Global Mobility Deep Dive for Internationals Looking to Go to the USA & Portugal
Level 2 - Value Investor
Welcome Avatar! After the overview on acquiring a second passport, an individual emailed us with some new details beyond what was listed here:
This is entirely a guest post by Jordan Chaplin who works in the citizen by investment industry.
As usual, always do your own research and decide what may be best for you. Every situation is different, every country is different and every person has a different financial/personal life picture.
Global Mobility Overview
My name is Jordan Chaplin and I work in the citizenship by investment industry. I’m a long time follower of BowTiedBull and love the community and ideologies that are preached. I hope this article is of assistance to anyone that has global mobility aspirations.
My goal is to take a deeper dive into obtaining residency or citizenship outside of your home country and what to expect during the process. I wont go into every product because I typically deal with only a few products and have a surface level understanding of other programs.
First let’s define important terms that will be using throughout the article:
Residency By Investment —> In exchange for contribution, an investor obtains a residency permit to live and work in a particular country. This avenue usually leads to citizenship after certain requirements are met.
Citizenship by investment —> In exchange for contribution an investor becomes a citizen with full rights.
Golden Visa —> Just a fancy name for residency by investment programs (equivalent of a green card in the United States)
Schengen Area: The Schengen area is a free travel area in Europe that allows visa holders to travel seamlessly without border controls once inside the area.
European Union (EU): A political and economic union of 27 European countries to collaborate on laws, business, trade, security, etc.
Not all EU countries are part of the Schengen area. Similarly, some of Schengen includes some nonEU members.
The distinction is important because a lot of the value of some of the programs is in the ability to get an EU passport because if you are a citizen of one EU country you have a lot of freedom within the other EU countries. If you have a Portugal passport your child can go to school in Italy, you can have healthcare in Germany and if you so decide you can live in any other EU country.
Schengen access is also an important distinction when deciding between programs. Lets say you have an Iraqi passport and want to travel on vacation to the Schengen area. You would need to go through a multi step process to get the required visa , fees are applicable to this process and you could be denied entry by border authorities regardless (having a visa does not guarantee entry). See the graphic below to see the difference between the EU and the schengen area. There is a lot of overlap with a few differences
What Is Citizenship anyway? Citizenship refers to legal status within a country. Below are the 5 types of citizenship:
Family Citizenship by Descent: For example your Father is from Italy therefore you are entitled to have an Italian Passport
Citizenship by Birth: This type is applicable to the United States. If you are born in a country you are entitled to be a citizen of that country. Contrary to popular belief there are only about 30 nations in the world that grant citizenship for this reason.
Citizenship by Naturalization: Applies to people who have entered the country through legal means or have lawfully lived there for a mandated period of time. It is customary to take a test which demonstrates understanding of the nation’s laws, culture, history and language.
Citizenship by Marriage: Becoming a naturalized citizen by marrying an individual with citizenship.
Economic Citizenship (Citizenship by Investment): Citizenship by investment programs
I like to split the programs up into 3 categories because each type of program offers a different solution:
Citizenship by Investment
Residency by Investment
USA Programs (USA only has residency by investment)
Like we discussed earlier, citizenship by investment is when you make some sort of contribution to a foreign economy and get citizenship in return. The 5 Caribbean countries (Dominica, St.Kitts and Nevis, St.Lucia, Grenada and Antigua) are known to offer this avenue for citizenship. The value in these countries is Schengen/EU visa free access and proximity to the United States. To get citizenship in these countries you are usually paying for the passport by means of donation to the government or buy some sort of real estate investment.
I typically don’t recommend the real estate in the Caribbean countries because they are usually shares, are overpriced and most developers don’t have a buy back option for the investor which limits the exit strategy options. On top of all of that, there are additional fees and taxes. It is much cleaner to just do the donation.
St.kitts is the most popular because it has the highest number of visa free travel countries and is the oldest and most established program. These programs are good for people with passports that have sanctions or have instability within their home country need to get out quickly. The Caribbean programs are are also the cheapest and all of them are approved for Schengen travel.
With that being said, I am a Dominican citizen by descent. I have a lot of family there and love going there to visit. However, like most Caribbean countries, it is very slow and can get boring very quickly despite the beautiful beaches and weather. So be sure this is something you absolutely want if you are considering Caribbean passports as a Plan B.
The three remaining countries that offer the Citizenship by Investment program are Vanuatu , Malta and Turkey. As of February 2023 the EU announced a full suspension of Schengen access for Venatu passport holders (EU halts Vanuatu visa-free access.) This makes the passport much less attractive. Malta is a much more expensive option and has extremely long processing times and Turkey doesn’t have EU/Schengen access. It is also about 2x the price of most of the Caribbean programs.
Now different people value different things, but I find that the strength of travel a passport provides is usually the most important factor.
There are many residency by investment programs but I typically focus on Portugal because Portugal checks a lot of attractive boxes. Portugal has a low crime rate, great weather, relatively low cost of living, great food and a minimal physical presence requirement (5 weeks within 5 years). For the Portugal Golden Visa there are 5 investment options.
