Over the last couple of years, there have been a few very important events that have changed the very nature of how we see residency by investment.

Some of the reasons why wealthy families wish to secure a second residence remain the same. They want to move to a country that allows them more freedom in terms of European movement and better social, education and health opportunities for the family.

However, it is becoming much more common that wealthy families are now seeing the financial and succession planning opportunities in holding a second residency. As much a plan B or C as a plan A.

The protection of a well-regulated country.

Not all countries are created equal when you look at their business and social environments. Gaining access to countries governed by unbiased legal systems and protected by strong police and security forces, is a huge draw for wealthy families.

Access to regulated investments.

Access to banking, investments and other markets are often closed or restricted to non-nationals and non-residents.

As an investor needs a balanced approach when building an investment portfolio, a second residency can be a great tool to help wealthy families expand their wealth management options.

Residency by investment provides the opportunity to access and benefit from local investments, banking and trade, which would normally be restricted if residency hadn’t been acquired.

Country bias – Investment diversification.

In addition to their investments, wealthy families have a similar dilemma when it comes to deciding where to place their more liquid assets.

Residents of some leading countries are restricted in their access to the world’s top banks. When it comes to the safety of the banking institution, countries such as Switzerland or Germany, The Netherlands, Singapore and South Korea come out top. In fact, out of the top 25 places in the 2021 Global Finance, list of the 50 world’s safest banks, EU countries take up 17 places.

Banking in Europe is often restricted and by taking up a second residency in a European country it could provide an investor with bank access and help spread the risk of having your money in one country. Of course bank, particularly those licensed to operate in EU jurisdictions adhere to all EU anti-money laundering principles and guide lines which is essential.

Opening of new markets.

Leading on from the banking opportunities, obtaining a second residency, in an internationally trade friendly country, may open new markets and opportunities.

Countries like Portugal in particular, hold great opportunities for new residents. With modern legislation, reasonable and sometimes quite low rates of taxation, it can be very beneficial for investors.

One country that has really benefited from this increase in inward investment is Portugal. As a country, it is going through somewhat of a controlled property boom, partially helped by the original demand for property at the start of the Portuguese Golden Visa program. Importantly, golden visa investors only account for 1,5% of all property sales according to last year’s statistics which shows a robust and mature market with solid fundamentals.

That said, the rules on where Golden Visa investors can buy property have changed and investors do not have access to the very best areas of Portugal anymore. Funds however are Golden Visa eligible and allow investors to invest in efficient property developments in some of the best areas of Portugal.

In addition to qualifying as an investment for a family’s residency application, a fund represents a real opportunity to make an investment in a rising economy and one which is well regulated by the Portuguese Financial Authorities. Unlike some ‘Golden Visa Trap’ properties out there, funds are likely to be attractive whether a right to residence is attached to it or not.

Succession planning and how RBI is considered an important tool.

Just as citizenship by investment, residency by investment is more and more commonly being used as an opportunity to help the next generation.

Most countries have very specific rules on physical residency before new residents are eligible to apply for naturalization. These rules can differ between countries, for instance, Portugal has a lower limit of just 5 years until a new resident can apply for naturalization whereas other countries such as Greece need applicant to be physically resident for no less than 183 days a year for 7 consecutive years.

There is the all-important language test that needs passing in order to be passport eligible and this is a fundamental step in the process and helps keep the program in good standing.

Once granted, the passport is transferable for generations to come. So an investment today could positively be impacting on the lives of unborn grandchildren for example.

Graham Sutcliffe

NG GLOBAL CITIZENS