An International Comparison of Investor Visas

Introduction  

Investment Visas have become a popular option for governments to attract wealth from overseas, in order to expand their own economies. Each country has their goals in attracting wealth, such as adding liquidity to their market, increasing real estate prices or creating new jobs. In the United States the EB-5 program, introduced in the 1980s, has seen increased demand since its inception. So much so that quota totals are being exceeded for Chinese EB-5 applicants and may result in, for the first time in the program’s history, a visa retrogression. Other countries have introduced similar programs, with a wide variety of minimum investment requirements, qualifications, and residency benefits that address the needs of each individual country.

This article will compare 11 countries: the Cayman Islands, St. Kitts and Nevis, Hong Kong, Singapore, England, Ireland, Portugal, the United States, Canada, New Zealand and Australia. Their investor programs vary widely in all aspects and in relative success.  These counties will be compared according to their minimum investment and job requirements, residency requirements and benefits, and processing times. Lastly, this article will offer improvements to the EB-5 program, as much can be learned by comparing the EB-5 program to other countries’.

Minimum Investment: Passive and Active 

The minimum investment in nearly all investor visas depends on the type of investment one intends to make. Basic qualifications also greatly vary. They typically require that the funds were collected legally, that the investor be experienced in business, that the investor demonstrate a sound business plan and many require that the investment be made prior to or at the time of application. Investments are also typically divided into either an active or passive investment types and the minimum investment often depends on the individual’s choice between these two options. What types of investments constitute an active or passive investment varies in each country.

Generally, passive investments do not require that the investor maintain oversight or directional control of the entity of which he/she is investing in. The investor receives a return from the entity as a whole, collecting earnings from his/her investment. Examples of passive investments range, from stock to real estate. Conversely, an active investment indicates that they investor will maintain direct control into the operations of the business. This allows the individual, ultimately, greater control over the kinds of returns they will see from their investment. Active investments often manifest themselves as private business of which the investor also manages. To what extent an investor must exercise control over a business varies. The EB-5 program allows for investors to be on the corporate board of directors or to become a limited partner, demonstrating the variation of what can be considered an active investment role.

Certain programs have only either active or passive options. Furthermore, investment minimums may vary within those options depending on the details of each government’s program. In the United States investors can choose from two options; a passive investment into a Regional Center (approved by the USCIS) or an active investment. Both options require a minimum $1,000,000 investment or $500,000 if the investment is in a Targeted Employment Area (TEA). The United States’ $1,000,000 active investment places it competitively amongst the countries analyzed in this article. New Zealand offers an Investor Plus visa which, for 10 million New Zealand ($7,900,200 USD), waives other requirements compared to their investor visa. Canada’s investor program requires 1.6 million ($1,433,267.98 USD) and Australia requires 1.5 million ($1,314,930.00 USD). Figure 1 demonstrates the highest minimum totals for 7 of the 11 countries discussed here, and whether that investment option is active, passive or both.

Figure 1

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These totals do not represent the minimum total for the 11 countries of this article. Rather these investment totals explicate the most expensive minimums and option from each country. For example, New Zealand offers two options for Investors; the Investor Plus program, with a minimum investment total set at 10,000,000 and a regular investor option, with a minimum investment set at  1.5 million New Zealand ($1,179,675.00 USD). Figure 2 lays out the cheapest minimum investment option from each country, and whether that investment is either passive or active.

Figure 2 

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Active investment options, on the whole, are cheaper than their passive counterparts, and typically, countries offer an investor choice: a cheaper, active investment option and a more expensive, passive option.

Active investment options, on the whole, are cheaper than their passive counterparts, and typically, countries offer an investor choice: a cheaper, active investment option and a more expensive, passive option.

Job Creation

Many Investor visas also require that the new business enterprise create jobs, legally employing citizens (or those authorized to work) of that country. The EB-5 program necessitates that the investor directly employs 10 individuals, or, in the case of the regional center, 10 active or indirect jobs. These minimums vary and only occur in cases of active investment. As previously expressed, many countries have no active investment option or offer both. Figure 3 outlines which countries have job creation stipulations, the minimum jobs needed and any related time limits for the implementation of those jobs.

