In this article, we will list and explore the top 15 CBI programs for tax benefits. You can skip our detailed analysis and go directly to our list of the Top 5 CBI Programs for TaxBenefits.
Citizenship by Investment (CBI) programs provide individuals with the opportunity to obtain a second citizenship in a foreign nation by making a qualifying investment. Some of the best CBI programs are attractive not only for the prospect of global mobility and expanded business opportunities but also due to the potential tax advantages they offer. These tax benefits often encompass lower personal income tax rates, exemptions on foreign-source income, as well as the absence of capital gains and inheritance taxes.
CBI programs typically involve making a qualifying investment, such as contributing to a national development fund, purchasing real estate, or other approved investment methods. Following the investment, applicants undergo a comprehensive vetting process to ensure they meet the program's eligibility criteria.
Exploring Second Citizenship as an Alternative Investment
High Net Worth Individuals (HNWIs) and Ultra High Net Worth Individuals (UHNWIs) are well aware of the importance of spreading their investments across a variety of asset classes and geographical regions to reduce risk. This strategy involves allocating funds to alternate investments such as stocks, bonds, real estate, and various financial instruments.
According to The Cerulli Report 2022, in 2020, HNWIs had around 7.7% of their portfolios allocated to alternative investments. However, as of 2023, this allocation has increased to an average of 9.1%, and financial advisors predict it will further rise to 9.6% by 2024. There are several compelling reasons behind the inclusion of alternative investments in client portfolios, with portfolio diversification (50%) being a key factor in reducing volatility, along with the pursuit of new growth opportunities (50%).
The report also indicates that HNWI practices are determined to increase their exposure to alternative investments across various strategies over the next two years. Private equity is at the forefront, with 50% of advisors and executives planning to enhance their allocations, followed by private real estate (45%) and direct investments/co-investing (32%). An overwhelming majority of surveyed HNWI practices (94% or more) anticipate either maintaining or expanding their positions in all types of alternative investment opportunities, excluding hedge funds.
Citizenship by investment combines the advantages of acquiring citizenship or residency with the potential for financial gains, when primarily opted through real estate investments. This approach melds aspects of immigration and investment strategies, with some degree of overlap, even though it may not fit neatly within the conventional category of "alternative investments" in the financial industry. However, its categorization can vary depending on the context, as it effectively serves both purposes concurrently.
Tax Efficiency via Citizenship by Investment
Beyond diversifying wealth, HNWIs and UHNWIs are now highly attuned to the profound impact of taxation on their fortunes. They diligently seek tax-efficient strategies that enable them to minimize their tax liabilities while maximizing their financial gains.
Many CBI programs open up a pathway to secure favorable tax treatment, granting access to more advantageous tax regimes that encompass policies aimed at reducing or entirely exempting income, capital gains, inheritance, and wealth from taxation.
By obtaining citizenship or residency in countries with favorable tax arrangements, HNWIs and UHNWIs can legally curtail their tax burdens. This strategic approach empowers them to structure their investments and income in a manner that mitigates the impact of high-tax environments in their home countries, effectively safeguarding and nurturing their wealth.
A selection of notable consulting firms that HNWIs and UHNW might find appealing are Verisk Analytics, Inc. (NASDAQ:VRSK), Booz Allen Hamilton Holding Corporation (NYSE:BAH), and Equifax Inc. (NYSE:EFX). These consulting firms are recognized for their expertise in providing tailored solutions and financial insights to high-net-worth clients.
On October 19, Verisk Analytics, Inc. (NASDAQ:VRSK) announced that it has introduced a Climate Risk Dataset to its sustainability and resilience analytics suite. This dataset offers valuable geospatial insights into a critical challenge faced by the global business community. Developed by Maplecroft, a subsidiary of Verisk Analytics, Inc. (NASDAQ:VRSK), this tool helps insurers, corporations, banks, and investors identify climate-related risks across their global operations and portfolios.
Booz Allen Hamilton Holding Corporation (NYSE:BAH) unveiled fresh insights from its AI portfolio on October 11, reaffirming its prominent position in implementing AI solutions for the federal government while expediting the achievement of essential mission goals through an innovative set of AI capabilities. Booz Allen Hamilton Holding Corporation (NYSE:BAH) has expanded and concentrated its AI portfolio to introduce new, tailored AI technology stacks that enable clients to attain their mission objectives with increased speed, cost efficiency, and scalability at the enterprise level.
On August 7, Equifax Inc. (NYSE: EFX) officially announced the finalization of its acquisition of Boa Vista Serviços, the second-largest credit bureau in Brazil. This strategic acquisition not only strengthens Equifax Inc.'s (NYSE: EFX) presence in the Brazilian market but also provides Boa Vista Serviços customers with access to a broad spectrum of Equifax's international capabilities and innovative cloud-based solutions.
With this context, let’s now explore the15 best citizenship by investment programs for tax benefits.
Top 15 CBI Programs for Tax Benefits
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Methodology
To identify the Top 15 CBI programs for tax benefits, we analyzed data from Trading Economics and KPMG, factoring in personal income tax percentages. We also conducted independent research for Vanuatu, which wasn't included in the initial data. The countries with the lowest tax rates were ranked highest, and in case of ties, we prioritized those with lower investment costs. We utilized investment amounts from our article 15 cheapest Citizenship by Investment programs in 2023 (we conducted separate research for Malta and Jordan as the information pertained to the top 15 only).
