US Edition
The Caribbean has long-been an attractive destination for the wealthy, given its constant sunshine, clear blue seas and favourable tax regime – but getting citizenship on the islands is becoming tougher.
The minimum investment threshold to get Caribbean citizenship doubled to $200,000 (£157,990) at the start of July.
The change is part of wider plans by Caribbean islands to attract high-net-worth individuals who are serious about investing in the country.
It also aims to address concerns from the European Union that the relatively low cost of citizenship has been making it too easy for criminals to launder money, or for nationalities such as the Chinese or Russians to gain passports for visa-free travel to the continent.
Joe Rice, of investment migration advisory firm Global Citizen Solutions, said: “The islands want a specific type of investor. They want to attract someone who isn’t just investing to get a second passport but wants to invest in the country itself, hopefully relocate, start a business and generate jobs.”
There are five islands that offer Citizen by Investment (CBI) passport schemes – Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis and St Lucia.
Here is 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 provides visa-free travel in certain countries.
That can be helpful if you are travelling internationally for business, and also for Britons looking to get easy access into 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 St Kitts and Nevis passport ranks 55th for mobility in the Global Passport Index, the highest of the five programmes among the Caribbean islands, providing access to 196 countries across the world.
There are also plenty of tax benefits to being a Caribbean citizen. You won’t have to pay any taxes on capital gains earned in the Caribbean, plus there is no inheritance tax. Additionally, some islands such as Antigua and Barbuda and St Kitts and Nevis have no income tax.
Even if you do have to pay tax as a citizen of one of the islands, tax rates vary from 10pc to 35pc, so it can work out lower than if you were living in Britain.
How to get Caribbean citizenship
The CBI scheme launched in 1983. There are a few different routes to getting your hands on a Caribbean passport.
You can make a donation to an approved government project, often in the form of a bond, or invest in real estate or businesses. The scheme you can invest in will depend on the island of your choice.
Armand Arton, chief executive of immigration advisory firm Arton Capital, said: “Many islands offer particular funds designed to optimise where capital is spent for Caribbean citizens.
“Investors want to know that their money is going to the right place and that it’s having a positive effect on society.”
For example, there is a sustainable island state contribution fund that wealthy individuals can donate to in St Kitts and Nevis, which supports increasing food production and evolving the creative economy. Alternatively there are several approved developments if you want to back real estate.
Mr Rice added that the real estate route provides a share in a luxury resort or hotel, but there may be limits on how often you can stay.
He said: “You may get to stay there for one or two weeks a year depending on the development, so it may not be the best option if you are thinking of relocating.”
If you do buy a home, there may also be limits on how long you need to wait to sell. For example, a property purchased under the private home sale investment option in St Kitts and Nevis cannot be resold for seven years.
How the process works
You can’t just turn up on a Caribbean island with a suitcase full of $250,000 cash. Applications for investment have to 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.
Each island’s own government website will often mention approved agents.
The agent will help with know-your-customer and anti-money laundering checks.
Mr Arton added: “This is to make sure that the Caribbean doesn’t welcome any bad actors and that the schemes continue to be a force for good.”
You will need to provide ID documents as well as evidence of your source of wealth.
The agent can help 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 typically takes between three to nine months to complete.
Once the application has been approved in principle, the client is asked to make the required investment whether that is in real estate, incorporating a business or by 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 access better tax rates.
As well as the minimum investment, there will also be agent fees to pay, admin charges for the application and due diligence as well as for the actual passport, which can bump up the costs.
For example a real estate purchase in St Lucia would have a $30,000 government fee for a single applicant or $45,000 if bringing a spouse. There is then an $8,000 due diligence fee for the first applicant and $5,000 for additional family members, and it costs $500 per passport.
That is almost $60,000 just in the admin for a couple, on top of any agency fees and the minimum investment being made.
Best places to invest
This will depend on what you are looking for.
According to research by Caribbean real estate brokerage The Agency, Grenada is among the most affordable for property, with real estate typically costing $2,000 per square metre.
Antigua and Barbuda are among the most expensive islands at $5,600 per square metre.
Mr Arton said: “With so many different investment avenues available, the best destination is usually determined by the personal preferences of the investor.
“Acquiring that highly sought-after second home in paradise is one of the main reasons why people might invest.”
Properties range from more affordable half a million-dollar homes to exclusive escapes for the ultra-wealthy worth up to $50m.
He added: “While many of these properties may be out of reach for most, there is a significantly higher percentage of housing on offer at a lower price point, so investors are spoilt for choice when selecting their second home.”
Caribbean yields
Brokers advise that the yield is not the main reason to invest.
In some cases, such as if you back government programmes, you may not get any financial return but the main reward is securing citizenship.
Mr Arton said: “Many investors find this to be much more valuable than any financial return as it provides them and their children with the ability to live and work visa-free.”
On average property investment yields are at the 5-10pc mark, he said, adding: “The yield is more of a bonus than the end goal, with Caribbean citizenship the real incentive for investing.”