BEIS White Paper on Audit Reform: Will Kwarteng's reforms really unchain entrepreneurs?
The market for global residence and citizenship by investment programmes has been hotting up for some time. The popularity of these schemes, offering long term residence and second passports by making a specific level of investments, has been fuelled by a combination of the demand for easier travel and political and economic security and the need for cash-strapped countries to redress their balance sheets.
There is now real global competition for these wealthy investors. A number of countries are revisiting their existing schemes to see whether they remain competitively priced. But just as the UK is reviewing its own Tier 1 investor visa category for wealthy foreigners, a small island in Southern Europe has decided to enter the fray and launch its own offering. No eyebrows would normally be raised - after all, many small islands around the world have run these programmes for years and sold their passports on the basis that these provide wide visa free travel to wealthy families.
But eyebrows have been raised. This is because the latest offering is from Malta, an EU member state, which in return for an investment (effectively a donation) of €650,000 will issue an EU passport within three months without the need for any period of physical residence in Malta itself.
In the current market, this new scheme is something of a bargain. While second passport schemes outside the EU are of limited value (as they only offer more visa free short term travel), existing schemes in the EU either require significant physical presence in the country for five or six years before a passport can be obtained or much higher investment levels. But Malta is now unique in providing an instant, high-value passport, which allows worldwide travel and long term residence in 28 EU countries. To many wealthy investors making a cost benefit analysis, the entry price would be viewed as pin money. It is very likely that these Maltese passports will go like hotcakes.
The UK should now be worried about the longevity of its investor scheme. Those acquiring these new EU passports will have little interest in living in Malta. As new EU citizens, they will be able to live in the UK, an already popular destination for the rich global elite, without any restrictions and more importantly, without having to make any financial investment in the UK which might benefit the UK economy. The UK currently issues visas to over 500 investors a year, meaning it could lose half a billion pounds in investment each year.
This is not welcome news for the Government at a time when the debate on EU immigration (or free movement, to give it its correct name) is already high on the agenda. The UK can do little about the new scheme and the EU Commission has confirmed, rightly, that it has no jurisdiction to intervene in the area of citizenship, which does not fall within the EU Treaty.
Part of the current review of the UK scheme is to look at whether there is scope to increase the investment thresholds for the UK scheme from £1m to £2m. The UK needs to think seriously before it prices itself out of the market.
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