The Millionaire Residency Visa
For a hefty investment (and we mean hefty), countries such as the United States and Australia are now granting residencies to wealthy foreigners
FOR FOREIGNERS, it used to be that hard work and plenty of patience for bureaucratic red tape would garner access into a coveted country. But, these days, sometimes all it takes to grab that golden ticket is achieving multimillionaire status and promising to make a hefty investment in a new homeland.
Number of individuals worth more than $30 million and their total net worth, by country
Countries such as the United States, Australia and New Zealand are all embroiled in a global tug-of-war for the wealthy, and each has either rolled out or reauthorized what are known as millionaire visas in recent years. These programs, which are aimed squarely at wealthy investors, fast-track these individuals’ path to permanent residency—and sometimes even citizenship. “Countries are trying very hard to attract foreign millionaires or billionaires,” says Douglas Goldstein, an international investment adviser and director of Profile Investment Services, which is based in Israel. “Everyone wants these people to bring their money and spend there.”
This push comes at a time when the growth in global wealth is shifting to business tycoons and others from emerging markets. The world’s “super rich”—those with at least $100 million in disposable assets—is forecasted to grow between 7 percent and 24 percent through 2016 in Western Europe and North America, much less than the 60 percent forecasted in Latin America, 76 percent in Russia and more than 100 percent in China and India, according to a 2012 wealth report from Knight Frank and Citi Private Bank. At the same time, legal experts and financial advisers say, political uncertainty in some places, as well as the ongoing tremors being felt in the Middle East, has pushed more multimillionaires to seek refuge in nations like the U.S. “They’re coming here for social and economic stability,” says Bruce Givner, an attorney based in Los Angeles.
To grab some of this wealth, officials in Australia say they launched their so-called significant investor visa last year to try and “attract prominent business people and investors from across the globe and increase economic growth.” Folks who want to soak in the Sydney sun and become permanent residents can do so in exchange for meeting certain criteria, including investing at least $4.7 million in financial products like bonds and managed funds, as well as companies based on the far-flung continent. The program has already attracted more than 170 applicants—who are mostly from China—and similar ones elsewhere have also seen a surge in demand of late. Last year, around 7,600 foreigners applied to the immigrant investor program known as the EB-5 in the U.S., more than double the number who did so in 2011.
Like the gold “flash pass” available at some amusement parks, investors can pay extra to skip ahead of others who are already fast-tracking through a line. In the United Kingdom, around $1.5 million in investments helps qualify for permanent residency after five years, while spending about $15.6 million cuts that wait to just two years. A bigger investment can also make it easier to get that coveted stamp of approval from an immigration and customs office. A “regular” investor visa in New Zealand requires, in part, that foreigners hold at least three years of business experience, speak English and be younger than 65 years old. But the country’s government legislated easier requirements two years ago. Now, an upgrade to investor “plus” status—which is obtained by spending an additional $6.8 million or so on top of the $1.2 million that regular investors pay—means applicants can have zero business experience, speak any language they want and be an octogenarian, or any other age for that matter. Welcome to Kiwiland.
As alluring as these visas may be to some, they can also lead to certain legal hassles. Some individuals have underestimated how difficult it is to retain their residency status once they’re actually in a new country. In the U.S., some investors have failed to create the minimum number of jobs—10 full-time positions within two years—they need to continue their stay here, so they’ve been sent packing along with their family back to the motherland. “Some people are basically buying green cards, and then they’re losing them,” says Lauren Cohen, the Florida-based attorney behind e-Council Inc., which helps craft business plans for wealthy folks who are trying to get these kinds of visas.
What might seem like a good deal on the surface could also prove financially frustrating—if not disastrous—in the end. Some governments have waited until billionaires have died, for instance, then used the foreigner’s residency status in their country to make a grab for taxes owed on the estate, experts say. In one of Goldstein’s cases, a client considered giving up his U.S. citizenship because he felt tax requirements here were too onerous. The multimillionaire then began negotiating for a special visa from officials in Cyprus, who offered him residency for a $15 million deposit in one of their banks. (In the end, he never took the bait.)
Hiring a legal expert to help with all the required paperwork adds up, of course. Yet it might prevent issues other investors have faced. Earlier this year, the Securities and Exchange Commission filed its first lawsuit against an EB-5 project, alleging that promoters were seeking foreign investors for a Chicago-based hotel and convention center and fraudulently sold more than $145 million in securities to around 250 investors primarily in China as a way to secure residency in the U.S.
Indeed, experts say, to some degree these programs have become a victim of their own success. Canada’s stack of immigrant investor visas got snatched up within 30 minutes two years ago, and while there were only 700 available to begin with, the country stopped taking new submissions last year to focus on a massive backlog of applicants. (Turns out, there were more than 88,500 at one point.) Meanwhile, in Singapore, the bar was already considered pretty high, as investors had to spend a minimum of $8 million and hold assets worth about $16 million. But a steady influx of rich outsiders contributed to a run-up in the city-state’s real-estate prices, and the government there discontinued the visa program last year to “reduce the upward pressure on local property prices from foreign investors,” according to a report from PricewaterhouseCoopers—proving that perhaps, sometimes, there can be too much of a good thing.