15 November 2018

Investors Find a Warmer Welcome in Europe

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A flurry of European countries have been rushing to make it easier for foreigners to get temporary residency—with a path to permanent residency and, in many cases, eventual citizenship—by investing a certain amount in their real-estate markets or certain other assets.  For some countries, the financial crisis has triggered the launch of residency offers for investors, sometimes referred to as golden visas. One example is Spain, where house prices took a beating during the financial crisis and have since recovered somewhat but remain below their levels before the crisis.

Residency laws differ widely from country to country, so investors need to investigate carefully before deciding to move. Embassies and consulates can provide direction, as can several firms whose business it is to advise those considering a move. But here’s an overview of some of the most important issues for investors to consider.

Know Your Taxes 

Moving abroad can lower your taxes, but taxes, like residency rules, vary widely. Americans with residency status who have no income linked to the U.K. economy owe no income taxes in the U.K. They only have to pay federal income taxes in the U.S., a boon for those who had paid state income tax. But the minimum investment for a golden visa in the U.K. is £2 million, or about $3.2 million at current exchange rates. Portugal offers similar tax treatment, although its minimum investment for a golden visa is much lower—€500,000, about $625,000 at current exchange rates.

Switzerland offers residency to foreigners who agree to pay a predetermined amount annually in taxes regardless of their income. As in the U.K., the benefits are geared to the very wealthy—the annual tax varies by region, with the lowest bill set at 250,000 Swiss francs, or about $260,000.

Work and Lifestyle 

Most investors looking to relocate to Europe from the U.S. want to have the right to work in Europe. But that may not be possible immediately. No matter the location, there’s more to life than work and taxes for most people. So it is advised for people to keep in mind that choosing a country to live in will determine their lifestyle.

Choosing Property 

Most countries allow foreign investors to choose from a wide range of real-estate options, from a home for their personal use to commercial properties like a hotel or office building. There are a number of websites that display properties for sale, but the prices shown on some sites are routinely higher than those quoted in the local markets. So he recommends that investors visit the area they’re interested in to connect with local real-estate agents.

In timing a move, investors should keep in mind that typically applicants for a golden visa must purchase real estate before applying for a residency permit, and it usually takes from a few weeks to a few months for permit applications to be processed.

Go Directly to Citizenship 

For those who have well over $1 million to invest, Malta has an offer that gives investors a lot of flexibility. It takes one year to get citizenship—not just residency—in this former British colony and current European Union member after investing roughly €1 million, or about $1.25 million. And a citizen of any EU member state benefits from the right to move and live in all 28 states.

But investors need to be careful about citizenship as on all other counts. The U.S. generally allows people to retain their American citizenship when they acquire citizenship in another country, according to the U.S. State Department. But some countries where investors might want to live restrict dual citizenship.

Click here to access the full article on The Wall Street Journal. 

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