Any savvy investor agrees with the phrase “don’t have all your eggs in one basket” and thus diversifies their investments. Diversity is important not only across industries but also across regions and continents, depending upon how small or big the portfolio is.
From affluent retail investors to the world’s biggest hedge funds and asset managers – no one keep all their “eggs” in one basket.
This philosophy rings true for all Indian affluent investors as well. As more and more wealth is created in India, and the country marches to becoming a $5Tn economy, investors must take cognizance of the importance of moving some of their investments overseas, especially in €, $ or £ denominated opportunities. It is no surprise that the ₹ is likely to continue depreciating as the economy swells up. Moving a part of one’s ₹ wealth to a € or other denomination locks their wealth from depleting irrespective of the returns that one might make.
This is what makes Europe and it’s Golden Visa investments very interesting!
Throughout the centuries, Europe has been at the centre stage of economics, politics, education and trade, and the European Union today boasts of its breath-taking diversity and endless opportunities. There are 27 member nations of the European Union, together offering a single market of over 750 million consumers with a high GDP per capital of over $36,500 and access to a $20Tn market.
They welcome professionals, investors, entrepreneurs, students, and retirees alike. The EU has plenty in store for anyone willing to invest and get a reasonable return. Europe also offers some of the most tax efficient jurisdictions. Offshore accounts are known to significantly decrease and eliminate tax liabilities that might otherwise emerge if wealth were maintained in domestic accounts. A whopping $32Tn of private wealth is parked offshore.
Golden Visas and Residence Rights are just an added perk of investing in the EU. Let us explore the 3 most popular destinations.
The Portugal Opportunity
For Indians, Portugal is not an unknown country or culture. India has its own mini-Portugal in Goa, which until 1961 was controlled by the Portuguese administration. Between 1510 and 1961, the Portuguese have left a real mark on this western state, where every Indian loves to holiday at. Many Goans have family in Portugal and vice versa. Their names, food, culture – everything is very close to Portugal.
Portugal today, is a small and prosperous nation with just over 10 million people and over $200Bn in GDP. She is a founding member of the EU and NATO. Portugal offers the Portugal Golden Visa program for investors who are willing to commit a capital of at least 350 thousand Euros. This Residency Visa also leads to citizenship in just 5 years, giving access to live, work and retire anywhere in the European Union. About 5% of the population in Portugal is foreign-born, and the country has regularly ranked in the top-3 in Migrant Integration, Health and Global Peace.
Investing in Portugal can yield healthy financial returns. The real estate rental market yields 3-5% which is at par with any major metro across the world, probably a bit higher. The price index has also shown continuous growth over the past 7 years. Portugal Golden Visa program requires an annual stay of only 7 days, which makes it lucrative for global investors. Since the launch of this initiative in 2012, over 10,000 investors from outside the European Union have invested over 6 Bn Euros through this program.
Portugal has also setup the Non-habitual tax regime for new migrants, which is gaining popularity among the British and Scandinavian retirees. Under this regime, taxes on incomes are significantly lower for a period of 10 years, when tax residency is transferred to Portugal and there is no tax on overseas income.
One can invest in a regulated Investment Fund or in a Property, to secure their Portugal Golden Visa. However, like all good things don’t last forever, the Portugal Golden Visa program is undergoing a massive regulatory change at the dawn of 2022, which increases investment requirement by almost 50% and removes the capital city of Lisbon and Oporto as a qualifying investment destination.
The Greece Opportunity
Strategically located at crossroad of Europe, Asia and Middle East, Greece is a free market, service-based economy with excellent growth prospects. The country offers non-EU citizens a Greece Golden Visa which can be acquired by investing in either residential real estate or an Alternative Investment Fund regulated in the European Union.
With just over 10 million people and a GDP per capita of around $22,500, Greece is an excellent easter gateway to Europe, providing access to the European single market. Off late, the government has been very aggressive in extending grants and tax credits to investment projects exceeding €5 Mn. She has a wealth of natural resources and an inspiring Mediterranean landscape and climate. Cost of living is quite modest compared to northern Europe or the UK which makes doing business in Greece more efficient. One can still trade with the entire European Union by setting up in Greece. Attractive sectors include real estate, tourism, logistics, ICT, agriculture and renewable energy. Greece is the 18th largest tourism destination grossing over €20 Bn in tourism receipts.
Recently, high decibel announcements included Microsoft’s Greek data centres plans as well as SpaceX bringing Starlink Internet to Greece. The Greece Golden Visa has attracted nearly 800 investors since 2014. The non-domicile tax regime is also gaining popularity with over 100 UHNW investors transferring their tax residency to Greece in 2020.
The Cyprus Opportunity
Cyprus is an island nation that is strategically in the Mediterranean, and very similar to Greece on all fronts. The island has instituted very favourable corporate tax regime which has led many foreign enterprises to set up shop. These corporates also benefit from an international workforce, with the majority of people speaking fluent English, as well as Russian and Chinese. The Cyprus Investment Program was launched in 2013, instituted a Residency Program for an investment of 300 thousand Euros and a Citizenship Program for an investment of 2 Mn Euros. While the latter has been closed since November 2020, the Program generated over 7 Bn Euros by accepting investments from nearly 4000 foreign nationals who are not Cypriot passport holders. A majority of these were subscribed by Russian and Chinese UHNW investors.
Cyprus offers favourable taxation policy with no inheritance tax, low corporate tax and tax incentives for start-ups. With over 60 double taxation agreements, Cyprus has eliminated any double taxation of citizens with dual nationality. From business point of view, the procedures for registering a company with the relevant authorities in Cyprus can also be completed very quickly and relatively inexpensively. Consequently, international businesses operating in the area often choose Cyprus as a tax-structuring base. Currently, Cyprus is promoting itself has a “headquartering destination” for companies looking to setup a European base in a lucrative-tax regime.
Like Portugal and Greece, Cyprus too offers its Residence Permit programs via investment in Real Estate, or regulated Alternative Investment Funds.
The author, Ashish Saraff, is Founder and CEO at Aretha Capital Partners. The views expressed are personal