to citizenship does. Montenegro’s offering is a much better choice than both Portugal and Greece, and while it is more comparable to Malta and Cyprus, the Montenegro CIP is available at a fraction of the cost. The program, which is restricted to 2,000 applicants over the next three years, truly adds up to a unique opportunity for investors looking for the ideal long-term investment that should not be missed !
Montenegro is at the heart of discovery, beauty, and opportunity. Long considered the pearl of the Balkans, this nation represents the ideal symbiosis between a natural and modern world. As one of the fastest growing economies in the Balkans, Montenegro is quickly becoming a key destination for investors seeking mobility, security, and increased quality of life. WHY CHOOSE MONTENEGRO ? M o n t e n e g r o ’s n a t u r a l b e a u t y a n d sophistication aren’t the only reasons why the nation is attracting vast opportunity for growth and development. Its recent independence and strategic position have also influenced Montenegro to become central to some of the most important industries in the world. Discover a world of benefits within Montenegro:
Fast procedure. Residency within 3 weeks and approval of citizenship within six months. No language requirements. No obligation to relinquish current nationality. NATO Member. Candidate country for future expansion of the EU, expected by 2025. Global mobility with access to 116 nations visa-free. Strategic geographical location in Europe with direct access to Adriatic Sea. Porto Montenegro; one of the world’s finest yachting marinas. An outstanding holiday destination. QUALIFICATIONS
travel document. Provide documents supporting the source and origin of invested funds. Hold no criminal record. Attest the power of attorneys and the investment agreement. INVESTMENT OPTIONS Government Fund Donation Applicants must make a contribution of €100,000 in the form of a government fund donation. Real Estate Investment
To qualify for residency or citizenship, applicants must fulfill one of the investment options below in addition to meeting the following criteria:
In addition to the donation, applicants are required to invest in approved real estate projects in the country. Depending on where the selected projects are, applicants will have the choice of the following investment levels:
Be a non-EU citizen. Possess a valid passport or another foreign
€250,000 investment in an undeveloped region (north of the country), or 4th Quarter 2018 - 39
Caribbean CBI Investment Programs
Anguilla’s $150k Residency Program Path to Citizenship to Open Soon
Anguilla, a British Overseas Territory (BOT) in the Caribbean, formally announced on Thursday its intention to open a residence by investment program in the fourth quarter of this year, with a starting price of US$150,000.
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Passport to Global Mobility with CITINAVI global
___________________________________________________________________ WhatsApp +33-7 5052 1847 +84-121 4335357 * firstname.lastname@example.org www.citinavi.net
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As a BOT, Anguilla is formally under the sovereignty of – although not part of – the United Kingdom, which in practice means it enjoys autonomy in domestic affairs but is subject to UK rule in matters of defense and foreign affairs, similar to Gibraltar or Cayman Islands (another Caribbean jurisdiction with a residence by investment program).
can benefit from the transition to a low-tax jurisdiction,” reads the government’s official presentation.
What’s Anguilla’s value proposition?
What does it mean to be a British Overseas Territory Citizen (BOTC)?
Apart from an inviting climate and otherwise high standards of living, the Anguillian government expects significant tax savings to be the program’s main attraction. “[…]persons migrating from the highly developed nations
Furthermore, following five years of continuous physical residence (9 months out of the year), investors are eligible for British Overseas Territory Citizen (BOTC) status.
BOTCs are not citizens of the UK, but there are several avenues available to those who wish to register as such, all of which, however, will usually require spending considerable amounts of time in the UK. 4th Quarter 2018 - 41
Caribbean CBI Investment Programs 1. Antigua & Barbuda Antigua CBI: EDUCATION OPPORTUNITY University of West Indies Fund
Antigua recently announced a new CBI option which has the added advantage of a one year scholarship.The scholarship will cover a whole years worth of tuition fees at the University of West Indies. A minimum donation of $150,000 for a family of four, plus costs is required. Citizenship of Antigua will enable the holder to travel freely to over 100 countries worldwide. Schedule of Fees In addition to the funding of the selected investment option, additional fees are payable by each family member. These comprise of the following: Government Fee The fees applicable are stated in the table below. 10% of the government fee is payable (and non-refundable) upon submission of your application with the balance due following receipt of an approval letter sent to the authorised agent who submitted the application. A government fee is charged for each family member. Due Diligence Fee All applications are subject to rigorous due diligence to ensure that only meritorious applicants are granted citizenship of Antigua and Barbuda. The due diligence fee is charged for each family member above the age of 11 years as prescribed in the table below. The due diligence fee is payable upon submission of the application by the appointed agent and is non-refundable. Passport Fee Each family member is required to pay the sum outlined for issuance of their passport. Schedule of Fees The National Development Fund (NDF) Processing fees $25,000 $25,000 for a family of up to 4 persons $25,000 for a family of up to 4 persons with incremental payments of $15,000 for each additional dependent. Contribution $100,000 $100,000 $125,000 Due Diligence $7,500 $7,500 + $7,500 for spouse, $2,000 per dependent 12-17, $4,000 per dependent 18 and over $7,500 + $7,500 for spouse, $2,000 per dependent 12-17, $4,000 per dependent 18 and over * Other fees payable include passport 42 - Citizenship Navigation
fees. These fees are subject to change. * All fees quoted are in US dollars The Real Estate and Business Investment options Processing fees $50,000 $50,000 for a family of up to 4 persons $50,000 for a family of up to 4 persons with incremental payments of $15,000 for each additional dependent. Contribution $400,000 $400,000 $400,000 Due Diligence $7,500 $7,500 + $7,500 for spouse, $2,000 per dependent 12-17, $4,000 per dependent 18 and over $7,500 + $7,500 for spouse, $2,000 per dependent 12-17, $4,000 per dependent 18 and over * Other fees payable include passport fees. These fees are subject to change. * All fees quoted are in US dollars Due Diligence and passport fees *USD *ECD Principal applicant $7,500 $20,250 Spouse $7,500 $20,250 Dependent child aged 0-11 $0 $0 Dependent child aged 12-17 $2,000 $5,400 Dependent aged 18-25 $4,000 $10,800 Dependent parent aged 65 and over $4,000 $10,800 Passport fee – each person $300 $810 Addition of Dependents *USD *ECD Spouse $75,000 $202,500 Dependent child aged 0-11 $25,000 $67,500 Dependent child aged 12-17 $25,000 $67,500 Dependent Parent aged 65 and over $75,000 $202,500 *Standard due diligence and passport fees apply *Please Note: ECD = Eastern Caribbean Dollars and USD = United States Dollars
2. Dominica Named the Nature Island for its unspoiled natural beauty, Dominica is arguably the most breathtaking island in the Caribbean, boasting one of the best standards of living in the region. WHY CHOOSE DOMINICA? O ff i c i a l l y t h e C o m m o n w e a l t h o f Dominica, this beautiful island boasts pristine sandy beaches, lush green mountains, acres of unspoiled tropical rainforests, and some of the best diving and hiking in the Caribbean. A diverse blend of English, French, African and Carib peoples and cultures, Dominica is a politically and economically stable state with the lowest crime rate in the region. In addition Dominica recognizes dual citizenship. The Economic Citizenship Program offers applicants a wealth of benefits and privileges: • No physical residency requirements. • Inclusion of dependent children under 28. • Inclusion of unmarried daughters under 28 living with and fully supported by the main applicant. • Inclusion of dependent parents and grandparents over 55. • No education or managerial experience required. • Visa-free travel to over 110 countries, including Europe’s Schengen zone, the U.K., Hong Kong, Malaysia, Singapore and Turkey. • No taxes for nonresidents. QUALIFICATIONS To qualify for citizenship in Dominica, applicants must fulfill one of the investment options below in addition to meeting the following criteria: • Be of outstanding character. • Hold no criminal record. • Have excellent health. • Have a basic knowledge of English.
