Should HNWIs still go for citizenship by investment despite US crackdowns?

If you are a high-net-worth individual (HNWI), chances are good that you want your investments to pull double duty. The best of the ultra-rich get their hands on coveted art worth upwards of seven figures to play speculation games while benefiting from tax breaks. Another group has been getting their feet wet in citizenship-by-investment programs (CIPs), and this is especially true among high-net-worth foreigners.

Golden visas (another name for CIPs) make it a cinch for HNWIs to establish another home outside of their country of birth. We're talking about a viable route to a second, perhaps more powerful passport that will allow you to pass through many airports visa-free. Of course, such residency investment schemes have irked leaders in some circles, and that includes the U.S President Donald Trump.

It hasn't been long since the White House imposed bans or visa restrictions on a handful of countries that are well known for their golden visa programs. They're mostly in the Caribbean (think Saint Kitts & Nevis, Dominica, Antigua & Barbuda, Saint Lucia, and Vanuatu). We must say that there is still a bevy of other countries with vibrant Citizenship by Investment programs, and they haven't been banned.

Citizenship by investment is a program that facilitates the acquisition of second or dual citizenship for foreign nationals who invest, donate, or provide other financial contributions to the host country. The credit goes to the Caribbean island of Saint Kitts and Nevis, which had the first CIP up and running in 1984.

CIPs aren't exactly cheap. You must invest upwards of $500,000 in donations or qualifying investments, and the return beyond citizenship might not be that tangible. This raises the question: are CIPs still viable investment gateways for the rich?

Having a golden visa through CIP means a second, more powerful passport in your hands. Take a Maltese passport, for instance. It pretty much guarantees visa-free travel across the entire Schengen Area and upwards of 180 other countries.

For wealthy individuals from countries with weaker passports, this perk alone can justify the price tag. Business trips become simpler when you're not stuck waiting weeks for visa approval. Family vacations don't require mountains of paperwork. The freedom to hop on a plane and land in most major cities without red tape is worth its weight in gold for those who travel frequently.

Political stability isn't guaranteed anywhere, and wealthy individuals know this better than most. A second citizenship gives you a backup plan if things go sideways in your home country. It provides a second home where you can live, work, and own property.

This safety net matters more in regions prone to political upheaval or economic volatility. Having a place to relocate without having to seek refugee status or emergency visas provides peace of mind. You've already laid the groundwork for a smooth transition if the need arises.

Some countries that offer citizenship by investment also offer favorable tax regimes. Several Caribbean nations, for example, don't tax worldwide income, capital gains, or inheritance. Portugal has a Non-Habitual Resident (NHR) program that can reduce your tax burden considerably.

If we had to pick out a single benefit of a second passport, it would be that it can open doors pretty quickly. If you're a foreigner looking to register a company in the EU, a Maltese or Portuguese citizenship makes that a cinch. The same goes for accessing banking services, better trade terms, and favourable economic policies.

Many countries with CIPs provide a bevy of social benefits that go well beyond tax breaks. Think about world-class healthcare, top-shelf education for you, and a better standard of living.

These benefits extend to your entire family. Most programs let you include your spouse, children, and sometimes even parents in your application.

Think of a second citizenship as an insurance policy – one you hope never to use. It sits quietly in the background until you need it. Your birth country may bombard HNWIs with capital controls, or worse, political tensions can flare up.

The best-case scenario is that you want to have the option of retiring somewhere safe that gets year-round sun (think Portugal, Malta, or Spain). However, when you look at it, having a backup plan is a no-brainer.

Here's the kicker: most CIPs don't require you to actually live in the country offering citizenship. Some programs, particularly in the Caribbean, don't even require you to visit during the application process. You can obtain a second passport while staying exactly where you are.

The number one rule of staying wealthy is to always diversify your investment portfolio, and what could be better than having your assets sprinkled across more than one country? In this respect, having a CIP-powered second passport is akin to the proverbial "not putting all your eggs in a single basket."

Like most incentive programs, CIPs are uber-popular because they're a win-win for both sides. Airline frequent-flyer programs, for example, help carriers onboard more travelers in exchange for redeemable miles and points. On their end, bank rebates, casino bonuses, and credit card sign-up offers give new customers a bevy of perks when they switch or register with them. The same goes for CIPs.

Golden visas may dangle lucrative citizenship in front of high-net-worth individuals, but governments have plenty on their receiving end. Countries like Portugal have scooped just under $65 billion in economic impact from their golden visa programs. Investments from the applicants help fund a raft of economic sectors, including education, arts, and research. Not to mention the employment opportunities these programs create, and that's why we think citizenship by investment programs is here to stay.