Global mobility has long been a must-have for wealthy investors, fueling demand for second passports, visas and citizenships. Liam Bailey asked three experts for their take on the latest shifts in the market.
On 17 February 2022, as Russian tanks and troops massed on the Ukrainian border, the UK government announced the immediate and permanent closure of its Tier 1 Investor visa scheme for foreign nationals.
Dramatic as it was, this announcement was just one change in a sector undergoing rapid growth and evolution. Speaking to three leading experts in the field it is clear that demand for mobility has expanded rapidly since the Covid-19 pandemic, and now covers a broader demographic including those seeking protection from arbitrary border lockdowns, or looking to work in another country.
NADINE GOLDFOOT Managing Partner, Fragomen UK
Covid led to huge growth in mobility requirements
The number of people who were suddenly able to do their existing work in a new country expanded rapidly. The “digital nomad” boom has brought many more people into the ambit of global mobility – and countries have responded by finding new ways to attract them.
Passive investment is out and active is in
This shift in demand has been reflected in a change in government objectives. Following the global financial crisis, housing busts in markets such as Spain and Portugal spurred property-led investor visa schemes. With stronger markets, countries are changing focus towards schemes that promote job creation, innovation and entrepreneurial activity.
Growth in nomadic workers will be constrained by tax rules and other considerations
While employees may be attracted to the idea of moving their laptop from a desk in Frankfurt to a café table in Lisbon, their employer might not be so keen. Freelancers and the self-employed have led the charge so far, with taxation complications,
social security and labour law considerations limiting the freedom of employed staff to join in. While destination countries are keen to work on simplifying tax rules, engaging outbound countries to co-operate will be more challenging.
The UK has hobbled itself, but not critically
The removal of the Tier 1 Investor visa needs to be understood as political theatre. The most recent iteration of the visa category was heavily regulated, with high compliance hurdles. That said, its removal fits with the shift to active categories. It
probably makes the UK somewhat less attractive to some investors, but the country still punches far above its weight in terms of attracting the world’s wealthy. Future changes to non-dom rules may have a more significant impact.
KRISTIN SURAK Associate Professor, London School of Economics
The pandemic made people question the assumption that mobility was assured
US citizens have a “good passport” with many travel privileges, but Covid threw these out the door. Suddenly, they faced challenges even to enter Europe. The result has been a huge increase in the number of Americans looking into investment migration options. If we look at demand globally, we see a shift in people’s time horizons as well, with many now looking for “medium-term” solutions, namely places where they may want to spend several months and that offer access to good
healthcare as well.
European and US visas are not the only options
Western schemes tend to dominate industry discussions, but other countries are becoming more important. In 2019, Malaysia’s investor visa was bigger than all European schemes combined. South Korean and Panamanian visa schemes are in high demand too, with both countries approving more applications than the EU powerhouses of Portugal and Greece. For citizenship, Turkey is the standout growth market with applications reaching nearly 1,000 per month during Covid.
True global mobility is a fantasy, but regional schemes are growing
The idea that we could ever see open borders at a global level is just not a possibility, due to the wealth disparities between countries. But at a regional level there is a growing drive to allow movement. The EU’s Schengen Zone might be the most high-profile example, but it is joined by similar cases elsewhere: ECOWAS in West Africa, CARICOM in the Caribbean, the GCC in the Middle East and Mercosur in South America. Could any of these expand? Possibly, although it’s easier to imagine Australia joining Schengen than a truly pan-global arrangement.
No one country has control over global immigration rules
As Vanuatu discovered recently, if compliance rules on your visa scheme become too lax, the EU can simply end visa-free travel and the value of your scheme plummets. But for the big players on the scene – the US and the EU – other geopolitical interests can play a role too: interestingly, neither has pressured Turkey over its popular citizenship-by- investment programme even though new Turkish citizens gain opportunities to access both places.
The Wealth Report 2023 : Introduction - "Recalibration"