Figure 3

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The United States requires the most stringent job creation stipulations amongst the countries analyzed. While Portugal also requires 10 jobs created, Portugal’s cheapest investment option allows the investor to purchase real estate, which as a solely passive investment, creates no jobs. Avoiding this stipulation of job creation is rather easy and a popular choice due to the lucrative nature of real estate investment. Other countries are more ambiguous about the number for job creation. Canada, for example, requires that the business must “create jobs for 5 years.”

Residency Requirements, Duration, and Benefits 

Residency requirements are those stipulations of how long the applicant must live in or visit the country throughout the visa. These minimum residency requirements widely range depending on each country. The EB-5 does not require that the investor stay in the United States for any particular amount of time but one can be considered to be abandoning their visa if they leave the country for a year or more, consecutively. Others stipulate a specific minimum number of days the applicant must be in the country. New Zealand’s Investor Plus require that the applicant spend 44 days in New Zealand in each of the last two years of the three-year investment period.

The total duration of each visa depends on the type of legal status one attains upon approval. The EB-5 program gives the investor a conditional 2 year green card with the opportunity, at the end of those two years, to apply for permanent lawful residency status. Most countries follow a similar model of between 1-6 years of temporary residence that can lead to permanent lawful residence and, subsequently, citizenship. Other models exist; in the Cayman Islands, the investor visa is valid for 25 years and can be renewed. In St Kitts and Nevis, one’s investment grants them instant citizenship. Figure 4 gives a succinct overview of some countries’ minimum residency requirements and the duration of their legal status.

Figure 4

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The residency benefits for each country can be hard to measure due to the specific wants or needs of the investor. For example, an investment in St. Kitts leads directly to citizenship and, with a St. Kitts passport, access to the EU as part of the Schengen area. However, investment options in St. Kitts, due to the small size of the islands, may not be appealing to certain investors. While the United States has relatively stringent minimum investment and residency requirements, the EB-5 has maintained its popularity throughout its history. Furthermore, foreign investors are often looking for safe investments, as they try to diversify their assets around the world, especially in cases where the political situation of their country of origin has been called into question. Thus benefits of each country are relative; Investors may be drawn to the direct benefits of each visa type or may have a personal preference for a specific country based on what the country itself offers, in terms of culture, security, education, economic market, and life style.

Processing Times 

Processing times shift and vary. In the United States, processing times are adjusted monthly, ranging in time depending on where one applies and the country of origin. How quickly one can have their application processed is of immense importance to the investor and can play a large role in what country they may invest in. Not all countries can anticipate how long the process will take, as they cannot be sure of how many applications they will receive. Canada, for example, recently began its Start Up visa category. As such, they do not have estimates for the amount of time processing will take. Figure 5 gives a picture of some processing times. Many countries do not give any information about the amount of time it will take to process their applications.

Figure 5 

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Conclusions 

Each investment program addresses the need of its own country. Portugal has responded to its real estate crisis of the last decade by promoting an investor program that encourages foreign investment into real estate. Other countries are concerned with drawing outside capital or bolstering certain sectors of their economy through passive capital investments. In the United States, the EB-5 program intends to create more jobs and new businesses that will employ more Americans. Investment programs, when compared, can give a view into the economic needs of the country offering it

Improving the EB-5 program would not dramatically alter its emphasis on job creation, because in part, that is its intended purpose. Clearly the minimum investment totals for the EB-5 program are reasonable as they have not deterred foreign investment and the program has only grown since its inception. Thus, improving the program would require a stream lining of the application process and improving processing times, to more efficiently address the growing number of foreign investors. Furthermore, increasing quota totals would respond to the changing global economy and number of investors currently waiting to invest in the United States.

The United States appeals to foreign investors for a multitude of reasons, a primary one being security. While Hong Kong has had a reported 23,176 applicants for their investment program (as of June 2014), recent political developments in China have called into question the country’s stability, which will likely hurt their program. US democracy and common law system has contributed to its perception as a good place to invest. With this inherent advantage, the EB-5 program is most greatly improved by placing greater emphasis on bureaucratic efficiency and increased quota totals, rather than a major overhaul of the entire system.