Global Background 01

Global Citizenship

Have you ever wondered what is the difference between residency and citizenship?

There are a number of significant differences between the terms ‘residency’ and ‘citizenship’. A citizen of a country, nation or state has rights that are not conferred on a resident. Citizens can confidently expect that they will hold that status, and those rights, for life. In addition, citizenship status can be inherited by children and grandchildren merely by proving, if they were born outside of that country, that they are close filial relatives of the citizen.

Residents have no such clear-cut security. Residency status can also, depending on the laws of that country, be separated into temporary and permanent residency. Each division may have different responsibilities, conditions and rights attaching to it. Some countries, such as the United Kingdom (UK) do not even acknowledge the term ‘residency’ but define it as ‘indefinite leave to remain’.

It is common for residents to have to renew their residency permits by continuing to satisfy that country’s legal requirements. These may include continuing to hold the initially-required investment, maintain clean health and criminal records, and meet physical residency requirements. How often a residency permit has to be renewed, and the conditions to be met, will depend on each particular country.

Some countries, after a specific period, say 5 years, may require that immigrant investment residents only have to be of good health, have no criminal record, and continue to show they will not become a burden on the state, instead of also having to maintain the investment.

Some countries, such as Cyprus do not offer a period of residency. Successful investors become naturalized citizens in a single process of a few months.

A High Net Worth Individual (HNWI) who is considering attaining global citizenship, or obtaining a so-called ‘Golden Visa’ should know enough about the differences between residency and citizenship, the qualifying requirements, and the laws of a country before finalizing that country as their destination of choice.

Attaining Residency

Residency by investment is achieved when an applicant, and their approved family members, satisfies certain conditions. Those conditions vary by country and, typically, involve such criteria as:

  • Having a certain net worth
  • Investing required amounts in approved enterprises or institutions, and holding those investments for as long as the immigration program demands
  • Meeting appropriate clean health and clean criminal background checks
  • Passing cultural and language tests
  • Paying all legal, governmental and processing fees
  • Providing documentation, in predetermined formats, to prove that required conditions are met

Attaining Citizenship

Most countries which offer immigration through investment want to encourage entrepreneurs and high net worth individuals to choose their country, and so they want to enable such residents to become citizens. In most cases, citizenship follows an approved period of residency. In addition to Cyprus, mentioned above, other countries which omit the residency phase, include Grenada and Antigua and Barbuda which offer citizenship within weeks, as opposed to years.

Different Countries, Different Status, Different Rights

Residents of many countries are immediately able to travel, either visa-free or visa-on-arrival to other countries. This is valuable to anyone who wants to, for example, travel throughout the Schengen Zone. Residents can live, work and study in their country of choice, and in other countries who have specific international arrangements with those countries.

The major differences between residency and citizenship, though, are that citizens have all the rights of residents and, depending on the particular country, can also:

  • Vote in elections
  • Petition the government
  • Know they will receive embassy or consular protection wherever they may travel in the world
  • Be called on to act as jury members in criminal trials
  • Hold public office (it should be noted that, in some countries, only natural-born citizens are eligible to stand for election to become head of state)
  • More easily sponsor distant family members to achieve residency, and
  • Benefit from more lenient tax laws, especially those governing inheritance (the United States of America being an example)

The greatest privilege of citizenship, as has already been mentioned, is the right to pass on citizenship of the chosen country to their offspring.

There are many detailed elements associated with both residency and citizenship as they pertain to different countries. The only way to be certain that all the right decisions are made, and are based on current law in those countries.

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