The Pros and Cons of Using Investment to Obtain Citizenship or Residency

March 22, 2023 Savannah Zimmerman

There are several ways to obtain citizenship or residency in a foreign country. One way is through investment. Citizenship through investment programs allows investors to obtain citizenship in a country in exchange for investing in that country's economy. Residency by investment programs will enable investors to obtain residency status in a country in exchange for investing in that country's economy.

The pros of dual citizenship are well-known and, in some cases, are apparent. However, the cons of dual citizenship are there, and we're here to discuss and weigh both the pros and cons of dual citizenship. You will be the judge in this debate about the pros and cons of dual citizenship. This article will discuss these topics and compare investment-based citizenship vs. more traditional methods, the potential impacts on the host country, and how to get citizenship through investment.

Citizenship Through Investment and Residency by investment

Before we dig deeper into the pros and cons of dual citizenship, let's define the terms such as citizenship by investment and residency by investment. To obtain citizenship through investments is a legal process by which an individual can obtain citizenship by investing a certain amount of funds in defined investment categories in that country. The investment can take the form of investment funds, property, or businesses. Some countries like the Caribbean countries offering Citizenship by Investment Programs (CIP) through donation to their government investment fund. The amount of investment required varies from country to country. Gaining citizenship through investment programs is also known as economic citizenship programs.

Residency by investment programs work similarly to citizenship by investment programs, but with one key difference: instead of granting citizenship, residency by investment programs presents residency status to investors, this may lead to citizenship. These programs have pros and cons, which we will discuss in the next section.

Citizenship through investment programs offers individuals the ability to live and work in the country of citizenship, but there are some drawbacks. Residency by investment programs provide many of the same benefits as citizenship by investment programs, including the ability to live and work in the country of residence, but there are some disadvantages.

The Pros and Cons of Both Methods

Obtaining citizenship or residency through investment can provide individuals and their families numerous benefits and drawbacks. Some of the potential benefits include the following:

Pros Of Citizenship Or Residency Through Investment

Improved Quality of Life: Obtaining citizenship or residency through investment can give individuals and their families access to better health care, education, and social services and even cleaner air - for those living in industrialized countries with less strict environmental protection laws.
Increased Freedom: Citizenship or residency by investment can provide individuals with more freedom as they will no longer have restrictions on their travel, work, or residency.
Increased Financial Security: Obtaining citizenship or residency through investment can provide individuals and their families with greater financial security by giving them access to multiple sources of income and a broader range of investment opportunities. Diversification is key.
Access to a Wider Range of Educational Opportunities: Individuals and their families with citizenship or residency will have access to a broader range of educational opportunities, including higher-quality public and private schools and universities.
Improved Political Stability: Individuals and their families can gain access to improved political stability and security by obtaining citizenship or residency through investment, allowing them to take advantage of the host country's political stability and protection.
Tax Optimization: Not just by taking up tax residency in a foreign country can help, but also the option to renounce one’s primary citizenship to save on income taxes.For example this is the case for US-American citizens who live abroad and still need to pay their income tax to the USA, as US persons need to pay their income tax to the IRS irrespectively where they live.

Cons of Citizenship or Residency Through Investment

Cost: Obtaining citizenship or residency through investment can be costly and may necessitate a significant financial investment for individuals and their families
Complexity: Obtaining citizenship or residency through investment can be a complicated and time-consuming process that could require the assistance of legal and financial experts
Loss of current citizenship: In some cases, obtaining citizenship or residency through investment may require the renunciation of your current citizenship, which can result in the loss of social, economic, cultural, and political ties to one's country of origin
Potential impact on the host country's economy: Residency and Citizenship through investment programs can significantly impact the host country's economy, resulting in large amounts of foreign investment with both positive and negative consequences

As you can tell, dual citizenship has multiple pros and cons. Before deciding whether to pursue this option, it is crucial to consider the potential drawbacks, such as cost, complexity, and potential impact on the host country's economy.

