Middle East’s ultra-rich eye second nationality

The highest number of wealthy business people seeking second citizenship comes from Pakistan, followed by Lebanon, Egypt and Syria.

American singer Tina Turner and French actor Gérard Depardieu both enjoy the benefits of global citizenship programmes, renouncing their US and French passports respectively to live in Switzerland and Russia. But the ultra-rich in the Middle East stand to gain even more from a second citizenship than merely a nice view and some tax perks.

Armand Arton, chief executive of Arton Capital, an investment firm advising high-net-worth individuals and families on how to obtain a second citizenship through investments, says not all passports are created equal. People from the Middle East are often limited in travel and business in Western countries, especially if their country faces political and economic turmoil, like Egypt, Syria or Lebanon.

The highest number of wealthy business people seeking second citizenship comes from Pakistan, followed by Lebanon, Egypt and Syria. Arton says the wealthy want to secure their assets to ensure their families are safe while they have the ability to travel freely to expand their business interests.

Although Dubai offers a safe haven and investment opportunities, for some from the Middle East it’s not a permanent option because they can’t get UAE citizenship and residency does not give them a second nationality that would open up business opportunities overseas.

“A large proportion of those people are here in Dubai,” Arton says. “They moved here during the Arab Spring because it’s safer and there are long-term benefits. But it’s not a long-term solution.”

The large expat community here is definitely considering other options than their own nationality, he says.

The ultra-wealthy can gain a second citizenship and access by investing in their country of choice through global citizenship programmes. These programmes differ in price and criteria: The Caribbean Commonwealth of Dominica requires only a one-off donation of $100,000 for a single applicant but the likes of Australia and the US require much more. Australia asks for $5 million to be invested in the country and the US for $1 million or investment in an industry that will create 10 jobs within two years.

Arton says the latest report from Wealth-X, the intelligence provider on ultra-high-net-worth individuals, says the world’s 200,000 ultra-high-net-worth individuals — defined as those who have more than $30 million — have an average net worth of $205 million; an investment of $1 million for a second residence or citizenship represents a very small portion of their wealth.

Largest growth

As an emerging market, the Middle East has the largest growth of high-net-worth people in the world. According to Arton, 40 per cent of the people here who are in the ultra-high-net-worth category are billionaires, and billionaires are five times more likely to apply for second citizenship.

Most people seek second citizenship in European countries and there are clear reasons why. In Hungary, investors can enjoy visa-free travel around the Schengen Area with a resident card obtained in three weeks. Once citizenship is obtained, in less than two years, the European lifestyle opens up for generations ahead. The investor would also get his original capital minus interest returned in five years.

This ability to move freely through Europe together with a low income-tax rate makes citizenship in Bulgaria popular. People can keep their citizenship in Bulgaria — with a top income tax of 10 per cent — even if they spend most of their time in higher-taxed European countries like France and Italy (both with a top income tax of 45 per cent).

The Caribbean is the second-most in-demand area for second citizenship because of the low cost of investment, fast-track programmes, and very little requirement to actually reside in your second citizenship country.

Arton says other Asian markets such as China and India will see significant growth in wealth in the next 10 years, which will see an increased demand for second residence and citizenship from those countries.

jenna@khaleejtimes.com

• UAE