Residence/Citizenship by investment schemes

While residence and citizenship by investment (CBI/RBI) schemes allow individuals to obtain citizenship or residence rights through local investments or against a flat fee for perfectly legitimate reasons, they can also be potentially misused to hide their assets offshore by escaping reporting under the OECD/G20 Common Reporting Standard (CRS). In particular, Identity Cards and other documentation obtained through CBI/RBI schemes can potentially be misused abuse to misrepresent an individual’s jurisdiction(s) of tax residence and to endanger the proper operation of the CRS due diligence procedures.

Potentially high-risk CBI/RBI schemes are those that give access to a low personal income tax rate on offshore financial assets and do not require an individual to spend a significant amount of time in the location offering the scheme.

Financial Institutions are required to take the outcome of the OECD's analysis of high-risk CBI/RBI schemes into account when performing their CRS due diligence obligations. (Further detail is available in our Frequently Asked Questions section below).

The OECD has analysed over 100 CBI/RBI schemes, offered by CRS-committed jurisdictions, identifying the following schemes that potentially pose a high-risk to the integrity of CRS.

 

Last updated: 22 October 2018

Jurisdiction

Name of CBI/RBI scheme

Antigua and Barbuda

Antigua and Barbuda Citizenship by Investment

Antigua and Barbuda

Permanent Residence Certificate

Bahamas

Bahamas Economic Permanent Residency

Bahrain

Bahrain Residence by Investment

Barbados

Special Entry and Residence Permit

Cyprus

Citizenship by Investment: Scheme for Naturalisation of Investors in Cyprus by Exception

Cyprus

Residence by Investment

Dominica

Citizenship by Investment

Grenada

Grenada Citizenship by Investment

Malaysia

Malaysia My Second Home Programme

Malta

Malta Individual Investor Programme

Malta

Malta Residence and Visa Programme

Panama

Friendly Nations Visa

Panama

Economic Solvency Visa

Panama

Reforestation Investor Visa

Qatar

Residence Visa for Real Estate Owner

Saint Kitts and Nevis

Citizenship by Investment

Saint Kitts and Nevis

Residence by Investment

Saint Lucia

Citizenship by Investment Saint Lucia

Seychelles

Type 1 Investor Visa

Turks and Caicos Islands

Permanent Residence Certificate via Undertaking and Investment in a Home

Turks and Caicos Islands

Permanent Residence Certificate via Investment in a Designated Public Sector Project

Turks and Caicos Islands

Permanent Residence Certificate via Investment in a Home or Business

United Arab Emirates

UAE Residence by Investment

Vanuatu

Development Support Programme

Vanuatu

Self-Funded Visa

Vanuatu

Land-Owner Visa

Vanuatu

Investor Visa

The information in the table reflects the current state of the OECD’s analysis of CBI/RBI schemes and will be updated on an ongoing basis.

Frequently Asked Questions

This section will be updated on an ongoing basis.

 

What are CBI/RBI schemes?

"Citizenship by Investment" (CBI) and "Residence by Investment" (RBI) schemes are being offered by a substantial number of jurisdictions and allow foreign individuals to obtain citizenship or temporary or permanent residence rights on the basis of local investments or against a flat fee.

Individuals may be interested in these schemes for a number of legitimate reasons, including the wish to start a new business in the jurisdiction, greater mobility thanks to visa-free travel, better education and job opportunities for children, or the right to live in a country with political stability. At the same time, information released in the market place and obtained through the OECD's Common Reporting Standard (CRS) public disclosure facility, highlights the abuse of CBI/RBI schemes to circumvent reporting under the CRS.

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How can CBI/RBI schemes be misused to circumvent CRS reporting?

CBI/RBI schemes can be misused to undermine the CRS due diligence procedures. This may lead to inaccurate or incomplete reporting under the CRS, in particular when not all jurisdictions of tax residence are disclosed to the Financial Institution. Such a scenario could arise where an individual does not actually or not only reside in the CBI/RBI jurisdiction, but claims to be resident for tax purposes only in such jurisdiction and provides his Financial Institution with supporting documentation issued under the CBI/RBI scheme, for example a certificate of residence, ID card or passport.

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Which CBI/RBI schemes present a potentially high risk?

Not all RBI/CBI schemes present a high risk of being used to circumvent the CRS. Schemes that are potentially high-risk for these purposes are those that give a taxpayer access to a low personal income tax rate of less than 10% on offshore financial assets and do not require significant physical presence of at least 90 days in the jurisdiction offering the CBI/RBI scheme. This is based on the premise that most individuals seeking to circumvent the CRS via CBI/RBI schemes will wish to avoid income tax on their offshore financial assets in the CBI/RBI jurisdiction and would not be willing to fundamentally change their lifestyle by leaving their original jurisdiction of residence and relocating to the CBI/RBI jurisdiction.

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What should Financial Institutions do?

Under Section VII of the CRS, a Financial Institution may not rely on a self-certification or Documentary Evidence if the Financial Institution knows or has reason to know, that the self-certification or Documentary Evidence is incorrect or unreliable. The same applies with respect to Pre-existing High-Value Accounts where a relationship manager has actual knowledge that the self-certification or Documentary Evidence is incorrect or unreliable.

In making the determination whether a Financial Institution has reason to know that a self-certification or Documentary Evidence is incorrect or unreliable, it should take into account all relevant information available to the Financial Institution, including the results of the OECD's CBI/RBI risk analysis. As a result, where, taking into account all relevant information, the facts and circumstances would lead the Financial Institution to have doubts as to the tax residency(ies) of an Account Holder or Controlling Person, it should take appropriate measures to ascertain the tax residency(ies) of such persons.

To the extent that the doubt is related to the fact that the Account Holder or Controlling Person is claiming residence in a jurisdiction offering a potentially high-risk CBI/RBI scheme, FIs may consider raising further questions, including:

  • Did you obtain residence rights under an CBI/RBI scheme?
  • Do you hold residence rights in any other jurisdiction(s)?
  • Have you spent more than 90 days in any other jurisdiction(s) during the previous year?
  • In which jurisdiction(s) have you filed personal income tax returns during the previous year?

The responses to the above questions should assist Financial Institutions in ascertaining whether the provided self-certification or Documentary Evidence is incorrect or unreliable.

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