A flurry of European countries have been rushing to make it
easier for foreigners to get temporary residency—with a path to permanent
residency and, in many cases, eventual citizenship—by investing a certain
amount in their real-estate markets or certain other assets. For some countries, the financial crisis has
triggered the launch of residency offers for investors, sometimes referred to
as golden visas. One example is Spain, where house prices took a beating during
the financial crisis and have since recovered somewhat but remain below their
levels before the crisis.
Residency laws differ widely from country to country, so
investors need to investigate carefully before deciding to move. Embassies and
consulates can provide direction, as can several firms whose business it is to
advise those considering a move. But here’s an overview of some of the most
important issues for investors to consider.
Know Your Taxes
Moving abroad can lower your taxes, but taxes, like
residency rules, vary widely. Americans with residency status who have no
income linked to the U.K. economy owe no income taxes in the U.K. They only
have to pay federal income taxes in the U.S., a boon for those who had paid
state income tax. But the minimum investment for a golden visa in the U.K. is
£2 million, or about $3.2 million at current exchange rates. Portugal offers similar
tax treatment, although its minimum investment for a golden visa is much
lower—€500,000, about $625,000 at current exchange rates.
Switzerland offers residency to foreigners who agree to pay
a predetermined amount annually in taxes regardless of their income. As in the
U.K., the benefits are geared to the very wealthy—the annual tax varies by
region, with the lowest bill set at 250,000 Swiss francs, or about $260,000.
Work and Lifestyle
Most investors looking to relocate to Europe from the U.S.
want to have the right to work in Europe. But that may not be possible
immediately. No matter the location, there’s more to life than work and taxes
for most people. So it is advised for people to keep in mind that choosing a
country to live in will determine their lifestyle.
Choosing Property
Most countries allow foreign investors to choose from a wide
range of real-estate options, from a home for their personal use to commercial
properties like a hotel or office building. There are a number of websites that
display properties for sale, but the prices shown on some sites are routinely
higher than those quoted in the local markets. So he recommends that investors
visit the area they’re interested in to connect with local real-estate agents.
In timing a move, investors should keep in mind that
typically applicants for a golden visa must purchase real estate before
applying for a residency permit, and it usually takes from a few weeks to a few
months for permit applications to be processed.
Go Directly to
Citizenship
For those who have well over $1 million to invest, Malta has
an offer that gives investors a lot of flexibility. It takes one year to get
citizenship—not just residency—in this former British colony and current
European Union member after investing roughly €1 million, or about $1.25
million. And a citizen of any EU member state benefits from the right to move
and live in all 28 states.
But investors need to be careful about citizenship as on all
other counts. The U.S. generally allows people to retain their American
citizenship when they acquire citizenship in another country, according to the
U.S. State Department. But some countries where investors might want to live
restrict dual citizenship.
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