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Most attractive countries for South Africans to invest offshore Featured

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Most attractive countries for South Africans to invest offshore

For many South Africans who are looking to invest offshore, traditional destinations such as the Isle of Man, Jersey and the UK are usually the first ports of call.

Increasingly however, other parts of Europe and the Caribbean have been welcoming foreign investors. These destinations offer substantial tax incentives in addition to attractive lifestyle and travel benefits such as residence or citizenship in return for an investment.


Andrew Taylor, Vice President of Henley & Partners, the global leaders in Residence and Citizenship Planning, says “Among the several countries now offering investors the chance to acquire citizenship or residence through investment, there are four citizenship-by-investment programs of real interest – two in the Caribbean and two in Europe.”


Each of the four citizenship-by-investment countries offers different benefits to investors. The Caribbean programs, for instance, offer more tax and banking incentives and the benefit of travelling on a passport that requires few visas. The programs in the EU offer the ability to live and work in Europe, attend European educational institutions and allow visa-free travel to more countries.


Taylor says, “The Caribbean is home both to the well-known program in St. Kitts and Nevis and a new, competitive program in Antigua and Barbuda. Starting at US$ 250,000 (R2.6million), these Caribbean programs are the most affordable in the world. They provide citizenship and passports that enable visa-free travel to the EU (including the UK) and Canada among other regions.”


“While it takes a shorter time to acquire citizenship in Antigua and Barbuda than in St. Kitts and Nevis, the latter has the added benefit of allowing investors to purchase property at the renowned Four Seasons Resort Nevis, starting from US$472,200 (about R5million), under the citizenship regulations,” says Taylor. “This property is managed by one of the most successful global hotel brands and can either be used personally by the buyer or rented out for income.”


In Europe, the two main citizenship options are the recently launched program in Malta, which Taylor says, “is the only program of its kind that offers visa-free travel to the USA”, and the one offered by Cyprus.


While these two offers are more expensive, starting as they do from Eur 1 million (about R14.5 million), they are also the most attractive as they lead to EU citizenship.


Malta offers the more affordable and streamlined route to citizenship within the EU of the two. “Under the Malta program, one person can apply with an upfront cost of about €900,000 (R13 million) and obtain full European citizenship (for life), and spouses and children can also qualify for citizenship,” Taylor says.


As well as these citizenship-by-investment programs, there is also Portugal’s very successful Golden Residence Permit Program (GRP), with over 1,000 residence permits issued through the program during the last year.


“The key benefits of this program are that Portugal is a full member of the EU and therefore residence here allows you to travel visa-free to all the notoriously difficult Schengen countries as well as to work, live or study in Portugal.”


The investment required for the GRP is a Eur 500 000 (about R7.3million) property purchase. The processing of a residence permit is relatively quick, in approximately 90 days; and after six years of residency (during which only 35 days of actual residency in a five year period is required), an investor is eligible to apply for citizenship.


“Through offices in key regions around the world, such as here in South Africa where we have an office in Cape Town, we coordinate and manage all legal and administrative work required in the preparation and submission of citizenship and residence applications,” explains Taylor adding “We also assist in opening local bank accounts, acquiring real estate and monitoring or managing the client’s properties throughout the investment period.”


Of course, investing offshore comes with risks and investors and as Taylor says, “Investors must keep in mind that there are many different restrictions and laws depending on the target country. For example, if we look at real estate only, each country has a degree of variation in terms of inheritance taxes, wealth taxes, income taxes, stamp duty, property taxes and annual costs, etc., all of which will affect potential profits or return on investment. Understanding these matters when defining your strategy is critical.”


He explains that offshore investments also have important implications for estate planning strategies such as the use of credit-shelter trusts, traditional life insurance and the like. This is in turn essential for people who wish to control the disposition of their assets after their death and to minimize the tax imposed by the state.


“The favourable tax rates in an offshore country are designed to promote a healthy investment environment that will attract outside wealth,” Taylor says, adding that “All the countries I have spoken about are destinations that High Net-Worth Individuals can use for offshore asset protection with benefits such as tax relief and a reduction of tax liability.”

Taylor gave a rundown on the tax incentives on offer in each of the five programs on offer, starting with St. Kitts and Nevis

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Last modified on Friday, 12 September 2014 10:46

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