Following the examples of St. Kitts and Dominica, Grenada recently passed a bill allowing foreigners to purchase citizenship in exchange for investment into the country. The Grenada Citizen by Investment Act of 2013 will grant the full rights of citizenship to foreign investors in an effort to stabilize the nation’s faltering economy.
The bill, which passed through Grenada’s House of Representatives on August 2, 2013, makes Grenada the most recent in a series of Caribbean countries to enact “citizenship by investment” legisla
Similar measures have been established in St. Kitts following the collapse of the sugar industry. The re-stabilization of the two counties’ economies is largely credited to foreign investment thorough their respective second citizenship programs.
Dominica also benefited from the use of citizenship by investment legislation during the recent global recession. While many of the nation’s neighboring countries experienced severe economic hardships, Dominica itself reported positive growth. The country’s resilience during the recession is frequently attributed to the funding it received through its foreign investment program.
Grenada’s second citizenship program differs from those of Dominica and Nevis in that it sets forth rigid residency requirements for all participants. This is intended to encourage continued investment in the national infrastructure by those who capitalize on the new law.
While St. Kitts requires either a commitment of $400,000 (U.S. dollars) in approved real estate projects or a contribution of $250,000 to the Sugar Industry Diversification Foundation, Dominica requires considerably less: $100,000. Grenada has remained silent as to the level of financial commitment it will require from participants in its program.
These policies have become increasingly enticing to libertarians and wealthy individuals looking to escape taxation in their home countries. Many Caribbean nationals installing such second citizenship legislation, like St. Kitts, charge their citizens zero capital gains, income, net wealth, inheritance or gift taxes. Grenada is following suit by attempting to draw wealthy expats to its shores. The money brought in through these programs could help these struggling nations rebuild crumbling infrastructure.
Citizenship by investment programs also aim to leverage the growing discontentment among some wealthy Americans who feel they are being asked to disproportionally contribute to the infrastructure of the country in which they live. Under the new legislation, such individuals will be afforded the opportunity to invest in the infrastructure of a different country in exchange for citizenship there. Some tax professionals see this type of legislation as a natural response to the growing trend of expatriation among the United States’ wealthiest citizens.
As an increasing number of Americans consider relocating to more tax-friendly environments, citizenship by investment legislation is expected to grow. More countries are buckling from a lack of funding for public infrastructure and are being driven to look for contributions from private sources. And as anger over taxation grows among America’s wealthiest individuals, many are finding investment in foreign governments increasingly promising.