11 Jan Want to trade in the European Union? Here’s why second citizenship is the solution
The European Union is the biggest economy in the world, accounting for one quarter of the world’s wealth (measured by GDP). It’s the leading global importer, exporter and investor and receives the most foreign investment and donates the most aid.
Businesses in the EU’s single market have clout – both within the EU and on the international stage. Those businesses enjoy preferential terms, taxes and tariffs and significantly less red tape. All things which translate into simpler, more profitable business.
Read on to discover whether an EU business could be better for you and how you can gain access to this coveted market.
Why do businesses want to be in the EU?
Members of this vast single market benefit from the free movement of goods, services, capital and people across all 28 member countries. They enjoy privileged international trade agreements globally, often including significantly lower tariffs and even complete exemption from duties.
What the EU really gives members is a powerful voice. One country alone doesn’t hold the same weight, and so can’t negotiate the same preferential terms. By contrast, the EU can leverage the power of 28 voices to secure the best possible trade terms.
Within the EU, this means completely free trade. Governments cannot restrict trade amongst the group in any way, aside from products that present a public health risk. Goods and services within the EU can move freely, with zero (or very minor) customs formalities. Intra-EU trade is hassle-free and red-tape-free, so you can get on with doing business. The EU works hard in the pursuit of “trade liberalisation”, aiming to minimise invisible barriers and unethical behaviour, and make trade easier, simpler and more cost-effective.
Is second citizenship the fast route to European trading?
EU citizenship means you can form, manage and run your business without restriction.
One benefit especially worth mentioning is the increased ease with which you can start a European Company. Known as an SE, a European Company is a public limited liability company regulated by EU law. It makes conducting business across the EU simpler, gives you even more freedoms within the single market, and provides a framework for multi-country staff management.
Although every EU country has their own rules about starting a European Company, you’ll likely find it significantly easier as a national of that country as you’re granted the same preferential rights as any natural-born citizen.
The advantages you’ll enjoy depend on the country you join, your business, the goods or services you trade, and where you trade. But the principle stands: EU citizenship unlocks the full business freedoms of operating within an EU country. Plus, EU citizenship also entitles you to live and travel freely throughout Europe, which makes the mechanics of doing business considerably easier.
What’s the fastest path into Europe?
So, you’ve decided a second citizenship is the right path for your business. What’s the fastest way to get EU citizenship?
Spain: Residency in three months; citizenship in ten years
You can secure a Spanish golden visa in two to three months for a EUR 500,000 investment into real estate. You can also invest into business in Spain, as long as your investment creates jobs, has socio-economic impact or contributes significantly to scientific or technological innovation.
If you’re already considering setting up a business in Spain – perhaps using Spain as the headquarters for your European company – this could be especially worth considering.
This golden visa only lasts one year though, so after that you upgrade your golden visa to a long-term residency permit. Then after a total of ten years of permanent residence you can apply for citizenship-by-naturalisation.
Spain is a fantastic platform for business across Latin America, North Africa, the Mediterranean and the Middle East. Over 12,500 foreign companies do business in Spain – including 70 of the Forbes 100. Spain is the fifth largest economy in the EU, and has both a thriving export and domestic market for potential business investors to exploit.
Portugal: Residency in two months; citizenship in six years
The Portuguese residency-by-investment programme is very popular. Like Spain, citizenship does take some time but you can secure Portuguese residency quickly – within two months. And you’re looking at a minimum investment of only EUR 350,000 into real estate.
You can then apply for citizenship-by-naturalisation after six years, as long as you’ve maintained your residency during that time by spending only one week per year in Portugal.
Portugal is considered one of the most beneficial tax environments for international business investors, with various tax exemptions available on foreign-source income, including capital gains.
Portugal has suffered financial trouble in the past but the economy is very much on the up – with a GDP annual growth rate of 2.5% year-on-year in the third quarter of 2017. Which means now is an especially good time to consider investing into the Portuguese economy – and unlocking the EU single market at the same time.
Bulgaria: Residency in six months; citizenship in one year
Having joined the EU in 2007, Bulgaria offers residency-by-investment with fast-track to citizenship-by-naturalisation. First investors become Bulgarian residents, with a secured and refundable investment of EUR 512,000 (BGN 1m) into government bonds. This process takes around six months, and involves visiting Bulgaria only twice.
Then you can naturalise as a Bulgarian citizen. Either you simply wait five years, and then naturalise without any additional investment, or you can fast-track your naturalisation request. To go this route, you’re looking at an additional investment of EUR 512,000 (BGN 1m) into government bonds after one year of residency.
Bulgaria has the lowest personal tax rate in Europe, at only 10%. Incorporate your company into Bulgaria and you’ll enjoy favourable corporate tax at the same 10%. Add the robust infrastructure and communications network, and it’s clear why Bulgaria is such a popular choice for entrepreneurs.
Malta: Residency in three months; citizenship in two years
Malta has been an EU member country since 2004, and launched the Malta Visa and Residence Programme (MRVP) in 2015 to give investors permanent residency rights in only three months.
One of the big business benefits here is the ability to subsequently apply for various tax incentives. Malta offers extensive exemptions and creates various loopholes that can be very tax-friendly for investors. For example, Maltese residents pay no tax on foreign-source capital gains. Malta also holds over 70 international double tax treaties, and has various preferential schemes available for residents. You’re looking at a total investment of EUR 580,000 to secure residency through the MRVP.
Then the Maltese Individual Investor Program (IIP) enables you to secure citizenship for investment of EUR 650,000. The process takes around one year, and you have to have been a resident for one year before starting your application.
Cyprus: Citizenship in 3 months
The Cypriot citizenship-by-investment programme is by far the fastest way into Europe. From start to finish, you could have your new passport in-hand within three months – and everything that comes with it. Not least, access to the GDP 14tr European single market. The Cypriot economy returned to pre-crisis growth a couple of years ago now, and has since firmly established itself as a popular centre for trade.
As an EU nation since 2004, Cyprus offers an attractive gateway to the Middle East, Russia, Eastern Europe and the Persian Gulf, and boasts the lowest corporate tax rate in the EU at 12.5%. You’ll also enjoy various tax exemptions, in addition to preferential trade terms within the EU.
So what do these privileges cost you? You’re looking at a refundable investment of EUR 2m to secure your lifetime citizenship here, with options to invest into real estate, business or financial assets.
Would your business benefit from having the EU in its corner?
The vast European Union single market gives many benefits to its 28-member countries and their nationals, centring around the freedom to travel and trade without red tape. And the economy is growing. To put it in context, if all trade talks currently under EU negotiation are completed, Europe’s GDP will increase by 2%. As the European Commission observes, that’s the equivalent of adding an additional “Denmark” or “Austria” onto the EU economy. Businesses trading from and within the EU enjoy a slice of that pie.
Although international business is certainly possible without the backing of an international trade group like the EU, one this influential can help your business get where it wants to go.
So as the most affluent and prestigious economy in the world, the EU really gives businesses a platform for easier, faster and more profitable international trade. And citizenship-by-investment could be your ticket into the EU.