Top 15 CBI Programs for Tax Benefits
15. Turkey
Personal Income Tax: 40%
Minimum Investment: $400,000
Turkey imposes taxes on its residents based on their global income, while non-residents are only taxed on income originating within Turkey. The specific tax rates and rules are contingent on the type of income, its source, and the individual's tax residency status. A key component of taxation in Turkey is the income tax, which follows a progressive scale ranging from 15% to 40%. It applies to various income categories, including employment, business profits, rent, interest, dividends, capital gains, and other sources. These income tax rates and brackets are adjusted annually to reflect inflation. Furthermore, taxpayers may be eligible for deductions and allowances, such as personal and family allowances, social security contributions, health insurance premiums, and charitable donations.
14. Malta
Personal Income Tax: 35%
Minimum Investment: $370,000
Individuals who reside in Malta are liable to pay taxes at progressive rates. Married individuals can choose to apply the single tax rates, while parents have the option to utilize the parent rates. Non-resident individuals are also subject to the progressive tax system in Malta, where tax rates range from 0% to 35%. The initial €700 ($750) of income for non-resident individuals is tax-exempt. Subsequently, they are subject to a 20% tax rate on the next €2,400 ($2,500), a 30% tax rate on the following €4,700 ($5,000), and a 35% tax rate on the remaining income.
13. Dominica
Personal Income Tax: 35%
Minimum Investment: $100,000
With a progressive income tax scale ranging from 15% to 35% for tax residents, Dominica's taxation system distinguishes between residents and non-residents too. Tax residents enjoy the benefit of a standard tax deduction of EC$30,000 ($11,100), which comes with no attached conditions. This deduction effectively reduces their tax rate by 8 percentage points to 22%. Non-residents, however, are subject to an indirect withholding tax rate of 15% on specific financial aspects, such as dividends, interest earned from deposits, rental income, and royalties. Dominica does not impose capital gains taxes on the sale of real estate and does not have property or inheritance taxes in place.
12. Jordan
Personal Income Tax: 30%
Minimum Investment: $750,000
Jordan employs a tax system that combines both direct and indirect taxation, overseen by the Jordanian Tax Department responsible for tax collection and enforcement. In terms of direct taxes, Jordan also operates a progressive income tax system with rates ranging from 5% to 30% for individuals and 20% for corporations. Social security contributions are mandatory for both employers and employees in Jordan. On the indirect taxation front, Jordan utilizes a sales tax system resembling a value-added tax (VAT) with a standard rate of 16% and also imposes customs duties on imported goods.
11. St. Lucia
Personal Income Tax: 30%
Minimum Investment: $100,000
Saint Lucia provides a range of tax advantages for both individuals and businesses. With a progressive tax system, St. Lucia does not impose taxes on capital gains or inheritance. Furthermore, businesses enjoy exemptions from taxation on capital gains, foreign income, and inheritance. Saint Lucia has established itself as an attractive location for individuals and companies looking to enhance their financial prospects.
10. Grenada
Personal Income Tax: 28%
Minimum Investment: $150,000
Grenada takes 10th place on our list of top 15 Citizenship by Investment programs for tax benefits. Grenada stands out as a unique financial haven with its favorable tax policies. This Caribbean nation has garnered recognition for its favorable tax policies, including zero taxes on capital gains, global income, and inheritance.
9. Cape Verde
Personal Income Tax: 27.5%
Minimum Investment: Approx. $220,000
Cape Verde levies taxes on income, property, and goods and services. Personal income tax rates in Cape Verde are progressive, with higher earners subject to a higher tax rate. Property tax is also imposed on real estate holdings, with rates varying depending on the property's value. The country offers various tax incentives and exemptions to promote foreign investment and economic development.
8. Egypt
Personal Income Tax: 25%
Minimum Investment: $250,000
The Egyptian tax system imposes individual income tax on the total net income of residents, covering income earned both within and outside Egypt if their primary commercial, industrial, or professional activities are based in Egypt. Additionally, non-resident individuals are subject to taxation on the income they earn within the country. The Egyptian tax system follows a progressive scale, with rates varying from 0% to 25%.
7. Cambodia
Personal Income Tax: 20%
Minimum Investment: $245,000
Cambodian residents are required to pay salary tax on their global income, whereas non-residents are only taxed on income earned within Cambodia. For residents, the salary tax rates are progressive and vary from 0% to 20%, depending on their monthly salary. Non-residents, on the other hand, are subject to a flat tax rate of 20% on their Cambodian-sourced income.
6. Armenia
Personal Income Tax: 20%
Minimum Investment: $150,000
Armenia's tax system comprises various types of taxes that contribute to the country's revenue and public finances. Income tax in Armenia is progressive, with different tax rates for various income brackets, and individuals are generally subject to a flat rate for their personal income. Armenia has worked to simplify its tax code and improve tax administration to create a more favorable environment for businesses and investors.
