Offshore investment through secondary citizenship programmes has grown in popularity in recent years as a viable source of investment income, ideal if for those who have global financial needs and want to hold some of their money outside their home country.
We spoke to George Eid of Arton Capital about the options currently available to South Africans looking to invest offshore, and the benefits of secondary citizinships.
What are the options available to South Africans wanting to invest in secondary citizenship programmes?
Global citizen programs basically fall within two categories: direct citizenship programmes which allow investors to invest or to donate capital to a government fund, or buying property to obtain citizenship within less than a year. However these options are probably not the most popular ones amongst South Africans due to the fact that they tend to be non-EU programmes.
Of course what we’ve seen is that South Africans are looking at EU programmes due to the fact that their kids could eventually go study, work and live there. For them the education factor is the most important.
When we talk about the EU programmes there are three that we specifically recommend: Cyprus of course being the most expensive but the quickest – requires the investor to put R2.5 million into a residential property for three years and then they can sell it. You’re looking at a 90 day time frame for them to get citizenship and a passport. It is expensive of course, generally properties that South Africans have been exposed to are the pricier ones in for example in Portugal or Spain we do advise that they look at the alternatives available to them.
On the other hand the programmes in Bulgaria and Hungary require investors to an investment in government bonds, which can be financed, and it becomes more cost effective for the whole family.
How long does it take?
There are two options in Bulgaria – there’s the normal procedure which requires the initial €511,000 (which can be financed as I mentioned); the applicant gets their permanent residency in six to eight months while the family takes another 3 to 4 months to get their permanent residence and in 5 years they qualify for citizenship.
As of December 2013 a new law allows investors who already have one year of permanent residence to fast track their application. So rather than waiting 5 years, they can double their investment 18 months after they joined the program, put another half a million Euros in government bonds and then apply for citizenship. So it can basically take two years instead of the normal 5 year period.
Do you assist in terms of selecting a property?
In Cyprus we do filter a few properties that we believe are suitable; where we’ve done all the due diligence and there’s a bank guarantee which means that they will eventually reach fruition etc. But of course when you go with a passive investment in government bonds there’s always the benefit of not having to worry about the investment depreciating or being at risk; because it’s a government bond you’ll get your money back at the end of the day.
Are you finding that more and more South Africans are looking into these options?
Definitely. If we look at it from a perspective of them securing something for the next generation – especially when it comes to the EU education system and having something for their children – that’s the biggest goal and objective that South Africans have.
The other one is that they don’t necessarily want to leave South Africa, they’re very happy doing what they’re doing here. Like all South Africans they love their country but they want to have a backup plan in case of political turmoil or instability.
The third benefit is the wealth protection and making sure that their wealth can be passed on to the next generation. When you look at secondary citizenship plans that’s one avenue that you can investigate further.
What does Arton Capital do to facilitate this process?
Arton Capital is a financial advisory firm. We advise governments on how to structure programmes so we always look at the global citizen as the centre point – he’s surrounded by all these government programs. We advise governments with regards to legislation and what kind of programs need to be in place to attract these investors.
What advice do you have for South Africans wanting to invest in secondary citizenship?
Before an investor pursues any programme they need to do their homework; they should look deeper into these programmes and the legislation, contact the embassy and try to visit, to explore to see what the reality is on the ground, to meet our team and the lawyers and the bankers. It’s always much better to get all the bits and pieces together before you make a decision.
Have you seen a trend in terms of increasing global immigration?
Definitely. There are different variables; instability, political turmoil…but lately for the first time we’re seeing Americans and Europeans looking at it for reasons like tax as their governments are taxing their wealth quite heavily.