INVESTMENT OPTIONS 1. Government Fund Donation A. Single Applicant A single applicant is required to make a nonrefundable contribution of US$100,000 to the Government Fund. B. Family Application I (Applicant + spouse) A nonrefundable contribution of US$175,000 qualifies the main applicant and the applicant’s spouse. C. Family Application II (Applicant + up to three qualifying dependents) A nonrefundable contribution of US$200,000 qualifies the main applicant and up to three dependents. An additional $25,000 is required for each additional dependent, other than a spouse. 2. Real Estate Investment Applicants may purchase property valued at a minimum of US$200,000 in a government-approved real estate development. The investment must be maintained for a minimum of three years. If maintained and sold after five years, the property qualifies the next buyer for citizenship as well. Nationals of the following countries and territories will be treated on a case-by-case basis: Afghanistan, Chechnya, Iraq, North Korea, P a k i s t a n , S a o To m e P r i n c i p e , Saudi Arabia, Somalia, Sudan, Turkmenistan, Uzbekistan and Yemen. Exceptions are applicants who have been legal residents in other countries for 10 years or more and whose investment funds do not originate from one of the above-mentioned countries. For case-by-case eligibility, please contact us.
INVESTMENT OPTIONS 1. Real Estate Investment With its economy shifting from agricultural-dominant to servicedominant, one of the most viable options for foreign nationals is investment in a pre-approved real estate project. Mount Cinnamon The Mount Cinnamon Resort is situated on a lush hillside on almost two miles of the Grand Anse beach, which is recognized by many as one of the most beautiful beaches in the world. Looking towards the historic capital of St. George’s, the resort sets the tone for an irresistibly elegant, yet intimate, relaxed beach hideaway. An award-winning destination, Mount Cinnamon is the most successful development under Grenada’s Citizenship by Investment Program, having attracted more than 80 per cent of all investment applications. Comprising 22 gorgeous, privately owned villas on 23 acres of freehold land, Mount Cinnamon is currently adding 250 new residences as well as new luxury facilities thanks to the CBI Program. Investors may sojourn at the resort for a period of 10 days per calendar year.
Applicants must invest a minimum of US$350,000, which must be maintained for a minimum of four years. This reduced investment amount means our valued investors take on less risk. The minimum amount includes the main applicant, main applicant’s spouse and two qualifying dependents. An extra US$25,000 is required for each additional dependent. The opportunity to own shares of Mount Cinnamon is an invitation to become a citizen of Grenada, begin a long and fruitful relationship with the island and its culture, and contribute to its future. 2. National Transformation Fund Donation Applicants may donate a minimum of US$150,000 to Grenada’s National Transformation Fund. The minimum amount covers the main applicant only. For a family of up-to four people, the requirement is set at US$200,000. An extra donation of US$25,000 is required for each additional dependent. 3. Your estimated cost Donation : 150.000 USD + Application fee : 1.500 USD Real estate : 350.000 USD
3. Your estimated cost Donation : 100.000 USD + Application fee : 8.000 USD
4th Quarter 2018 - 43
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4th Quarter 2018 - 45
- Opinion -
In October 2017, the Kingdom of Saudi Arabia granted a robot named Sophia citizenship. A few weeks after that announcement, an artificial intelligence (AI) ‘boy’ named Shibuya Mirai became the first machine to be granted residence in central Tokyo. Shibuya Mirai is also the first AI to be officially genderized by a state (Sophia’s creators, Hanson Robotics...)
The Commodification of Citizenship and the Ethics of Human Rights Prof. Hussein Abbass, School of Engineering and Information Technology, University of New South Wales, Australia
Imagine it is 2025. ‘Citizens for Sale’ is an online shop that sells robots that have been granted citizenship by a particular country. The old trick of marrying a citizen in order to obtain residence in a country has become outdated. Citizens for Sale’s success is based on a business model that allows humans to buy robots so that the owners become citizens of the robot’s country of citizenship, automatically affording them all the benefits associated with the citizenship. Even if the robot’s owner does not wish to reside in the new country, his or her citizen robot avatar can do so on his or her behalf. Taking this thought a step further: The robot can act on its owner’s behalf by attending board meetings, for example, to connect the owner to the board remotely and even make financial decisions autonomously, as long as these decisions do not violate the robot’s delegated privileges. This would prove beneficial for a highly influential businessman or businesswoman with a range of business interests in multiple countries, who could conveniently and comfortably manage his or her robot (or robots) from his or her home office. Before disregarding the above scenario and labeling it juvenile science fiction, it is important to consider a few facts. In October 2017, the Kingdom of Saudi Arabia granted a robot named Sophia 46 - Citizenship Navigation
citizenship. A few weeks after that announcement, an artificial intelligence (AI) ‘boy’ named Shibuya Mirai became the first machine to be granted residence in central Tokyo. Shibuya Mirai is also the first AI to be officially genderized by a state (Sophia’s creators, Hanson Robotics, casually refer to the robot using the feminine ‘her’). Are these isolated incidents or are they the beginning of an era in which Citizens for Sale will become an actual business model for robotics? Before we get excited, let us discuss some of the prin- ciples that may or may not hinder this possibility. In most countries, the law defines a legal person, or simply person, as being either natural (a human) or juridical (a corporation). For Sophia to be a globally recognized citizen, we need to amend the definition of a legal person to include not only natural and juridical but also robot. Only then can a robot be recognized as a legal person in most countries, and only then can the concept of con- ferring citizenship on robots begin to be plausible. The EU is in fact exploring electronic personhood to ensure that robots are accountable for their actions. However, where does this lead us as a society? A legal person is defined by law to make persons unambiguously accountable for their actions. The board of directors in a corporation is the legal entity respon-
sible for the corporation’s actions. The board of directors comprises humans. A human is eligible for punishment by serving a jail term or paying a mulct. Isolation and being in a jail induce psychological distress, resulting in a form of pain. A mulct reduces the resources available to a human, exerting financial or resource pressures that prompt psychological distress. Societies typically rely on psychological pain, through jail terms or mulcts, for punishment rather than inflicting physical pain. Exerting this form of psychological distress seems to be regarded, by the law, as more humane and a fair consequence; after all, it is the human’s decision- making mental processes that caused the individual to act inappropriately, thus deserving castigation. Will a jail term for Sophia cause Sophia pain? What does jail even mean for Shibuya Mirai when this robot has no physical body and lives only in cyberspace? Even if machines develop emotions, will these afford them a pain experience that humans deem sufficient? What, even, is machine pain and how can it deter a machine from acting inappropriately? What would be an alternative form of consequences that would make it meaningful to punish a machine and, therefore, hold it accountable for
its actions? Outside science fiction, these are complex ethical, moral, and technological questions with, at present, only embryonic answers. Ultimately, humanity today has no meaningful mechanism for holding a machine accountable. So, how can we navigate this reality and confer citizenship on a machine that has no ability to be accountable for its actions, as in the case of Sophia and Shibuya Mirai? Citizens for Sale uses an innovative business model in that John can be held accountable for the actions of the robot citizens he purchases. John carries responsibility on behalf of his robots. If these robots are truly smart, trustworthy, and reliable, they will naturally and autonomously act in John’s best interest. In the event that Citizens for Sale can certify the trustworthiness of these robots, would society deem this sufficient cause for John to accept the risk of being accountable for his robots’ actions? In this scenario, there are still at least three challenges. Firstly, citizenship is a decision of the state. The honorable concept of citizenship cannot be transferred, inherited, or sold by a human. A state may well legislate the conferral of citizenship to the sons and daughters of a citizen, but the actual citizen does not have the legal remit to do so. For a human, citizenship is a privilege. Once the privilege is granted, humans have access to rights as determined under the auspices of the state. By deduction, Sophia does not have the right to transfer her citizenship to John. The second challenge is whether accountability is transferable. In principle, parents may be held accountable for the actions of their children if these actions
