The Importance of Timing in Citizenship by Investment Programs: When to Apply?

Applying for a citizenship by investment is a complicated process, and there are a lot of moving parts to be aware of. It’s necessary for applicants to thoroughly research prospective countries, and this involves checking the relative tax laws, finding out how much you’re likely to spend both in terms of investment and associated fees (legal, administrative etc.), and ascertaining precisely how long the entire process is going to take.

It is this last point that we’ll be examining today. The process of obtaining citizenship by investment can be an involved and time-consuming one, and so it’s better to act sooner rather than later. Not only does this ensure that you’ll obtain citizenship in a timely manner, it also acts as insurance against unforeseen changes to the CBI program of the company to which you’re applying, meaning that you won’t be caught short should they later change their requirements.

However, that is balanced by the importance of ensuring that you do your research thoroughly, and that you do not rush through processes before you fully understand them. This tension between thorough research on the one hand, and not dragging one’s feet on the other, defines the application process for a lot of people.

With that in mind, let’s take a look at the importance of timing in CBI programs.

There are a few factors that go into the decision of when to apply for your second passport. Let’s examine each of them in detail.

How much Benefit will a Second Citizenship be to you and your Family?

This question is, for most high-net-worth individuals, an easy one to answer. A second citizenship is almost always of benefit to those who acquire one, particularly if your home country has an unfavorable tax regime or a passport that doesn’t afford you visa-free access to quite as many countries as you’d like.

The only instance in which a second citizenship might not be of immediate benefit, in fact, is if it’s not presently within your budget. Which leads us to our next question…

Do you have the Funds?

One of the biggest factors in deciding whether or not to apply for a citizenship by investment program is, of course, the investment itself. It goes without saying that the investment required is never unsubstantial, and you can expect to be required to invest at least USD $100,000 before receiving your second passport.

For many high-net-worth individuals, this is not much of a consideration. However, some applicants do not possess quite so much in the way of liquid assets, and will need to carefully think about when to make their application.

Simply put: you should apply for a second passport as soon as you are financially stable enough to make the application. It’s best not to apply, for instance, if your personal financial situation is precarious, and it’s possible that you will not have the necessary funds when it comes time to send them to the relevant organizations. Ensure that you have enough money put aside for the application – not only for yourself, but for any dependents.

Remember, also, that it’s not as simple as having the investment funds put aside. There are several associated fees that go along with a CBI investment.

For instance, applying for the Saint Kitts and Nevis CBI program involves a due diligence fee of $7500 for the main applicant, and $4000 for additional dependents aged 16 or older, and fees for application and document processing. Finally, additional fees will apply should you wish to accelerate your application. All of this adds up, and can easily take your application cost (including the investment) north of $200,000.

Ultimately, it’s a case of getting your ducks in a row, looking at the funds you’re going to need that will cover all of your family members, and making the application.

How Many of your Dependents are Minors?

You’ll note above that due diligence fees for Saint Kitts and Nevis apply to dependents aged 16 or older (note: as of July 1st 2023, this will be changed to 18 or older). This, naturally, implies that dependents younger than the age in question will either be completely exempt from fees, or will pay a reduced amount.

The fact of the matter is that both are true. Due diligence fees often do not apply to minors, and other fees are quite often 30-40% cheaper than for older dependents. What does this mean for you? If any of your children are approaching the age of majority, then it’s best to get your application in before they cross that threshold. The amount of money you can save is likely to be considerable, and can make your application that much more affordable.

Note: the age of majority is determined differently in different jurisdictions, and it’s worth checking before going ahead with your application.

Are the Guidelines, Rules and Regulations going to Change?

An important consideration to any citizenship application is whether or not you can expect changes to be made to the program’s admission requirements in the future.

To return to the example of Saint Kitts and Nevis: the popular Caribbean nation is, until July 1st 2023, offering a limited-time offer with extremely generous requirements. All contributions to the SGF (Sustainable Growth Fund) have been reduced by a flat $25,000, and all applications are being processed in 60 days rather than 90.

After that point, however, the contributions will revert to the previously required amount, and applications will similarly revert to the former 90-day period. It’s possible to still get your application processed in 60 days, but this will involve extra fees for expediting the application.

This is only one example, of course, but the point stands: CBI programs are not set in stone, and they frequently change their requirements and fees. You may be looking at a very attractive CBI program today, and have the funds ready to go – but that could all change tomorrow, and you could find yourself several tens of thousands of dollars short of the requisite amount.

All of this, therefore, makes for a compelling reason to make your application sooner rather than later, and take advantage of potentially lower fees and required contribution amounts.

Have you done the Necessary Research?

The above advice may very well have you pulling the trigger on the first half-attractive CBI program that you come across. But hold off before making that application and depositing non-recoverable contributions – it’s important to consider your options first.

There are a good deal of CBI programs out there, and some are bound to be more suitable for you and your family than others. Before making any irrevocable decisions, then, you might want to consider:

Location

Though it’s not necessary to actually reside in many countries that offer CBI programs, it’s nevertheless an important factor if you plan to, say, purchase a residential property there, and you intend to spend at least part of the year there.

With that in mind, Caribbean countries are always an attractive option – particularly given how many of them offer citizenship-by-investment programs. With very attractive weather, beautiful scenery and affordable prices, countries such as Saint Kitts and Nevis, Antigua and Barbuda and Saint Lucia can make for excellent home bases from which to explore the rest of the region.

However, it could be that you’d rather be located somewhere in Europe. In this case, Turkey and Malta both make for excellent CBI options – do be warned, however, that such high-value locations carry commensurately hefty administrative fees and minimum investment amounts.

Passport Strength

One of the biggest considerations for any second citizenship is how useful your new passport is going to be. Visa-free (or visa-on-arrival) access to desirable countries such as the US, UK, Hong Kong, Singapore and the Schengen Zone countries is obviously very attractive, and should always be sought after. You should always, then, research which destinations you’ll be able to visit with your new passport.

Tax Regime

Trumping perhaps even passport strength in importance is the tax regime of your new home. Can you expect inheritance and capital gains taxes? Are you liable for tax on earnings abroad? What sort of tax can you expect on domestic income and profit?

All of these are typically extremely important questions for high-value individuals who are likely trying to escape draconian tax policies in other countries, and it’s important that you do your due diligence on this front.

All of the above means that it’s important to do your research before making any final decisions. However, this research can realistically be done in a day or two – don’t let it hold you back from choosing your new home as quickly as possible!