by The Caribbean has long been an attractive destination for the wealthy, thanks to its constant sunshine, clear blue seas and favorable tax regime – but citizenship on the islands is becoming increasingly difficult.
The minimum investment threshold to obtain Caribbean citizenship doubled to $200,000 (£157,990) at the start of July.
The change is part of the Caribbean islands wider plans to attract high net worth individuals who are serious about investing in the country.
It also aims to address European Union concerns that it is too easy for criminals to launder money, or for nationalities such as Chinese or Russians to obtain passports to travel visa-free to the continent because at the relatively low cost of citizenship.
Joe Rice, from investment migration advisory firm Global Citizen Solutions, said: “The islands need a particular type of investor. They are trying to attract someone who is not just investing to get a second passport but who wants to invest in the country itself, hopefully resettle, start a business and create jobs.”
There are five islands that offer Citizens by Investment (CBI) passport schemes – Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis and St Lucia.
Here’s what you need to know if you want to invest for Caribbean citizenship.
Why is Caribbean citizenship attractive?
One of the main attractions of Caribbean citizenship is that it offers visa-free travel to certain countries.
This could be helpful if you are traveling internationally for business, and also for Brits looking for easy access to the European Union and Asia.
All five of the passport schemes provide visa-free access to more than 140 countries such as EU members as well as Britain, Singapore and Hong Kong.
The Saint Kitts and Nevis passport is ranked 55th for mobility in the World Passport Index, the highest of the five programs among the Caribbean islands, providing access to 196 countries worldwide.
Being a Caribbean citizen also has plenty of tax benefits. You will not have to pay any taxes on capital gains earned in the Caribbean, and there is no inheritance tax. In addition, some islands such as Antigua and Barbuda and Saint Kitts and Nevis have no income tax.
Even if you have to pay tax as a citizen of one of the islands, the tax rates vary from 10pc to 35pc, so it may work out lower than if you were living in Britain.
How to get Caribbean citizenship
The CBI scheme was launched in 1983. There are a number of different ways to get your hands on a Caribbean passport.
You can donate to a government approved project, often in the form of bonds, or invest in real estate or businesses. The scheme in which you can invest will depend on the island of your choice.
Armand Arton, chief executive of immigration advisory firm Arton Capital, said: “Many islands offer separate funds designed to optimize where capital is spent for Caribbean citizens.
“Investors want to know that their money is going to the right place and that it is having a positive impact on society.”
For example, there is a sustainable island state contribution fund that wealthy people can donate to in St Kitts and Nevis, which supports increasing food production and developing the creative economy. Or some developments are permitted if you want to return real estate.
Mr Rice added that the real estate route provides a share instead of a luxury property or hotel, but there may be limits on how often you can stay.
He said: “You might be there for a week or two a year depending on the development, so it might not be the best option if you’re thinking of relocating.”
If you buy a house, there may also be limits on how long you have to wait for it to sell. For example, a property bought under the private house sale investment option in St Kitts and Nevis cannot be resold for seven years.
How the process works
You can’t wind up on a Caribbean island with a suitcase full of $250,000 in cash. Investment applications must be made through approved agents such as Global Citizen Solutions and Arton Capital.
Mr. Rice warned that this sector is open to scammers, so it is important to do your due diligence and check for evidence that the agent has worked in the Caribbean.
Approved agents will often be listed on each island’s own government website.
The agent will help with know-your-customer and anti-money laundering checks.
Mr Arton added: “This is to ensure that the Caribbean does not welcome any bad actors and that the schemes continue to be good practices.”
You will need to provide identification documents as well as evidence of the source of your wealth.
The agent can decide on the best island and scheme for your needs and submit an application. This will be reviewed by the country’s CBI unit, and the entire process usually takes three to nine months to complete.
When the application is approved in principle, the client is asked to make the necessary investment whether that is in real estate, incorporating a business or donating to a government fund.
Unlike residency schemes in some European countries, there is no requirement to stay on the island but it can help to access better tax rates.
In addition to the minimum investment, there will be agent fees to pay, administrative fees for the application and due diligence as well as the actual passport, which can increase the costs.
For example there would be a government fee of $30,000 for an individual applicant or $45,000 buying real estate in St. Lucia if he is bringing a spouse. There is a due diligence fee of $8,000 for the first applicant and $5,000 for additional family members, and it costs $500 per passport.
That equates to almost $60,000 in admin for a couple, on top of any agency fees and the minimal investment being made.
The best places to invest
This will depend on what you are looking for.
According to research by a Caribbean real estate brokerage, Agency, Grenada is one of the most affordable for property, with real estate typically costing $2,000 per square meter.
Antigua and Barbuda are among the most expensive islands at $5,600 per square meter.
Mr Arton said: “With so many different investment avenues available, the investor’s personal preferences tend to determine the best destination.
“One of the main reasons people might invest is to get a much-sought-after second home.”
Properties range from more affordable half-million dollar homes to ultra-rich exclusive getaways worth up to $50m.
He added: “While many of these properties may be unavailable for the most part, there is a much higher percentage of housing available at a lower price point, so investors are spoiled for choice and choosing a second home.”
Caribbean production
Brokers advise that the main reason for investing is not the return.
In some cases, for example if you support government programs, you may not get any financial return but the main reward is securing citizenship.
Mr Arton said: “Many investors see this as far more valuable than any financial return as it gives them and their children the ability to live and work without visas.”
On average property investment returns are at the 5-10pc mark, he said, adding: “The return is more of a bonus than the end goal, and Caribbean citizenship is a real incentive to invest.”