are due to negligence on the parents’ part. However, not every mistake a child commits will result in the automatic transfer of accountability to the parents. The question is, in the case of robots, under which conditions should the owner be held accountable? Additionally, under which conditions will we forgive the robot for its transgression if the deed has nothing to do with the owner or manufacturer but rather the outcome of exposure to inappropriate habits and the result of undesired learned behavior? The cost of robots’ actions will affect humans directly and/or indirectly, but how much of our fundamental human rights are we, humans, willing to forego in order to pardon robots for their misdeeds? The third challenge is related to ethics and moral values. Those smart robots that will act in John’s best interest are loyal to John. But what happens when John’s perceived best interest could be achieved unethically or could violate the moral values of the society in which the robots are situated? For these robots to be ethically and morally compliant, we — humans, that is — need to agree unequivocally on the rules that the robots must abide by in the determination of acting ethically. Unfortunately, the challenge here is not a technological one alone. To date, humans have failed to articulate clearly and objectively what these ethical boundaries are. This may be because these ideals are very much contextdependent, hence it is not possible to enumerate all of them, or human diversity implies that universal consensus is impractical. While most logical human beings would deem the conferral of citizenship on Sophia as a trivial media exercise, it is difficult to deny that the principle is
already on the market, necessitating the application of concerted intellectual engagement. Even if it is a media stunt, using the honorable concept of citizenship transforms it into a highly relatable commodity. So, how do we move forward? One option is to remain in fear and denial of the reality that we are moving toward, while another option is to start planning for it. Giving in to fear will slow us down, leaving us with little time to prepare for this technology-based reality-to-be. A comforting thought is that most of the challenges related to this new dispensation do not need to be addressed universally. Contextualizing the challenges can help us ready ourselves for this unfolding reality. More importantly, doing so will afford us a prospect of shaping it better. The research topic of trusted autonomy is an overarching one that looks into the AI technology needed to design ethical and moral robots, smooth the relationship between humans and robots, and develop certification and performance assurance of smart robots. Trusted autonomy aims to maintain human dignity and rights by unfolding the complexity of what makes something ‘right’, designing the right technology, and designing the technology right. If human rights are at risk, the least we can demand from manufacturers is assurance pertaining to the trustworthiness of these robots, with all of what the concept of trust entails. However, before we can demand that, we need to invest in identifying what is technologically achievable and what is not. Nevertheless, this leaves us with two questions: Who benefits most from — and, by implication, who should invest in ensuring the trustworthiness of — AI and smart autonomous systems? (Global Citizenship - Review) 4th Quarter 2018 - 47
French Castle Golden Visa FREE EDUCATION PURPOSE EU To read the detailed legal provisions for the “Personal Passport” residence card, please visit the official website of the French government, Legifrance. Click on the hyperlink above to reach the website : www.legifrance.gouv.fr
FRANCE THE NEW STAY "TALENT PASSPORT" Consulate General of France. Visas.The law of March 7, 2016 has changed in depth the right of foreigners. One of the central provisions of this law is the creation of the residence card "talent passport" which aims to attract and simplify the procedures of highly qualified people and international talent. This residence permit, which is normally for 4 years, is issued upon first admission to French territory but can also be issued to foreigners already present on the national territory. For the employees, the duration of the residence permit corresponds to that of the employment contract which justifies its delivery. For other cases (such as entrepreneurs, performers, etc.), the duration will normally be 4 years unless the Administration has reservations about the quality of the project, and in this case, " a title of two years may be issued to avoid a refusal of residence permit and verify the effective implementation of the project at renewal. (Circular of November 2, 2016) Businessman touching TalentFor employees, the advantage of the residence permit "passport talent" is not to have to apply for authorization of prior work with the foreign labor services of 1.DIRECCTE. In addition, members of the family of the holder of this residence permit will be able to benefit from a specific residence permit of a duration equal to that of their spouse (or parents) with a right to work.
DIRECCTE: les Directions régionales des entreprises, de la concurrence, de la
consommation, du travail et de l'emploi 48 - Citizenship Navigation
Advantages of Talent Passport Residence Card There are no hard academic and language requirements for the investor (the main applicant); - Valid for up to four years! As long as the investor has been holding an investment project (original project or new project) in France, the residence card can be renewed; - Investors' dependents (subsidiary applicants: spouses and children under 21 years of age) can obtain the same "Talent Passport - Family Members" residence card; - Investors and their families can integrate into France’s social security system and enjoy social benefits; they have the right to study, work or do business in France; - After the investor and his family have resided in France for five years, they are eligible to apply for a permanent card or passport.
Immigration Act Application conditions for “Personnel Passport” residence card ? - Applicants must be at least 18 years of age; - The applicant needs to issue a detailed personal resume and a “No bankruptcy record statement” to prove that it has the ability to implement and manage the investment project; - The applicant needs to invest in a commercial project in France. The investment project should meet the following conditions: • The real estate investment should be greater than 300,000 Euros; • Create or retain jobs; - The applicant needs to issue a "tax payment certificate"; The applicant needs to issue a "Certificate of Source of Funding"; - Applicants and family members need to issue a certificate of no criminal record
COUNTRY CLUB LOCHES
With more than 3.6 million visitors per year, the group of 42 chateaux that make up the UNESCO World Heritage Site in the Loire Valley is one of the most popular tourist destinations in France outside Paris itself. While all of them are beautifully maintained and culturally significant, it's impossible to see more than a handful without becoming castled-out pretty darn tout de suite. But Castle Loches and nearer Castle Verneuil-sur-Indre in particular are worth seeing for their stunning architecture and fantastic historic presentation that highlights the lives and work of their inhabitants through the centuries. Project Introduction One of Europe's largest castles of Loire tourism resort. An investment project that meets the criteria for applying for a “personal passport” residence card Château de Verneuil-sur-Indre of 18th century, the will of the owner is to keep the lord's symbol associated with the manorial rights, the "big tower" having replaced the dungeon in tardifs to Gothic castles. Château de Verneuil-sur-Indre is a French castle, which comprises both the remains of a castle dating back to the fifteenth century and partly a castle classic style located in the municipality of current Verneuil-sur-Indre in the current department of Indre-et-Loire region and the Centre-Val de Loire. FRENCH CASTLE GOLDEN VISA PROGRAM 300.000 Euros : Family Residence Card (4 years)
COUNTRY CLUB LOCHES Château Verneuil-sur-Indre
PROJECT DEVELOPMENT OF 48 HECTAR Luxurious apartments of castle prices : 40m2 (220.500E) - 90m2(360.000E) Guarantee : 5% per year Project Profile - How to understand the investment mode l Further information and accompanied visit to château Verneuil-sur-Indre : www.CountryClubLoches.com CountryClubLoches@gmail.com YouTube : French Castle Golden Visa WeChat : parisneko WhatsApp/Line/Viber : +33750521847 (en/fr/jp/kr) Mobile +33-6 34 10 54 47 (en/ch/fr)
4th Quarter 2018 - 49
COUNTRY CLUB LOCHES
48 hectar developments : - Castle -Dungeon hotel -Golf - Horse riding sports school - Cottages -Luxurious apartments - SPA Hammam - Cycling - Gym (2 hours from Paris)
Who doesn't love a good castle? But you can have too much of a good thing ...
