Brexit: Interesting Times for Investment Migration
3 April, 2018
In early 2018, the UK has moved forward on citizens’ rights but remains in the midst of challenging Brexit negotiations. The rights of UK nationals in the EU, and of EU nationals in the UK, now seem far clearer. It is expected that after Brexit in March 2019, EU nationals who wish to enter the UK (other than as visitors) will have to qualify for entry, perhaps in a similar way to non-EU nationals currently. As for EU nationals already in the UK, the British government and the EU agreed, on 8 December 2017, on plans to protect the rights of most EU nationals who are in the UK at the specified cut-off date, i.e. 29 March 2019. Under these plans, EU citizens living lawfully in the UK, and UK nationals living lawfully in the EU, by this date will be able to stay and enjoy broadly the same rights and benefits as they do now.
As future rights post-Brexit are unclear, we continue to see a significant increase in appetite from high net worth individuals (HNWIs) within the UK for investment migration solutions within the EU, to guarantee free movement rights. Malta and Cyprus are proving increasingly popular, with immediate EU citizenship — after 12 months’ effective residence in the case of Malta — available for those anxious to preserve free movement rights post-Brexit. This trend is not exclusive to UK HNWIs; indeed, HNWIs in the US are also looking at European citizenship and residence solutions to protect themselves against growing political and economic uncertainly in the US.
The UK’s Tier 1 categories have proved resilient against Brexit uncertainties. Statistics show not only stability in uptake from Q3 of 2016 (after the UK’s referendum vote), but in fact increased interest across Investor and Entrepreneur categories, despite Brexit. The number of investor applications granted rose by 80% between Q2 and Q3 2016, and by 39% between Q4 2016 and Q2 2017. The UK’s Tier 1 Entrepreneur statistics, too, are stable and show sustained interest. The reasons for this are manifold: the UK’s Tier 1 options are uniquely positioned to withstand free movement restrictions post-Brexit due to their long-term, commitment-driven nature in terms of residence and job creation for entrepreneurs. In addition, neither of the options are citizenship programs and have, therefore, traditionally attracted those looking to establish themselves and/or their families in the UK in the long term, rather than those looking for expeditious citizenship options and free movement rights. The UK has never been a convenient option for those seeking EU citizenship ‘instantaneously’ — it takes three to five years to obtain permanent residence, with applicants having to spend around half of that time physically present in the UK every year, and five to six years to obtain citizenship, which has even more onerous residence requirements.
This immediately contrasts UK citizenship options with the programs in Cyprus and Malta, which offer immediate citizenship and a 12-month path to citizenship, respectively. This bears in mind that citizenship of either of these countries allows for free movement within all the other member states of the EU, not just the UK. However, these two jurisdictions will no longer provide an indirect route to the UK once the UK has left the EU (assuming the end of free movement).
The UK remains attractive to HNWIs because of, among other things, its quality of life, education system, and geographical position in the world. The recent introduction of a residence requirement (180 days in a year) for the dependents of Tier 1 applicants may, however, deter some applications. That aside, the decision to leave the EU does not seem to have dampened the appeal of the UK to HNWIs. Rather, the available statistics so far indicate that the UK’s Tier 1 Investor route may in fact become increasingly popular for those who were planning to establish themselves in the UK through citizenship programs elsewhere in the EU but who cannot do so post-Brexit.
That said, we are still in unknown territory. As such, it is unclear what Brexit will mean for investment migration across Europe come April 2019.