Anatoliy's Analysis

The Golden Visa of Your Dreams: Synthesizing an Optimal RBI Program From Existing Practices

Anatoliy’s Analysis
With Anatoliy Lyetayev

Anatoliy Lyetayev covers topics that help industry professionals be more efficient, do more business, and make more money.

Citizenship by investment (CBI) programs get a lot of press, and why shouldn’t they? They break down borders, increase mobility, and raise your visa-free destination count. That’s all fine and well, but when it comes to an actionable “Plan B”, residency by investment (RBI) programs in the EU take the cake; it is, after all, the European Union we are talking about.

RBIs do not get as much attention as their passport bequeathing counterparts, yet they are perfectly situated between cost-effectiveness and efficacy to offer those in need a resolute contingency plan. And savvy investors are aware, just take a look at the statistics from last year for some of the most popular RBIs of Spain, Greece, and Portugal:

  • Spain Golden Visa: 1,422 main applicants approved
  • Greece Golden Visa:  3,428 main applicants approved
  • Portugal Golden Visa: 1,047 main applicants approved

These figures demonstrate the massive demand for RBI programs in the EU, but what exactly makes an RBI attractive for both offering country and interested investors?

The most important building blocks of a successful RBI

  • Nature of investment – while investment types vary from real estate, share capital, loan capital, and donations, investing in bonds is the superior option. Bonds provide investors with a safe dwelling for their money, a simple liquidation and exit strategy, and a hassle-free method of investment. Bonds can also be non-profit, in turn augmenting the country’s overall income, take the UK or Malta as examples.
  • The simplicity of obtaining citizenship – getting a residency in the EU is great; getting an EU passport is even better. RBIs that lead to citizenship without an abundance of complications in a simple and comprehensive matter are bound to get more attention. Portugal takes the lead here, as lax language and physical presence requirements make getting its passport in five years a walk in the park.
  • Permanent residence, not residence permits – there is comfort in continuity, and investors need to know that their investments will benefit them perpetually. Malta offers permanent residence to investors and the vast divide in advantages between permanent residence and temporary residence (as set in the EU’s 2004 directive) is reason alone for a country to sway investors.
  • Concurrent dealings – high net worth individuals did not make their money by blindly diving into ventures; at a certain level, they become more risk-averse and look for safe bets, and nothing is safer than an escrow account. Utilizing escrow accounts to release funds once approval is granted provides investors with the peace of mind they need to pursue its program. Everyone in the RCBI industry knows clients like guarantees. 
  • The need for speed – long processing times are enough to turn a pleasant client meeting into a void of awkward silence. Investors are not used to waiting, they need the process done and they need it now. Two months of processing, like in Greece or Spain, is adequate time to keep everyone happy. Longer times, however, can rebuff interested clients; Portugal for example can keep investors waiting up to a year for their residence permits. The latter could benefit from expedited processing services of two weeks, for example, something the typical investor has no problem paying up to EUR 30,000 for.
  • In and out – providing investors with the chance to apply in the awarding country or its consulate can make a big difference. The COVID-19 pandemic comes to mind, as investors were unable to travel for simple things such as biometrics or oaths, marooning hunderds of thousands of euros until travel restrictions are lifted.
  • Digitize it – electronic filing is the next big step RBIs should take; they simplify the process, streamline operations, and give the environment a much-needed break. No need to keep piling papers when it just makes everything more difficult. Everything is now done online, RBIs should follow suit.
  • Live tracking – just like tracking your newly ordered shipment from Amazon gives you peace of mind, so does getting real-time updates on your file. The USCIS made gigantic strides in providing this service through assigning files a case number, generating a password, and setting up a notification system to let the client and/or lawyer know when their residence cards are ready.
  • 5 years a time – residence cards should be issued with a 5-year validity; there is no need for investors to experience the hassle of renewals every year after investing large sums of money. Latvia’s golden visa comes to mind here, as investors have to visit the European country every year to renew their residence. By ignoring the basics Latvia made their program worse, and in turn, lost a large chunk of clients for an otherwise intriguing program.
  • All about the family – broadening the parameters of dependents can greatly influence an investor’s choice when choosing an RBI, the more family members they can add, the more inclined they will be to invest.
  • The more the merrier – many fertile RCBI markets such as the Middle East have large family compositions (seeing a family of eight is rather normal in KSA), and RBIs should cater to bigger families by providing them with reasonable options tailored to their situations.
  • No additional obligations – RBIs are supposed to elevate an investor’s lifestyle, not complicate it. There is no need for any complicated or extra obligations such as residence requirements, job creation, active management of investments, or otherwise. Keep it simple and the clients will come. Just ask Greece.
  • Options, options, options – a plethora of investment options is a recipe for disaster. As more investment requirements intertwine the more complicated the program gets, and the more confused investors become. Keep it simple, bonds and real estate are the most popular, not to mention beneficial, options; keep them, and scrap the rest. Do not limit the growth of those options like Montenegro and the Caribbean do with approved developers; let the entire country get a slice of the pie.
  • Exit strategy – Portugal allows investors to liquidate their investments in five years, while Greece requires them to hold on to it as long as they want to maintain their residence. Giving investors a chance to recoup their investments can be the deciding factor in which RBI they eventually choose.

A strong RBI program can bring countless benefits
There is a lot of populism of socialist/leftist parties within the EU that decry RBI programs in Europe. Socialists bewail that immigrants are coming in and “stealing their jobs” and raising real estate premiums. The fact of the matter is, however, that RBI programs attract high net worth individuals that bring their wealth, which was earned in a foreign state, along with them to their newfound homes. In addition to their initial investment and influx of funds, they tend to spend upwards of EUR 100,000 a year, often even creating jobs. These people are considered a loss for their home country, so it is only logical their new country considers them a gain. 

A message from our partners
Middle East Road Show Ad

Another huge boost these investors bring with them to the economy is their search for a preferential tax regime. For example, in Portugal upwards of 25,000 people have applied over the past 10 years, just imagine the taxes the Portuguese government collected throughout the period.

To be able to attract these elites a country must create an alluring and robust RBI program, and below I have drafted what the epitome of RBI programs could look like:

  • An investment amount of EUR 200,000 in either real estate or bonds
  • A holding period of 5 years
  • Government fees of EUR 5,000 for the main applicant and an additional EUR 3,000 per dependent
  • A processing time of two months with an option of expedited processing

A program molded in this form would easily attract 3,000 applications a year. An average family composition of 3 members would entail the state receiving more than a whopping 33 million Euro in unencumbered funds in fees alone along with 600 million Euro in direct investments into the countries economy.

If half of those applications were in real estate and assuming an average property transfer rate tax of 7%, the country would obtain a gargantuan EUR 21 million in taxes. This is all assuming all investors stick to the minimum investment threshold. The state will also receive money when extending the residence permits.

The lower the investment amount, the larger the niche market, and the higher the demand; it’s basic business. This would necessitate an increase in service providers and transactions, which in turn would create more jobs and more marketing for the program, and ultimately, more investors coming in the following year. It’s a domino setup of prosperity.

Creating such a perfectly balanced, well thought-out, and enticing program would without doubt bypass its competitors in the EU.

Anatoliy Lyetayev AuthorSubscriber

I am a former human rights lawyer turned founder of global citizenship and residence advisory company Migronis Citizenship

We can choose where to live and do business. I have been living in different countries, such as the USA, Brazil, Portugal. I test countries and evaluate them according to my criteria. Therefore, I know what to offer my clients.

I appreciate the freedom of movement. That is why I help others get it.

follow me