50 - Citizenship Navigation
3rd Quarter 2018 - 51
LUXEMBOURG New 3rd Country Resident Visa for "Quality Investors" The Luxembourg Chamber of Deputies adopted on 08/02/2017 a law that seeks to attract new 'Quality Investors' from third countries. According to the new law, the Minister will grant the residence permit in Luxembourg to "investors" from any third-country national: LUXEMBOURG : ACTS AND REGULATIONS Article 53a created by the Law of 8 March 2017 specifies the criteria for obtaining the “investor” residence permit. LUXEMBOURG: CONDITIONS To obtain residence permit for investors, the non-European nationals need to invest in a future or existing business in Luxembourg, in a future or existing investment management structure or in form of a deposit with a financial institution (see conditions below for details): having invested at least EUR 500,000 in an existing company with its registered office in Luxembourg and commit to keep it for a duration of at least 5 years (The investment must comprise at least 75% of own funds. 25% of the investment may be borrowed over a minimum term of three years) or; to invest at least EUR 500,000 in a new business still to be created, with its registered office in Luxembourg and at least 5 work positions which must be createdwithin 3 years of the incorporation of the business. The recruitment of staff must be in collaboration with the National Employment Agency (Agence pour le développement de l’emploi – ADEM) With regard to investments in existing or still to be created businesses (investments of at least EUR 500,000), the company must or will have to carry out a commercial, crafts or industrial activity or; to invest at least EUR 3 million (The investment must comprise at least 75% of own funds. 25% of the investment may be borrowed over a minimum term of 3 years ) in a management and investment structure, either existing or still to be created, with its registered office in Luxembourg where it must have and maintain the necessary substance or; 52 - Citizenship Navigation
to invest at least EUR 20 million in the form of a deposit of funds with a financial institution established in Luxembourg, and with the commitment to keep said deposit for at least 5 years. The investment must consist of 100% of own funds. It may consist of cash or financial instruments deposited with a single financial institution. The investor may invest in his own name or through the intermediary of an investment entity.
Go to the Immigration Department for the bio-metric data (photo and fingerprints); Come in person to get residence card at the Immigration Department; Return to the municipality to confirm the immigration status and receive a certificate of residence (certificate de résidence).
LUXEMBOURG: IMMIGRATION PROCESS
If all the criteria described above are met, the applicant is issued with an “investor” residence permit valid for three years. This residence permit may be renewed for the same duration when necessary. After a maximum of 12 months of the residence permit being issued, the Minister that initially gave an opinion on the application will re-verify the criteria required by Article 53a and if conditions are no longer met, one additional year may be granted to correct the situation. Beyond this deadline, if the criteria are still not met, it may be recommended to the Minister responsible for immigration to “withdraw residence permit in accordance with Article 101”. To avoid the withdrawal of his residence permit, the holder of the permit must be able to produce all relevant documents asked by Ministry of finances.
Consultation regarding immigration for investors to Luxembourg; You will prepare, legalize and post all necessary documents to us for verification Our certified translators will translate all documents into French or German if necessary; Note: Prior to submitting the application to obtain a residence permit as an investor, the applicant must submit proof of his investment or his plan in order to obtain the opinion of the Minister responsible for finance as following: The investment project as foreseen by article 53bis, par. (1), points 1 and 2 to the minister in charge of the economy; The proof of the investment, or the project of investment, as foreseen by article 53bis, par. (1) points 3 and 4 to the minister in charge of the finances. The Ministry of Finance shall then notify the applicant of his opinion. If approved and successful: We will prepare your immigration file and apply to the Ministry in charge of immigration and after approval to consulate of Luxembourg; The visa (if/when approved) will be delivered by a consular service few weeks later; You will come to Luxembourg and within three working days must submit a declaration of arrival to the municipality of the chosen place of residence; You have 3 months to: Pass a medical test with a general doctor. The results will then be sent to the Medical Department who should inform the Immigration Department if the medical conditions are fulfilled in order to obtain a Luxembourgian residence permit; Apply to the Immigration Department for the issue of residence card;
How Digitalisation Will Change Fund Distribution By Olivier Portenseigne, Managing Director, Fundsquare, Luxembourg
LUXEMBOURG : ADDITIONAL INFORMATION
LUXEMBOURG: FAMILY If at the moment of the application, you included your spouse and children in the documents they will obtain the same immigration status and Residence Card as you. LUXEMBOURG: CITIZENSHIP After successfully getting the residence permit as investor and immigrating to Luxembourg you and your family may apply for citizenship after seven (7) years living in Luxembourg. Citinavi by the consultant Luxembourg Residence permit in Luxembourg for wealthy individual, investors, highly qualified worker, entrepreneurs; Family reunification program; Set up a company, business and financial plans; Legal service in corporate, banking, immigration and administration law; Renting / buying a property;
The heat is on the investment fund industry to keep pace with a changing market. Along with growing client awareness of fund fees, asset managers increasingly see the need to know their end investors better in order to create additional value. The funds distribution supply chain is fragmented and opaque, but digitalisation offers a way forward. Digital collaboration with wealth managers and client advisors will be an important feature of this new world. Pressure on fees is being felt across the industry. Passive managers are forcing active managers to cut costs and margins, just at a time when the industry is trying to digest diverse regulatory changes. Asset managers also need to work on how they interact with end investors, and comparison with other industries may help. The online travel industry has replaced high street agencies by bringing together a complex ecosystem of players using sophisticated digital tools. Meanwhile, asset management operates on an almost exclusively business-to-business level, with little connection to the multiple, subtly different needs of clients and their advisors. Many in the fund industry understand that they must focus more on meeting the individual needs of each investor, but it is challenging to make the industrialised fund production and distribution process respond accordingly. Digitalisation is Key Digitalisation offers a way forward with all these challenges. Until now progress has been slow, not least because most recent
investment in change has been focused on regulation. But now there is a pressing need to digitise to become more efficient and replace mutually incompatible legacy systems and costly processes. The potential gains are in view. Deloitte have highlighted the potential for around €1 billion savings per year to be made in Luxembourg’s cross-border fund hub alone. Areas such as cash management errors and reconciliation, know-yourcustomer, due diligence processes and more need to be rethought and operating models redesigned. Not only will a new generation of technical solutions be more efficient and less error prone, but they will lead to a clean pool of data from which value can be extracted using artificial intelligence. Thus, digital transformation will cut operating costs and boost margins, and it will enable an improved customer experience and strategic marketing and product planning. This will open the way to on-going, iterative interaction with existing and potential investors, and also independent financial advisors, wealth managers and other distributors who understand local markets best. Indeed, every participant in the fund administration and distribution supply chain will be able to contribute to adding value.
learn from this sum of data. Such a decentralised, shared-economy approach offers substantial promise for value creation. Artificial intelligence tools can then be brought to bear on this wealth of data to produce valuable marketing insights. This will enable the industry to have a dialogue with investors and advisors in the culture/language they understand. So rather than marketing a ‘US equity’ or a ‘European sovereign debt’ branded fund, asset managers will offer asset preservation and growth solutions that suit the risk appetites of each investor. This is the essence of building a brand which will help the asset manager d i ff e r e n t i a t e t h e m s e l v e s f r o m t h e competition, and demonstrate their value in the face of the challenge from passive investment products. Only digitalisation can achieve this agility on a large scale. Practical Solutions
Big Data, AI and Blockchain
The Luxembourg-based initiative FundsDLT is tackling these challenges. This infrastructure will enable the whole ecosystem of specialised actors to work directly with each other, so boosting efficiency. This blockchain-based system will also host a range of transactions, making it a repository for a mass of valuable data.
These are some of the reasons why a blockchain-powered approach to digitalisation is so exciting. The potential of distributed ledger technologies to handle the investor register is clear. It will enable every player in the fund production and distribution chain to contribute and share processes, then
The beta version of the system is being tested with the help of a range of fund administrators, asset managers and fund distribution service providers. A prototype has been already developed, with fund shares having been exchanged for cash following an order received from a mobile app. 4th Quarter 2018 - 53
PERMANENT RESIDENCY Through a secure investment
The Cyprus PR program offers non-EU nationals guaranteed permanent residency within 2 months with a single, secure, real estate investment of €300,000. It applies to the investor, their spouse dependent children up to age 25 and the parents of the applicant and spouse. What’s more, the permits are valid forever! The process is extremely straightforward and can even be arranged remotely.
