Golden Investor Visas, Permanent Residence Permits and Residency by Investment: A Comparison of Global Tax Relocation Programmes

Global Migration

Last update: 17 June 2024

Comparative Table of Current Residence Permit and Golden Investor Visa Programs (2024)

Looking for Direction

In a globalized economy, the permission to work and reside in more than one jurisdiction is key to success.

Over the recent years, residency by investment (RBI) programs have attracted the attention of a growing number of global entrepreneurs and investors willing to change domicile to improve their international mobility, tax planning, and family security.

Immigration rules happen to be unclear, or their application is subject to sudden changes. Knowledge of the global policy environment and local immigration practice is essential to minimize risks and ensure compliance. Astrantia Consulting is known in the market for its precise approach to documents and good working relationship with immigration authorities. In addition, we closely monitor policy developments at the national and supranational levels.

In particular, for a relocation to be considered effective, EU case-law (here) requires the existence of a genuine link with, and continuity of presence in, the host state. This is because RBI programs on offer by EU Member States, such as Austria (here), Gibraltar (here), Greece (here), Italy (here), Malta (here), Portugal (here), Spain (here) automatically confer EU rights to third-country nationals, such as (i) visa-free travel in the Schengen area (here) for 90 days in any 180-day period (ii) the right to vote in EU elections (iii) consular protection outside the EU and (iv) access to the EU Single Market.

It is true that the European Parliament has called upon EU Member States to phase out all investor schemes and the European Commission will continue monitoring, via its expert group, whether the economic residency and citizenship programs still offered in the EU comply with Union law, in particular by implementing a common set of risk management measures (security, AML, anti-avoidance), transparency (statistics), and governance (anti-corruption).

Noblesse oblige – the attraction (and operation) of sizeable cross-border capital transfers carries risks calling for scrutiny. The 5th EU Anti-money Laundering Directive (AMLD5) subjects EU CBI/RBI applicants to enhanced due diligence by gatekeepers (banks and other "obliged entities" such as accountants, advisors, notaries, trustees, estate agents, art dealers).

Freedom of movement (and choice of tax residence) brings "reason to doubt". The OECD qualifies most CBI and some RBI programs as a potential risk to the effective functioning of the automatic exchange of information (AEOI) under the Common Reporting Standard (CRS). In 2018, the OECD singled out 16 high-risk countries (here) offering both (i) personal tax below 10% on foreign income and (ii) physical presence requirements under 90 days and advised banks to challenge, and further investigate, the self-declared tax domicile of residents coming from those countries, in particular by applying the 90-days rule.

On the other hand, we believe that global citizens spending less than 90 days in any particular jurisdiction can still structure their affairs around a tax-efficient center of vital interests.

OECD Tie-Breaker Rules

Since its first draft in 1958, the OECD Model Convention (here) serves as the blueprint for the negotiation of bilateral tax treaties. It contains legal definitions (such as the very notion of residence) widely adopted in double tax treaties (DTT)s by OECD member and partner states (here).

Art. 4 of the Model Convention provides rules for resolving conflicting cases of double residency and avoiding double taxation (so-called "tie-breaker rules"). Conflicts often arise because, under their domestic laws, two states may claim that a person is resident in their territory.

Tipping the Balance: Are there Cases of Double Residence?

In the following, we quote from Art. 4 of the OECD Model Convention (definition of the term "resident") and provide clarifications in the form of relevant commentaries given by the OECD itself (in italics):

"The term resident means any person who, under the laws of [a] State, is liable to tax therein, by reason of domicile, residence, place of management or any other criterion of a similar nature (the definition aims at covering the various forms of personal attachment to a State which, in the domestic taxation laws, form the basis of a comprehensive taxation [unless the person is] subject only to a taxation limited to the income from sources in that State or to capital situated in that State).

