Citizenship versus residency: What is the difference?

shutterstock_132892682 smallJames Bowling, CEO of Monarch&Co, discusses differences between citizenship and residency programmes, and highlights the benefits of both

Many people are looking to hedge their lifestyles by applying for a second residency or citizenship. Countries across the globe, from Malta and Portugal to Mauritius and even the USA, are offering residency and citizenship programmes through which foreigners can buy a citizenship or residency in that country, either through real estate investment or business investment.

James Bowling, CEO of Monarch&Co - a market leader in facilitating residence, property and investment options in hand-picked territories around the globe – points out that the type of investors who are attracted to these programmes are those who either want to move to another country immediately or reserve the potential to move at very short notice.

“One of the greatest advantages of investing into a residency or citizenship programme is that applicants don't have to emigrate to enjoy the lifestyle and financial benefits, and can receive citizenship in as little as three months”  Bowling explains. Other advantages include the travel benefits offered by some of the destinations. “Many of our clients incur huge travel inconveniences when travelling abroad owing to the conditions set on them by virtue of the passport that they carry.  Visa applications are both costly and time consuming and generally an irritating nuisance.  Through residency and citizenship programmes, investors can gain travel benefits through obtaining another residence or citizenship that has fewer travel restrictions and visa requirements.”

Bowling also points out that by gaining a second residence or citizenship, investors are also able to enjoy huge tax breaks. “The extent of these benefits would depend on the new jurisdiction’s offering and incentives as well as where the client makes their primary tax residence.  The purposes of this planning could be either personal or corporate or both,” he says.

“Some investors are also attracted to residency and citizenship programmes for the opportunity to improve their lifestyles through better access to basic services such as health and education as well as more select criteria such as sporting facilities, natural environment and the like.”

So how do permanent residency and citizenship differ? Bowling explains that permanent residency refers to a person’s visa status.  “By achieving permanent residency, the person is allowed to reside for as long as the validity of the residency within a country of which he or she is not a citizen.  A person with such status is known as a resident or permanent resident of that country. Resident permits are issued for migrants who meet certain criteria and its validity is time based.”

Bowling notes that depending on the client’s country of citizenship and the country where permanent residence is obtained, benefits vary and can include travel benefits, a property investment and/or a holiday home, an immigration destination, a new tax jurisdiction, an improved personal and corporate tax exposure, new company structures, estate planning benefits and lifestyle security.

By obtaining citizenship in another country, the investor becomes a citizen of that country which entitles them to carry that country’s passport.  “Depending on the countries involved, the investor will be able to keep their existing citizenship and passport and thus the new passport becomes their second passport.  This is why these programmes are often referred to as second passport programmes,” Bowling explains.

In addition to the benefits of permanent residence programmes, citizenship programmes can also offer no restrictions on the time allowed to visit or leave the country, no annual commitments in order to maintain citizenship status, further improved travel benefits and a complete lifestyle hedge.

While a residency or citizenship investment can be a great option, Bowling points out that there are many issues to consider when planning which residence or citizenship programme would be the best option for an investor with a particular set of needs.

“The first port of call,” says Bowling, “would be to establish the reasons for wanting a citizenship or permanent residence.” He lists some issues investors should think about when considering a residency or citizenship in a new country:

“There are several key advantages to participating in residency and citizenship programmes,” says Bowling, “which are ultimately designed to enhance the investor’s portfolio and quality of life.” However he cautions investors looking into citizenship and residency programmes to only use the services of a reputable company that has a solid track record and the necessary expertise.

For more information contact:James Bowling at Monarch & Co on 011 883 9018 or visit www.monarchandco.com