Our Company is experienced with the process and will gladly assist you to achieve your residency permit. TIME TO PR : 2 Months RESIDENCY REQUIREMENT : 1 day every 2 years PROCESS : Simple, no language,medical exam or interview APPROVAL : 100% ________________________________________________ INVESTMENT CRITERION Permanent residency may be obtained through a secure property investment, the nancial criterion is as follows: €300,000 investment in new residential real estate (in a single property or two properties)
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We are so confident in the process and approval rate that we offer a money-back guarantee should you not receive your permits within a two month period.* * Two month period commences on the date of receiving your proof of submission of an application for an immigra- tion permit under regulation 6(2) reference number from the Cyprus Ministry of Interior. The guarantee is subject to you fullling the application requirements for the fast-track 6(2) permit. A two week grace period will be allowed for administrative delays.
Enjoy unristricted access
› Freedom to live freely in Cyprus › It offers an insurance policy for the future › It enables you to own a business in Cyprus › It gives you the right to apply for Cyprus citizenship › It enables you to travel throughout Europe with ease › It enables you to access first class healthcare and education › The process and requirements are very simple and the permit is quaranteed to be issued within 2 months 54 - Citizenship Navigation
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Cyprus Permanent Residency with CITINAVI global
___________________________________________________________________ WhatsApp +33-7 5052 1847 +84-121 4335357 * email@example.com www.citinavi.net 24 | Flagship Developments
The Hungarian Residency Bond Investor program is now suspended. Explore other residency investment programs in Bulgaria, Portugal and Cyprus. WHY CHOOSE HUNGARY? As a member of the European nion and the Schengen zone, Hungary is among the 30 most-visited destinations on the planet. The country is perfectly located in the center of Europe and boasts a rich and diverse culture of music, film, food and literature, as well as universal health care. Established in 2012, the Investor Residency Bond Program offers applicants a host of advantages: Inclusion of qualifying family members, including parents, without age restrictions. No requirement to travel to Hungary. Applications can be lodged at the respective Hungarian Consulate. Fast processing leading to EU permanent residency for life in under 30 days. No physical residency requirements. Fully guaranteed investment returned in full after five years. Free movement throughout Europe’s Schengen zone. QUALIFICATIONS 56 - Citizenship Navigation
A booming hub in the heart of Central Europe, Hungary is one of the mostvisited, culturally rich and well-located countries on the Old Continent.
The Investor Residency Bond Program d o e s n o t h a ve a n y se t cri te ri a fo r applicants in terms of personal net worth or management experience. However, the Hungarian administration officers reserve the right to request an interview meeting with the applicant, which can be exercised at random.
PROGRAM COST : € 350.000 Financed Investment An extremely attractive financing offer is available for a one-time fee of €125,000 to clients who wish to leverage their capital.
During the initial due diligence and application stages, the financial intermediary and the Hungarian authorities will follow standard knowyour-clients and anti-money laundering procedures. Main applicants must provide a set of standard documents proving their source of income and accumulation of personal net worth. INVESTMENT OPTIONS Full Investment The statutory procedure for accepted foreign direct investment in the Investor Residency Bond Program includes the purchase of special Hungarian government bonds in the amount of
€300,000 with a maturity of five years. At maturity, the original capital is returned to the investor without accrued interest. Legislation dictates that the program investment is used to purchase bonds that are issued by a Residency Bond Agent approved by the Hungarian authorities. The agent, in turn, invests that amount in the Hungarian government bonds. This transaction is subject to a Subscription Agreement with the designated enterprise, which must be licensed for the main applicant’s geographic region. The government bonds are assigned for the program only and cannot be used for trading on the public or the secondary market. Once the security is issued to the investor, the Residence Bond Agent will provide an irrevocable declaration certifying that a Treasury bond with a nominal value of €300,000 and a fiveyear maturity will be purchased using the funds received from the investor within 45 days of his/her residence permit being issued. In addition to the investment, applicants are also required to cover all processing and visa application fees. To further guarantee the investment, applicants may wish to obtain a Letter of Bank Guarantee by the issuing bank. Additional fees by the bank may apply. As the only agent registered in Hungary, we can accept applicants from any country, provided applications are lodged in person within Hungary. All other applicants must make sure that their investment is made through the designated agent responsible for their specific region.
HUNGARY Golden Visa
Most of us dream of moving
to an island but the logistics and costs involved can be discourageous. Thailand’s government is making it easier — though not necessarily affordable — with their new elite residency visa program. So whether it’s Ko Samui or Ko Pha Ngan, moving to Thailand just got a little easier.
The Thailand Elite membership program is a state-owned subsidiary of the Tourism Authority of Thailand and offers seven different relocation packages. If you’ve got money to burn, the top-of-the-line “Elite Ultimate Privilege” membership costs $60,000 for a 20-year residency. One of the main benefits is the Privilege Entry Visa (PEV) which allows members an extendable one-year stay in Thailand. In addition to the multiple-entry tourist visa, the membership includes a 24/7
concierge service, which gives expats VIP access to those pesky government agencies (think immigration, work permits, and the department of motor vehicles). Also included: limousine airport transfers, a private lounge at the airport, annual health checkups at a stateof-the-art private hospital, special shopping and dining discounts, complimentary spa treatments and complimentary golf greens fees.
If you’re on a budget, the low-end tier is around $14,500 for the “Elite Easy Access” membership. That gets you a renewable five-year visa and similar perks to the Elite Package, minus the golf and spa treatments. Aimed at retirees and frequent business travelers, the application-based program anticipates that more than 1,000 people will apply. Individual and family memberships are available.
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ELITE TOP PROGRAM 20 YEARS E L I T E ULTIMATE PRIVILEGE Be a friend of Thailand be an Elite member The very 1st country level Thai government initiated membership, under the care of Tourism Authority of Thailand (TAT). As an Elite member you will immediately notice a difference in the way you are treated from the moment you touch down at the airport. Thailand Elite originates from a singular goal to present the finest that the country has to offer into one unique package for our honoured guests. The Cabinet passed a resolution on 29 July 2003, approving the Thailand Privilege Card Project as proposed by the Ministry of Tourism and Sports, whereby the Tourism Authority of Thailand (TAT) was to implement the project in the form of limited company. "Thailand Privilege Card Company Limited" registered its incorporation under the Civil and Commercial Code on 29 August 2003, having the TAT as its sole shareholder and the registered capital of THB 1,000 million and having the status of state enterprise under the Budget Procedures Act B.E. 2502 (1959). Its objectives
are to generate revenues from foreign visitors; and draw high-end visitors, businessmen, investors and the long stay groups, by offering rights and services to members. Such services are from both public and private sectors, e.g. Visa Privilege, Special Entry Visa, and Privilege Entry Visa As part of the Tourism Authority of Thailand, this exclusive club has access to privileges that money alone cannot buy. Thailand Elite is the world's first country membership programme with benefit for immigration, leisure, business, and much more. Preferred treatment at golf courses, spas, hotels, clubs, and medical facilities throughout Thailand await our Members. As a friend of the country, we want you to enjoy your time here to the fullest extent. We look forward to presenting you with our Thai heritage and hospitality famous the world. 5 YEARS ELITE FAMILY EXCURSION (MIN. 2 PERSON) 4th Quarter 2018 - 59
The Growth of Citizenship and Decline of Duties Prof. Dr. Dimitry Kochenov, Chair in EU Constitutional Law, University of Groningen, Netherlands; Chairman, Investment Migration Council, Switzerland he gradual extension of the T scope of those enjoying the rights of citizenship among the actual bearers of the status is a well-known story of women, indigenous peoples, and other minorities. The gradual extension of those enjoying the status of citizenship in full is the story of the ‘coloreds’ “unfit for citizenship”, of migrants, and of colonial subjects. Once it became unacceptable not to extend the rights of citizenship to settled minority categories, not allowing them to pass on citizenship became obviously problematized, just like the right of other minorities to enjoy access to the status as such. As the gap between the scope of nominal citizens and the scope of citizens with citizenship rights was drastically diminishing (women were granted the right to vote and pass on their citizenship status to their descendants, for instance), coupled with the extension of the status of citizenship to formerly excluded minority groups (think of the extension of full Australian citizenship to Aboriginals, for instance), the ideological distinction between citizens and non-citizens in a society expectedly came to be problematized and contested, bringing about the increasing extension of rights, coupled with a grant of a (theoretical) possibility of acquiring citizenship status to any settled resident of any 60 - Citizenship Navigation
modern liberal democratic state. Crucially, and inseparably from the story of status and rights, the same evolution affected citizenship duties too. Traditionally the main vehicle of transposition of purely legal truths into the reality of day-to-day lives through coercion, mass schooling, and conscription, duties of citizenship are undergoing an astonishingly speedy recess in the majority of liberal democratic jurisdictions around the globe, as forging a good citizen — that is, punishing those who deviate from the legal truth enforced by teachers, the army, and the police (and, crucially, the complacency of the well-meaning, law-abiding masses) — is no longer a defensible task of the state. In the majority of liberal democratic jurisdictions there is no conscription, no more citizenship-based taxation, and no more harassment of dual nationals, to give just a few examples. As long as the duties and the civic virtues promoted by any state are necessarily designed to quash the recognition of minority groups in society (and sometimes even majority groups, as was the case with women all around the world and Black people in South Africa), any arguments for their goodness and necessity fail to tell the whole truth, stopping at the retelling of the ideological mantras of the unity of demos and political community, as polished as they are comfortable,
and ignoring the functions of such duties in the actual societies on the ground. It is a most-welcome development that citizenship is no longer centered on duties, thus becoming less totalitarian, more inclusive, and forward-looking. Truly, 19th century scholars would find it most surprising and counterintuitive that full citizenship, including a package of rights associated therewith, is attainable without conscription and sacrifice, let alone extended to the legally ‘unfit’ who cannot be conscripted at all — for instance, women and/or minorities. With the waning away of the need to rationalize discrimination and de facto inequalities within the de jure status of equals, which seems to be the key function with which the duties of citizenship have traditionally been endowed, the modern state certainly lost some of its stakes in the grand citizenship narrative of egalité, liberté, and fraternité for the very select few on the pre-set terms of goodness that have to be shared by all at gunpoint.
