By Burcu Arik
ISTANBUL
The number of high net-worth Turkish individuals looking for a second passport through investment has increased 100 percent over the last three years, a recent report has revealed.
But what does 'citizenship by investment' stand for? Anadolu Agency asked experts and searched for the countries which offer the change of a second passport – if someone has the cash.
The term, also known as 'economic citizenship' or 'investment immigration', happens when a country gives citizenship in return for bringing business or purchasing real estate.
According to Tolga Habali, director of Henley & Partners Turkey -- an international company that advises clients on the best places to invest and get a passport -- second citizenship is a growing need.
"The world has experienced globalization of goods and services as well as the globalization of capital; today we have seen the globalization of human beings which makes second citizenship a must," Habali tells Anadolu Agency.
Habali says that, according to Henley & Partners' index, applications for second-citizenship programs increased 100 percent in Turkey over the last three years.
"There are many good reasons why you should make an application for a second citizenship program," Habali says.
The programs are aimed at wealthy individuals and families who want to secure themselves and enjoy freedom of travel, tax benefits and investments and business opportunities in offshore markets.
According to Habali, the motivations of individuals in Turkey are no different: "Consequently, it is a big gain to create alternatives in every aspect."
Visa-free travel is shown as the key reason for the increasing number of applications for citizenship by investment programs.
Turkey has been struggling with the European Schengen and U.S. visa requirements on its citizens for many years.
However, Turkish people have never been so close to benefiting from visa-free travel to Europe's Schengen area – possibly starting in June 2016 as part of a recent talks between Turkey and the European Union).
According to European Stability Initiative (ESI), up until the 1980s Turkish citizens could travel without a visa to all Western European countries except Greece.
After the 1980 military coup in Turkey, these countries introduced a visa requirement for Turkish citizens. With the establishment of the Schengen zone in the 1990s, the visa requirements became common EU policy, the ESI says.
Experts across the world also say instability and security issues are key factors motivating people to get citizenship by investment.
Many countries, especially in the Middle East and Europe, are struggling with a surge in refugees and terrorism.
Due to wars both in Iraq and Syria, there is concern over increasing crime, terrorism, foreign fighters and other extremist organizations both in Turkey and Europe.
More than one million refugees arrived in Europe last year, fleeing Syria, Iraq and parts of Africa.
Released by Arton Capital, a global financial advisory firm for investments, a 2014-report titled says that around 60 percent of all wealthy second-citizenship applicants come from countries in the Middle East.
According to Habali, countries which legally have economic citizenship programs are Malta, Southern Cyprus, Austria; Antigua & Barbuda, St Kitts & Nevis, Dominica, Grenada and St Lucia in the Caribbean.
"Malta, Antigua, and Dominica are the most popular countries among citizenship-by-investment programs. But the mobility from Turkey has mostly turned to Malta recently," Habali says.
He says that Malta – an EU member – is the most demanded country among the Turks “as Maltese citizenship gives you the right to live and work anywhere in the European Union and to travel visa-free to the United States," Habali says.
However, Malta is the most expensive country in the program. Henley & Partners' Visa Restrictions Index says that a Maltese passport gives you access to Switzerland and visa-free travel to 166 countries.
But the cost of a Maltese passport is over $1.55 million plus fees, according to H&P. The cost varies from company to company.
By far the cheapest deal for citizenship is on the tiny Caribbean island of Dominica which requires making an economic contribution to the country, according to Habali.
"The second passport from Dominica will cost a single applicant about $150,000 after 4-6 months. A travel document from Dominica gets you visa-free travel to many European countries, including the U.K.," he says.
However, Habali says that contrary to general belief, many countries like Canada, the U.S., the U.K., Spain and Portugal do not offer citizenship by investment programs.
"We need to make a distinction here. The aforementioned countries have only immigrant investor or Residence by Investment programs offering applicants temporary or permanent resident status, and not the citizenship.
"You can only get citizenship [from these countries] if you receive first an immigrant statusor permanent residence permit and live in those countries for many years and fulfill residency obligations ," he says.
To be a citizen of Canada, physical presence is required.
According to the Canadian Citizenship Act currently, after you get a immigration status, you have to live for four years (1,460 days) out of six years for citizenship eligibility while the U.S. requires around 3 years physical residence out of five years.
"An economic-citizenship program is different than those programs. You can enjoy the second passport opportunity with no residency requirements," Habali says.
However, passports for sale have also raised security concerns among European Union member states.
According to Habali, the governments offering citizenship / passport by investment not only after the money.
They have strict due diligence process and questioning source of wealth, source of funds and conducting personal background checks.
When Malta firstly announced proposals to start selling passports in 2013, many European politicians accused the tiny island nation of selling EU citizenship.
Some politicians called the programs "a clear abuse of EU citizenship and Schengen rules" while some of them shouted that "citizenship must not be up for sale".
Even the European Parliament held a debate on the program in 2014.
The outcries made the Maltese government temporarily halt the law's implementation in 2014 and review its requirements. But Malta has defended the program, saying "it is aimed at affluent people in order to boost the country's economy."
The 2014 Arton Capital report shows that the average net worth of a second-citizenship applicant is well above the global average for wealthy individuals.
Applicants have an average net worth of $205 million, compared to the global ‘ultra-high net worth’ average of US$135 million, the report says.