Comparison of Citizenship and Residency Through Investment with More Traditional Methods

Traditional methods of obtaining citizenship or residency, such as marriage or employment, differ significantly from investment-based programs. Here are some key distinctions between the two:

Investment Requirement

Individuals participating in investment-based programs must make a significant investment in the host country, typically in the form of a real estate purchase, business investment, or government bond. Traditional methods of obtaining citizenship or residency, such as marriage or employment, do not necessitate a significant financial investment.

Speed of Processing

Investment-based programs frequently result in a shorter processing time for citizenship or residency applications compared to traditional methods. The faster processing is because investment-based programs intend to appeal to wealthy individuals who are often eager to obtain citizenship or residency.

Eligibility Requirements

Specific eligibility requirements, such as a minimum level of investment, must be met to participate in investment-based programs. Some programs may have small residency requirements. Traditional routes to citizenship or residency, such as marriage or employment, typically have more lenient eligibility requirements.

Potential for Long-Term Benefits

Long-term benefits of investment-based programs include access to a broader range of educational opportunities and holding two passports. Traditional routes to citizenship or residency, such as marriage or employment, may provide different benefits.

The Potential Impact of Investment-Based Citizenship and Residency Programs on the Host Country

Investment-based citizenship and residency programs can significantly impact the host country's demographic makeup and population growth. Here are a few ways in which these programs can affect the host country:

Demographic Shift

Investment-based citizenship and residency programs frequently attract wealthy individuals and families from other countries with cultural, linguistic, and socioeconomic backgrounds that differ from the local population. It can cause a significant demographic shift in the host country, with positive and negative consequences for the local community.

Population Growth

Most CIP countries are small nations, thus investment-based citizenship and residency programs may increase population growth in the host country. Consequently, it can help the local economy and support demographic diversity but also strain the host country's infrastructure and resources.

Increased Competition for Jobs

The influx of wealthy individuals and families into the host country through investment-based programs can increase competition for jobs and other economic opportunities. As a result, it can be particularly challenging for the local population, which may be disadvantaged regarding skills and qualifications.

A shift in the Housing Market

Investment-based citizenship and residency programs can result in changes in the local housing market, such as increased demand for high-end properties and decreased availability of affordable housing for the local population. These effects led the Portuguese government to adapted the Golden Visa law and consequently excluded investments in Lisbon, Porto and almost all of Portugal’s coastline from the Portuguese Golden Visa Program. These mostly empty apartments led to price increases in the local real estate (and rental) market. Ultimately the Portuguese government is currently discussing to shut down Portugals Golden Visa residence program.

How To Get Citizenship Through Investment

There are several ways on how to get citizenship through investment. Still, it typically involves making a significant financial contribution to the host country through investment in local businesses, real estate, or government bonds. Here are the steps involved in obtaining citizenship through investment:

Research Investment Options

Many countries offer citizenship through investment programs, so it is vital to research the options available and choose the program that best fits your needs and interests. At Citzen Lane we have carefully selected investment opportunities.

Review Eligibility Requirements

Each country's citizenship through investment program will have different eligibility requirements, such as minimum investment amounts, residency requirements, and requirements for inclusion of adult children, parents or even siblings. Make sure to carefully review these requirements to ensure that you meet them before proceeding.

Submit Application

Once you have chosen the program you wish to participate in, Citizen Lane will prepared the application with you and ultimately submit a formal application. Application submission will typically involve providing personal information, documentation, and proof of investment.

Complete the Due Diligence Process

Once we have submitted your application, your case will need to undergo a due diligence process, which includes a background check, and other security checks.

Pay Processing Fees

In addition to your investment, Citizen Lane charges processing and legal fees associated with the citizenship by investment program, which may vary depending on the country and program.

Receive Approval

Once your citizenship application is approved, you will need to invest and complete other necessary steps, such as paying taxes and fees, obtaining a passport, and taking an oath of allegiance. For residence by investment programs the investment needs to be done typically before the application. Contact us to discuss how you may secure your financial investment.