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PORTUGUESE GOLDEN VISA PROGRAM
COMMERCE, REAL ESTATE INVESTMENT 300.000E
PARADISE OF IMMIGRATION
António Paula Varela, Lawyer
The real estate may be acquired by one or more individuals in the co-ownership regime provided that each co-owner has invested a value equal or exceeding €500.000,00 (or €400.000,00). The Golden Visa holder is free to rent the property and obtain a return on the investment. After the acquisition of the real estate asset, the applicant may mortgage or encumber the property in the part that exceeds the amount of € 500.000,00 (or € 400.000,00 b) Acquisition of a real estate with construction dating back 30 years or located in urban regeneration areas for refurbishing, for a total amount equal to or above €350.000,00 (or €280.000,00 if the property is in sparsely populated areas) c) Capital transfer of €1.000.000,00, including incorporation or acquisition of a company with a share capital of €1.000.000,00 The amount transferred to Portugal may be invested in deposits, shares, bonds, investment funds, public debt, securities. Should the applicant pretend to acquire or Incorporate a Portuguese company, there is no limitation regarding the corporate purpose of the company. On the other hand, the company may 62 - Citizenship Navigation
d) Creation of at least 10 jobs (or 8 jobs if the investment is made in sparsely populated areas
a) Acquisition of real estate with a value equal to or above €500.000,00 (or €400.000,00 if the property is in sparsely populated areas)
develop its activity in Portugal or abroad and the company may invest the money in Portugal or overseas. When the applicant decides to make a bank deposit he/she should maintain a deposit with an average quarterly balance equal or exceeding €1.000.000,00. When the applicant chooses to incorporate or acquire a local company he/she should maintain shares with the same nominal value
Acquisition of real estate with a value equal to or above €500.000,00 (or €400.000,00 if the property is in sparsely populated areas)
e) Capital transfer with a value equal to or above €350.000,00 (or €280.000,00 if the investment is made in sparsely populated areas) to be invested in research activities developed by public or private institutions of scientific research, integrated in the national scientific and technological system f) Capital transfer with a value equal to or above €250.000,00 (or €200.000,00 if the investment is made in sparsely populated areas) to be invested or to support artistic productions, recovery or maintenance of national cultural heritage, through central and local administrative services, public institutes, entities that are integrated the in public companies, public foundations, private foundations with public utility, inter municipal entities, municipal associations and public cultural associations that pursue artistic productions, recovery or maintenance of the national cultural heritage g) Capital transfer with a value equal to or above €500.000,00 to acquire participation units of investment funds or private equity funds oriented to the capitalization of small and medium-sized
companies that, for such purpose, submit the respective capitalization plan and evidence that it is viable In most situations mentioned above, the Investment can be executed directly by individuals or through a single shareholder limited liability company. 3. Validity and Renewal of the Golden Visa: The Portuguese Golden Visa is valid for the period of one year counted from the date of issue, automatically renewable for successive periods of two years. It is important to underline that there is no limitation on the duration of the Golden Visa. For the purposes of renewal, applicants do not have to live in Portugal. In fact, and this is one of the biggest advantages of the Portuguese program, Golden Visa holders only must demonstrate that they have stayed in Portugal a minimum of seven days (continuously or with interruptions) in the first year and fourteen days, (continuously or with interruptions) during the following two years. 4. Benefi ts of a Gol den Visa: The Portuguese program beneficiaries of a Golden Visa are entitled to: a) Residence visa waiver for entering in Portugal and EU b) Living and working in Portugal if he/ she wants (although it is not necessary) c) Develop businesses in Portugal and EU d) Free movement within the Schengen area countries e) Family reunification (includes for example i) the spouse, ii) minors under the guardianship of the couple or of the one spouse, iii) progenitors in first direct line or parenthood to the resident or the respective spouse provided they depend from either of those) iv) a foreign national that maintains with the applicant a cohabitation union acknowledged under the terms of the law f) Applying for permanent residence within five years. e) Applying for Portuguese Citizenship within five years, provided all requirements set out by the Nationality Act are fulfilled
FRANCE Immigration by Real Estate Investment + 300,000€
EARLY FREE EDUCATION (age 10-14) followed by naturalization at the age 18 with property, commerce or "Angel-French Tech Startups" investment - free public school (legal guardian) - or private boarding school : 40.000E/year
1. Introduction. The Portuguese Golden Visa is one of the most consolidated residence programs in Europe. The security of the country together with the friendly environment for foreigners, the tax advantages provided by Portugal, and the real estate opportunities and stability existing in Portugal, made the Portuguese Golden Visa one of the most popular regimes for Chinese people 2. Types of Investment. Obtaining a Golden Visa in Portugal is not dependent of an arbitrary decision of local authorities or officials. In fact, if a person fulfils all the legal requirements, the Golden Visa is in a timely manner issued. It is possible to obtain a Portuguese Golden Visa, without the need to reside in Portugal, in following situations:
Foreign family benefits free education at public school in FRANCE / GERMANY
* FAMILY RESIDENCE CARD * RETIREMENT RESIDENCE VISA Financing up to 50% CITINAVI does not only partners with lawyers and tax advisors, but also with financial experts. If non- residents would like to partially finance their purchase with a loan, certain documents are needed. Advantages ; -Family residence card (Talent passport-4 years without french language test) -J.O. 2024 Paris since 2017 french real estate prices increase by rates of 9% per annum. A EUR 300.000 passive investment in a french commerce, startups will get applicants and their families a 4-year visa that can be renewed as long the investment is maintained. After five years of continuous residence in France - or, indeed, in any EU country, as per EU rules - applicants are eligible for P.R.(permanent residence). A year after obtaining P.R.(permanent residence), applicants may apply for citizenship, provided they have obtained proficiency in the French language over the proceeding 5-6 year period. Infants (age 10-14) justifying certicates of 5 years allow easily to grant french citizenship at the age 18 as option of nationality. The spouse and dependents of he investor may take up employment in France. To be sure, this program will not suit investors who don't intend to physically reside in France, but the investment can be completely passive and there's a decent chance of serious returns or risks.
