Citizenship by Investment” (CBI) and Residence by Investment (RBI) schemes are being offered by a substantial number of jurisdictions for foreign individuals to obtain citizenship or temporary or permanent residence rights on the basis of local investments or against a flat fee.
OECD has published list of 21 countries offering CBI/RBI schemes which could be used to circumvent reporting under the Common Reporting Standard (CRS), after examining over 100 countries offering golden visa and citizenship schemes.
However, the most popular golden visa programs offered by Portugal, Spain, Greece, Latvia etc are spared and not blacklisted by OECD
- Portugal
- Spain
- Greece
- Latvia
- United Kingdom
- Ireland
- Netherlands
- Italy
- Bulgaria
- Turkey*
- Jordan
- Luxembourg
- Thailand
- United States
- Canada
- Australia
- New Zealand
* Citizenship by investment
OECD further clarified that
Not all RBI/CBI schemes present a high risk of being used to circumvent the CRS. Schemes that are potentially high-risk for these purposes are those that give a taxpayer access to a low personal income tax rate of less than 10% on offshore financial assets and do not require significant physical presence of at least 90 days in the jurisdiction offering the CBI/RBI scheme. This is based on the premise that most individuals seeking to circumvent the CRS via CBI/RBI schemes will wish to avoid income tax on their offshore financial assets in the CBI/RBI jurisdiction and would not be willing to fundamentally change their lifestyle by leaving their original jurisdiction of residence and relocating to the CBI/RBI jurisdiction.
Individuals may be interested in these schemes for a number of legitimate reasons, including the wish to start a new business in the jurisdiction, greater mobility thanks to visa-free travel, better education and job opportunities for children, or the right to live in a country with political stability.
At the same time, information released in the market place and obtained through the OECD’s Common Reporting Standard (CRS) public disclosure facility, highlights the abuse of CBI/RBI schemes to circumvent reporting under the CRS.
OECD has recommended financial institutions opening bank account to raise questions such as:
- Did you obtain residence rights under an CBI/RBI scheme?
- Do you hold residence rights in any other jurisdiction(s)?
- Have you spent more than 90 days in any other jurisdiction(s) during the previous year?
- In which jurisdiction(s) have you filed personal income tax returns during the previous year?
