The Lay of the Land
In the world of so-called global citizens, one of the key considerations is to have a second passport. The saying goes that you had no choice about where you were born, but you can certainly choose where you are going to live. This is particularly so when it comes to high net worth individuals. That category breaks down into: billionaires, centa-millionaires ($ 100 M+), ultra high net worth individuals (30M+) and high net worth individuals (1M+). The Covid-19 pandemic is putting a squeeze on the lower category, which consists of about 18 million individuals. But the real action is to be found in the higher categories, consisting of over 200,000 individuals that may be interested in a second passport.
For such individuals, one of the premier destinations is Cyprus. Among the key reasons are: a great climate, beautiful countryside with ocean views, a stable government, a good economy and proximity to major markets. Cyprus boasts a well handled response to the Covid-19 pandemic in that it had few infections, was in good economic shape going into the crisis and will emerge relatively unscathed. Economically, the country is run based on English common law, is business friendly, is open to foreign investment and has a low tax regime. Post pandemic items related to quality of life in terms of health care and education score high marks in Cyprus.
Benefits of Cyprus
In terms of benefits, the Cypriot second passport program is the only fast track citizenship by investment program in Europe. The investor and family members are able to travel, work and live anywhere in Europe without even residing in Cyprus to obtain or maintain citizenship. Dual citizenship is allowed, and applicants can get the passport within about six months. The passport is open to applicants from all nationalities and provides visa-free travel to 171 countries, including the Schengen countries, Canada, United Kingdom, Australia, Singapore and Hong Kong but not the United States.
To obtain citizenship in Cyprus the would-be immigrant must invest at least €2,150,000. The most popular route is to invest €2 million in residential real estate for five years and pay €150,000 which is used by the government for low cost housing and research. One other requirement is that the investor must maintain at least €500,000 in real estate in Cyprus for the rest of his life, so that at the end of five years, only €1,500,000 can be rebated. If the investor is interested in investing more money, another part of the program enables investment in Cypriot companies or various projects, but this would require an additional investment of €500,000. The country budgets for 700 investor immigrant applications per year, but those who may file late will simply be processed in the following year, so it should not be a source of concern.
Some of the more attractive aspects of the program are that a Cypriot Permanent Resident card is issued shortly after an application is filed while the investor is waiting for the second passport, the main applicant, spouse and dependent children below the age of 28 are eligible to obtain citizenship, and even elderly parents above 65 can also apply for citizenship as dependents. Also, English is broadly used in Cyprus.
Taxation Concerns Needless
One of the concerns that will be on the mind of some investor immigrants in the post-pandemic world is whether the target country may have accumulated a lot of debt because of expansionary fiscal policies employed during the crisis, and how this could play out in post-pandemic increases in taxes to pay off the indebtedness. This question was recently posed to Harris Georgiades, the former Minister of Finance of Cyprus. He responded by saying Cyprus was fortunate in terms of its pre-pandemic economic policy which left the country economically strong going into the crisis. That meant that the country did not have to engage in much economic self-defence through deficit spending and therefore there will be no tax increases or predatory tax measures introduced in the years ahead.
Past Problems Largely Resolved
More generally, while Cyprus is indeed very peaceful and stable today, it is a country that is made up of Turkish and Greek descendants and to this day is still a chess piece in a dispute over sovereignty of the northern part of the island that Turkey claims. Still, it is not expected that this will have any serious impact on life on the island any time soon. During the 2012-2013 Cypriot Financial Crisis, Cyprus re-capitalised the Bank of Cyprus and Cyprus Popular Bank (Laiki Bank) through a bail-in of depositors by converting bonds and deposits in excess of €100,000 into shares in the two banks. Investors incurred losses as a result. However, the lessons were learned by the Cyprus government and Mr. Georgiades indicated they will not be repeated.
All things considered, for those who can afford the investment required, Cyprus appears to be an excellent choice.