Real Estate (5 years) - This can range from 280,000EUR to 500,000EUR Mostly Commercial real estate is used for this investment. Residential property is only available in interior rural areas. (5-6 years exit strategy, most of the commercial real estate investments have an optional buyback example: The GV investor purchases the property for 300,000EUR. At the end of the hold period the investor can sell back the property to the developer for 300,000 EUR or hold it, or sell it on the open market)
Donation to arts = 250,000EUR
Venture Capital/Private Equity=500,000EUR (higher risk,)
Bank Account = 1,500,000EUR
Company Creation = 10 Employees (very difficult, huge liability , must pay salaries for employees)
There are a few exciting developments in the Portugal residency by investment market. I’m connected with a fund that offers digital asset exposure and through that has eligibility for the golden visa. However, if someone does not want to tie up 500,000EUR at risk for 5 year hold period I usually recommend the real estate option.
The Real Estate option is mostly commercial because residential must be in interior rural areas which has low density and low population (not a very desirable investment and more liability). Porto, Lisbon and recently Algarve (Wealthy Americans are spiking portugals algave housing market) have been the hotspots for real estate investments.
Real estate and venture funds depending on the risk appetite of the investor are the most popular avenue for residency. Donation to arts is literally a donation, no return on investment. Depositing into a bank account has a high capital requirement and has the same hold period as the other options. Company creation is extremely stressful, very expensive and has a ton of paperwork.
All of these programs are tools for different purposes. They won’t be around forever. Portugal has threatened closing its program many times. (Portugal to close its golden visa program). The best time to these programs is now while they’re open.
Below is a table that is extremely useful when comparing programs.
THE US of A: The United States has, in my opinion, the best pound for pound residency by investment program in the world and it is called the EB-5 Investment Visa. If you aren’t an American Citizen and are interested in becoming a citizen / getting a green card this program is for you.
History of EB-5:
1990 – EB-5 program is created
2008-2009- financial crisis drives expansion of the EB-5
2020-2021 - uncertainty of the program expiration
September 2021 - program is set to expire
March 2022 - EB5 program reauthorized until 2027
In March 2022, the program’s biggest change was the update to concurrent filing. Here is an explanation of what concurrent filing is:
EB-5 concurrent filing is like getting two things done at the same time to save time. Imagine you're in line to get a special ticket to get on a ride at an amusement park. Usually, you have to wait in one line to get the ticket, and then wait in another line for another ride you really want to go on. Waiting in two lines at different times would take a really long time. Concurrent filing is like a special pass that lets you wait in both lines at the same time. Instead of waiting in one line and then the other, you get to join both lines together. This makes the whole process faster.
That is by far the most attractive feature. Imagine you are a student and your going to graduate in a year and when you graduate your F-1 visa will expire or your in a program in the USA and at the end of the program your J-1 visa will expire. You want to stay in the USA so your parents make an eligible EB-5 investment and like magic you can stay in the country.
I’ve worked with someone that lost a job within the tech field and was here on a H-1B visa. It is very hard to find another job and one that will sponsor you in 60 days and he was forced to leave the country along with his family.
Why EB-5:
Ability to live and work in the USA
Once a US resident, investors can get public education for free and have a higher chance of attending an IVY league school. For a family of 3 kids, the investor could save upwards of $470,000 by obtaining an EB-5 visa.
Lower tuition rates if they are a local resident in a state —> Grants and Scholarships for being a U.S. citizen
Gain access to U.S. business opportunities
More certainty in the legislation. Currently the law is valid until 2027
No language requirement
Investment is an approximately 3-5 years and is PAID BACK after the end of the loan term
Foreign families with children under the age of 21should see this as an investment to come to the United States. As a permanent resident in the United States you can qualify for in state tuition, scholarships and grants. Here’s an example: UCLA in state total cost per academic year is $42,059 while the total cost for nonresidents is $76,259 , difference of $34,200. $34,200 x 4 years = $136,800.
In addition to potential savings, It is much easier to apply as a local student to go to grad school or the ivy schools. Outside of education you can enjoy retirement benefits, work anywhere, start businesses, etc.
The EB-5 program is an investment and not a donation. The total investment period is 3-5 years and you’ll receive your investment back.
The biggest barrier to entry for the EB-5 visa is that it is an $800,000 dollar investment. I’ve seen some projects offer bridge loans to the investor but 99/100 the investor must have $800,000+ obtained lawfully to begin the EB-5 process.
Due Diligence: There are a lot of shady actors in the business so asking the right questions and understanding the risks with a lot of projects is extremely important.
How long does it take for me to get citizenship?
Show me a detailed breakdown of the fees and payment timeline (we have these readily available)
Which country do you think is best? (Most agents will say the country they will get the highest commission from. Before you ask this question to understand why you want citizenship/residency abroad and which program sufficiently fills that need for you. If they answer without asking any questions, find another agent).
What tax liabilities will I face?
How do I ensure my money is safe during the process?
What is the renewal or maintenance requirements for this program?
Can citizenship be passed on to future generations?
What is the exit strategy for my investment?
Are there restrictions on selling the investment after citizenship is granted?
Is there a minimum holding period for the investment? What is the holding period?
Even though I said I don’t recommend Caribbean real estate to get citizenship that is not up to me. If you decide to go that route, ask how many of their clients resold their real estate shares and ask if you can contact that client to confirm.
Hope this helps. If you have any questions my personal email is:
jordancchaplin at gmail dot com
Thanks
Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are *opinions* written by an anonymous group of Ex-Wall Street Tech Bankers and software engineers who moved into affiliate marketing and e-commerce.
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Please can you clarify whether commercial real estate investment in Portugal is still an option as a route to Golden Visa. Article seems to suggest so but linked article suggests otherwise.
What is your recommendation for US citizens looking to diversify?