Where an individual is resident in [two] States, then his status shall be determined as follows:

• He shall be deemed to be a resident only of the State in which he has a permanent home available to him (the place where the individual owns or possesses a home; this home must be permanent, that is to say, the individual must have arranged and retained it for his permanent use as opposed to staying at a particular place under such conditions that it is evident that the stay is intended to be of short duration [...]. The permanence of the home is essential; this means that the individual has arranged to have the dwelling available to him at all times continuously, and not occasionally for the purpose of a stay which, owing to the reasons for it, is necessarily of short duration: travel for pleasure, business travel, educational travel, attending a course at a school, etc. For instance, a house owned by an individual cannot be considered to be available to that individual during a period when the house has been rented out and effectively handed over to an unrelated party so that the individual no longer has the possession of the house and the possibility to stay there); 

• If [the individual] has a permanent home available in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (center of vital interests) [thus, regard will be had to his family and social relations, his occupations, his political, cultural or other activities, his place of business, the place from which he administers his property, etc. The circumstances must be examined as a whole, but it is nevertheless obvious that considerations based on the personal acts of the individual must receive special attention. If a person who has a home in one State sets up a second in the other State while retaining the first, the fact that he retains the first in the environment where he has always lived, where he has worked, and where he has his family and possessions, can, together with other elements, go to demonstrate that he has retained his centre of vital interests in the first State];

• If the State in which he has his center of vital interests cannot be determined, or if he has not a permanent home available to him in either State (as for example, a person going from one hotel to another), he shall be deemed to be a resident only of the State in which he has an habitual abode (where he stays more frequently. For this purpose regard must be had to stays made by the individual not only at the permanent home in the State in question but also at any other place in the same State [...] without it being necessary to ascertain the reasons for them [...] The test will not be satisfied by simply determining in which of the two [...] States the individual has spent more days during that period. The phrase 'séjourne de façon habituelle' [...] provides a useful insight as to the meaning of 'habitual abode', a notion that refers to the frequency, duration and regularity of stays that are part of the settled routine of an individual's life and are therefore more than transient);

• If he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State in which he is a national;

• If he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement".

Our Services

We help our clients find and implement the right migration strategy

Our strategic relocation services include:

• Review of immigration eligibility
  
• High-level tax advice, involvement of local counsel where needed
  
• Collection, preparation, and processing of permanent residency applications
  
• Follow-up and immigration status tracking

Our RBI applicant due diligence includes:

• Sanctions, PEP, and AML background checks
  
• Close coverage of media exposure including exhaustive index of press articles (where needed)
  
• Cross-validation and determination of source reliability
  
• Comprehensive description of the applicant’s source of wealth, in addition to the source of the funds to be transferred to the RBI program

The practice of due diligence (here) lies at the core of the investment migration industry. Our enhanced due diligence reports are nonintrusive and draw on a variety of materials derived from the public domain (open-source intelligence) and proprietary databases. They provide government agencies in charge of residency programs with a sound basis for assessing and managing (i) money-laundering (ii) sanctions, corruption, crime and (iii) reputational risks when reviewing residency and citizenship applications.

Our in-house compliance allows us to protect our clients’ confidentiality and determine an application’s success potential at an early stage, thereby avoiding surprises further down the immigration road.

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References

European Commission (2019) Investor Citizenship and Residence Schemes in the European Union (here)

European Parliament (2022) MEPs call for a ban on ‘golden passports’ and EU rules for ‘golden visas’ (here)

European Parliamentary Research Service (2018) Citizenship by investment (CBI) and residency by investment (RBI) schemes in the EU. State of play, issues and impacts (here)

OECD (2019), Model Tax Convention on Income and on Capital (Full Version)

OECD, Rules Governing Tax Residence by Countries (here)

Oxford Analytica (2020) Due Diligence in Investment Migration. Best Approach and Minimum Standard Recommendations (here)

Oxford Analytica (2020) Due Diligence in Investment Migration. Current Applications and Trends (here)

STEP (2021) Global Mobility of Ultra-High-Net-Worth Individuals (Globe Law and Business) (here)

Transparency International, Global Witness (2018) European Getaway. Inside the Murky World of Golden Visas (here)