______________________________________________ António Paula Varela, Lawyer email@example.com
Citinavi global helpes for the immigrants by investment. firstname.lastname@example.org
Immigration by Real Estate Investment + 300,000€
EARLY FREE EDUCATION (age 10-14) followed by naturalization at the age 18 with property, commerce - free public school (legal guardian) - private boarding school : 40.000€ /year * FAMILY RESIDENCE CARD * RETIREMENT RESIDENCE VISA
Financing up to 50% CITINAVI does not only partners with lawyers and tax advisors, but also with financial experts, who can choose the most suitable loan from over 100 banks. If non- residents would like to partially finance their purchase with a loan, certain documents are needed. Social security, healthcare and immigration • The social security system is equally contributed to by employees and employers: there is pension, healthcare, as well as unemployment insurance • Healthcare for everyone: since 2009, Germany has introduced a legal obligation to health insurance • Immigration: Germany is a very modern, tolerant and cosmopolitan society with high standard of living, which is why approximately 7 million foreigners have made Germany their home High-quality education and innovative research • Most universities and colleges are state funded • Around 750 publicly-funded research institutions in Germany, as well as research and development centers run by industrial corporations Europe’s economic hub Germany comes out on top Brexit is re-shaping the European real estate map. Berlin, Hamburg and Frankfurt occupy the top three places in the league table, while Munich retains its appeal at Number 5.One pan-European investor stated that “Germany replaces the UK as Europe's number 1 safe haven." for 2017. Real Estate Prices • Even with increasing rates of over 10% per annum, purchase prices in Berlin are still below other large German cities such as Munich, Hamburg, Stuttgart or Düsseldorf • In the past five years, the prices have increased steadily, as well as the demand for housing4th Quarter 2018 - 63
IRELAND The Place to do Business By Pearse Trust Limited, Dublin, Ireland
Immigrant Investment Programme Gain residency in Ireland by investing €1,000,000 into an approved fund, which is refundable after 5 years. Should the investor's children wish to attend university in Ireland, they can gain a €50,000 reduction from the investment. Ireland is home to two of the top universities in Europe, namely Trinity College and University College Dublin.
Ireland happy to be nowhere near the residence-for-investment list All too often Ireland finds itself in the crosshairs when it comes to issues of tax avoidance and unfair tax competition, especially within the EU. Attempts to force through a Common Consolidated Corporate Tax Base, new OECD Base Erosion and Profit Shifting rules and, most recently, a digital sales tax all can seem to be framed in the context of stopping Ireland enjoying the competitive advantage it has developed as a particularly open small economy. We may not be anything close to a Wild West on corporate taxation, but dirt, repeatedly thrown, can ultimately stick, tarnishing the reputation of Ireland Inc. It’s a relief, then, to find that Ireland appears nowhere near a list of this year’s “best investment migration programmes”, shorthand for passport-forinvestment or residence-for-investment schemes. Henley & Partners, which styles itself as a citizenship advisory firm and which is based in London, produces a ranking of global residence and citizenship programmes. This year’s list, published on Tuesday, ranks Malta as the go-to place for citizenship programmes for the fourth year running, with Austria 64 - Citizenship Navigation
top of the residence-by-investment league, knocking Portugal from its perch for the first time. The UK, Italy, Belgium, the US, Canada and Australia are among others offering residence for investment, though only Malta, Cyprus and Austria among EU states offer citizenship programmes. The OECD has now set its sights on these schemes, stating this week that while they can operate for perfectly legitimate reasons, “they can also be potentially misused to hide their assets offshore by escaping reporting under the OECD/G20 Common Reporting Standard”. Schemes that are “potentially high risk”, it says, are those that give “access to a low personal income tax rate on offshore financial assets and do not require an individual to spend a significant amount of time in the location offering the scheme”. And listed among those that cause concern? Yep, Malta and Cyprus. But, fortunately, not Ireland. (Irish Times)
Establishing a Company In the modern business world, incorporating a company and the legal structure that an entity takes is a critical decision. The 2010 World Bank Investing across Borders report states that Ireland has ‘one of the simplest and shortest processes’ to establish a foreign-owned limited liability company. The correct structure can provide substantial advantages for those undertaking commercial affairs. These advantages include limited liability, separate corporate personality, and possible advantageous taxation. The Companies Act 2014 ‘The Act’ provides for a number of distinct corporate entities such as private companies limited by shares; private companies limited by guarantee and having a share capital; companies limited by guarantee without a share capital; public companies and private and public unlimited companies. Private Companies The most common type of companies formed in Ireland are private companies limited by shares. The Act created two types of private company limited by shares, the Designated Activity Company (DAC) and the Private Company Limited by Shares (LTD). The DAC bears a significant resemblance to the private company limited by shares which existed under the previous Companies Acts of 1963 - 2013. Some types of companies such as a licensed bank or a company that has debt securities listed or admitted to trading on a market must register as a DAC. The LTD company type is more commonly adopted by companies in Ireland. The LTD benefits from most of the innovations introduced by the Act intended to simplify their administration. The LTD is governed by a single, simplified constitutional document without an objects clause which eliminates the restrictive nature of company objects. Although the LTD can have an authorized share capital, it is not a necessary requirement and it may choose to have no authorized share capital. A LTD company can have a minimum of one Direct
Taxation Irish tax law offers many taxation benefits to companies wishing to set up operations in Ireland. The primary benefit, from a tax perspective of doing business in Ireland, is Ireland’s standard corporation tax rate of 12.5 per cent. We examine the Irish tax advantages with regard to the setting up of either a trading or holding company in Ireland.
Ireland is recognised as one of the most attractive locations for international companies to access the EU internal market. Many of the world’s biggest and most successful companies across a range of industry sectors have chosen to establish considerable operations in Ireland. These companies are involved in a wide range of activities and sectors including technology, pharmaceuticals, biosciences, financial services and manufacturing. It is no surprise that Ireland has been placed fourth in Forbes’ annual Best Countries for Business List. Ireland’s attractiveness as an investment location can be attributed to the positive approach of the Government to the promotion of inward investment, its membership of the European Union (EU), the ease of establishing a foreign-owned limited liability company, a very favourable corporate tax rate and a skilled and flexible labour pool.
First for availability of finance skills First for flexibility and adaptability of workforce First most competitive country in the Eurozone Fifth in the world for availability of workforce
Irish Trading Structure Low rate of Irish corporation tax Ireland has a standard rate of corporation tax (CT) for Irish companies of 12.5 per cent for all trading income. A higher rate of 25 per cent applies to foreign income, passive income such as interest, rental and other non-trading income. Where an Irish company is managed and controlled in Ireland and generates the requisite level of substance in Ireland, the Irish CT rate of 12.5 per cent will apply to the company’s trading profits. The requisite level of substance is normally achieved through the Irish company satisfying a number of issues, including, but not limited to the setting up of an office situate in Ireland, to generate a physical presence in Ireland and also the employment of a suitably skilled Irish employee to carry out the company’s key management activities. Where the appropriate level of substance is not achieved by the Irish company, the Irish CT rate of 25 per cent will apply to the Irish company’s trading profits. Acquisition of intellectual property for trading purposes The Irish tax regime provides a tax deduction for the capital cost of acquiring specified intangible assets which are used for the purposes of a company’s trade. The term ‘specified intangible assets’ is widely defined and includes, but is not limited to; patents, trademarks, licences, copyrights, computer software, brands, industrial know-how, and goodwill directly attributable to any of these intangible assets. Furthermore, Irish tax legislation provides for a Stamp Duty exemption on the acquisition of intellectual property. 4th Quarter 2018 - 65
Knowledge Development Box The Finance Act 2015 introduced the Knowledge Development Box (KDB) into Irish tax legislation. Under the KDB, trading profits earned by an Irish company from patented inventions and copyrighted software are to be taxed at a rate of 6.25 per cent to the extent that those profits are related to any research and development (R&D) undertaken by the company. Research and Development tax credit In instances where a company trading in Ireland incurs expenditure on R&D activities within Ireland (or within the EEA) it shall be entitled to a tax credit of 25 per cent in respect of that expenditure. This is in addition to the normal tax deduction of 12.5 per cent obtained for the R&D expenditure, i.e. the company effectively obtains an overall 37.5 per cent tax deduction for the R&D expenditure. Example for illustrative purposes: Case: Irish company with a period end of 31 December During 2017 the Irish company will incur qualifying R&D expenditure on salaries and general overheads of €1,000,000. The company’s taxable profits for the period ending 31 December 2017 after an allowable tax deduction for the R&D expenditure of €1,000,000 will be €4,000,000. The company’s taxable profits of €4,000,000 will give rise to a corporation tax liability of €500,000, (i.e. €4,000,000 at 12.5 per cent) for 2017 before the deduction of the R&D credit. The R&D credit of 25 per cent will be calculated on the R&D spend of €1,000,000. This results in a R&D credit of €250,000. This R&D credit can be deducted from the corporation tax liability of the company, i.e. €500,000. This will result in a revised corporation tax liability of €250,000 The R&D credit of 25 per cent, together with the corporation tax deduction allowed for the R&D expenditure of €1,000,000 results in a total tax saving for the Irish company of 37.5 per cent, i.e. €375,000 in 2017. Irish Transfer Pricing Regime Ireland has introduced a transfer-pricing regime. However, it only applies to trading transactions and there is a generous exemption for ‘small and medium sized’ companies. Irish Holding Company Structure Ireland is considered to be a very attractive holding company location, the main benefits of which include: Favourable Irish tax treatment of dividend income. No Irish dividend withholding tax on dividends from the Irish holding company to EU / tax treaty countries. No Irish capital gains tax on disposal of shareholdings in qualifying subsidiaries. Favourable Irish tax treatment for interest on qualifying borrowings. No thin capitalization provisions. No controlled foreign corporation rules.
Extensive tax treaty network. Pro-Business Infrastructure Talent
3 Countries Make up 84% of Europe’s €5 bn-a-Year Golden Visa Market
The combination of the youngest population in Europe, with one third of the population under 25 years old and high standards in education has meant that, while companies may locate here initially for low corporation tax, they continue to invest in Ireland because of the young, talented workforce. The Irish education system ranks in the top ten countries in the world and according to the OECD, 52 per cent of 25-34 year olds have a third level qualification, 10 per cent higher than the OECD average. The IMD World Competitiveness Yearbook 2016 lists Ireland as the first for flexibility and adaptability of workforce and third most productive workforce in the world. The Special Assignee Relief Programme provides for relief from income tax for staff assigned from abroad to work in Ireland and can facilitate key personnel and the business in moving to Ireland.
We’ve compared Europe’s golden visa programs by application approval volumes and foreign direct investment raised over the last 12-month period.
A note on our figures:
The IMD World Competitiveness Yearbook 2016 ranks Ireland very favourably in a number of key areas which are important for Foreign Direct Investment: First for availability of finance skills First for flexibility and adaptability of workforce First most competitive country in the Eurozone Fifth in the world for availability of workforce Establishing a presence in Ireland provides a gateway into Europe, the world’s largest single market, with barrier-free access to over 500 million consumers. Ireland’s geographic location, transport links to Europe, the US and the Middle East provides easy access to international markets. Ireland has long been marketed as the land of a hundred thousand welcomes, Céad Míle Fáilte in Irish, which is evidenced through the growing number of diverse multinationals and nationalities working in Ireland. Ireland is the only English speaking country in the Eurozone, fostering continued close ties with the UK and the USA. In conclusion, it is clear from the above that Ireland has a number of unique factors which have lead to the country becoming a destination of choice for international companies to access the EU internal market. Ireland’s competitive tax regime, regulatory framework, the availability of talented workers from within the EU and outside, and our access to EU markets is central to its ability to attract investment over other EU countries. From our experience of working with our International clients we have developed both an understanding and a significant level of experience of the above factors and their importance to investors in establishing operations in Ireland. www.pearse-trust.ie
by Christian Nesheim
For the number of approved main applicants during the last 12 months, we’ve used the latest available figures for each jurisdiction. For programs that report only annual figures, we’ve used data from the latest full year (2017 for Spain, for example, and 2016 for Ireland). For programs that report more frequently, we’ve used the freshest possible data (12 months to September 2018 for Portugal and Greece, for instance).
While in terms of absolute figures raised by golden visa programs the gains are more widely distributed, the top four programs – Portugal, Spain, Greece, and the UK – split 93% of the market (about €4.7 billion) between themselves.
In terms of programs included in the market-place, we’ve left out nonstandardized programs like Belgium or Germany. We also omitted programs with a very limited number of applications, like Jersey and Switzerland, which combined make up less than 10% of the market. For Bulgaria, we only know cumulative figures for the last five years, so we’ve divided that total by five to get an estimate for the last 12 months. Nearly 8,000 main applicants (and about 15,000 dependents) obtained a golden visa in Europe last year, nearly half of whom got theirs in Greece. In 2017, Spain’s golden visa program saw, for the first time, more applications than its Portuguese neighbor. While in terms of absolute figures raised by golden visa programs the gains are more widely distributed, the top four programs – Portugal, Spain, Greece, and the UK – split 93% of the market (about €4.7 billion) between themselves.s in Europe last year; one country alone made up more than half the market. We’ve compared Europe’s golden visa programs by application approval volumes and foreign direct investment raised over the last 12-month period.
A note on our figures: For the number of approved main applicants during the last 12 months, we’ve used the latest available figures for each jurisdiction. For programs that report only annual figures, we’ve used data from the latest full year (2017 for Spain, for example, and 2016 for Ireland). For programs that report more frequently, we’ve used the freshest possible data (12 months to September 2018 for Portugal and Greece, for instance).
Golden Visa’s New Bond/ Equity/Deposit Options to Start at €400k For more than a year, Greek authorities have heralded plans to add further investment options to their Golden Visa. On Wednesday, Greece’s Minister of the Economy – Stergios Pitsiorlas – divulged further details. A new bill, already drafted, would add the following investment choices, beyond the €250,000 real estate investment, currently the program’s only option: A €400,000 investment in debt or equity with real estate investment companies. A €400,000 term deposit in a Greek bank. A €800,000 investment in Greek government bonds.
In terms of programs included in the market-place, we’ve left out nonstandardized programs like Belgium or Germany. We also omitted programs with a very limited number of applications, like Jersey and Switzerland, which combined make up less than 10% of the market.
Click for full resolution image Explaining the Ministry’s plans over the next two months, Pitsiorlas said the new golden visa rules would be a priority, reports AMNA.
For Bulgaria, we only know cumulative figures for the last five years, so we’ve divided that total by five to get an estimate for the last 12 months.
Already Europe’s most popular such program by a wide margin, the Greek golden visa’s additional options will serve to further solidify its competitive edge. In the absence of a force majeurtype contingency, the Hellenic Republic’s golden visa will become the most popular in the world by year’s end.
Nearly 8,000 main applicants (and about 15,000 dependents) obtained a golden visa in Europe last year, nearly half of whom got theirs in Greece. In 2017, Spain’s golden visa program saw, for the first time, more applications 66 - Citizenship Navigation
than its Portuguese neighbor.
4th Quarter 2018 - 67
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