Jurg Steffen has recently met a wealthy Filipino couple who wants to acquire another citizenship, one that will allow their children to go to a European school or travel anywhere without applying for a visa. Steffen says this is now a normal thing among the rich, with thousands of them around the world acquiring a new passport.
Steffen, a former banker in Switzerland, is the managing partner at the Singapore office of Henley & Partners, a market leader in residence and citizenship planning. The company has 20 offices around the world that help thousands of wealthy individuals and their families acquire second residence or citizenship.
“Our clients are wealthy families who just want to look at their options. It is just a normal thing,” Steffen says in a news briefing at Fairmont Hotel in Makati City.
“There are a lot of entrepreneurs here in the Philippines who want to travel more easily who do not want to get a visa all the time and they make a donation or real estate investment between $200,000 and $400,000 and then they don’t need a visa anymore. They can travel with St. Kitts [Caribbean] passport visa-free even to Schengen countries,” he says.
Steffen says Filipinos also have the option for the European citizenship program, where in one and a half years, they can have the Cyprus or Malta citizenships.
Steffen has had a lot of dealings with the world’s richest families, having established and developed a private bank operation for one of the leading banks in Switzerland. He was also a director in the cross-border wealth planning department of UBS in Zurich, advising high-net worth individuals and key clients regarding financial, residence and citizenship planning.
Before joining Henley & Partners, he was a personal advisor for the members of one of the wealthiest families in Europe and a member of the management board and head of the wealth planning department of a leading private bank in Austria.
He has been leading the Singapore office of Henley & Partners since April 2013, where he met some Filipino families looking at their options. “The [residence and citizenship] market in general is growing. There are now more Filipinos, there are more people in the region who do this, but we cannot say why they are doing it. Every situation is different. I just met a wealthy family here in the Philippines, and they said you have to advise us. Show us to Antigua, St. Kitts, Malta or Cyprus. They said it is good for our children to have more than one passport,” Steffen says.
“If you have Filipino passport, you can’t travel to many countries. If you are wealthy, you want the best for your children. Why not get another citizenship?’ he says.
A Filipino passport holder can travel to only 60 countries visa-free, while a Caribbean citizen can go to more than 130 countries without applying for a visa. A European citizen can travel to over 160 countries.
Steffen says Henley & Partners helps rich individuals or families, with good reputation, to acquire residence or citizenships in Caribbean countries such as St. Kitts and Nevis as well as Antigua and Barbuda. It also offers European citizenship programs through Malta and Cyprus.
Steffen says it is difficult to know the exact number of Filipinos that they were able to help. “We have plenty of offices. Some Filipinos go to our Hong Kong office, some to our Singapore office,” he says.
What is clear is that these Filipinos are among the richest in the country, or those with a net worth of at least US$3 million to US$4 million for the Caribbean program applicants and 20 million euros for the Cyprus citizenship program.
“There are wealthy Filipinos and if they can afford, why not. We also see that it is an educational thing. When your friends said it is okay, why should I not do it? It is like you have a Porsche, and suddenly your friends also want their own Porsche,” he says.
Steffen says the Philippines is a new market for citizenship. “But it is a good market, because Filipinos are very open. They speak very well English and they travel a lot. A good passport is an important plus for them, because they can travel easily,” he says.
Henley & Partners, however, stays away from people who are politically exposed and those with tarnished reputation. “It is very important for us. Before we accept the clients, we ask them about their background, where their wealth comes from. We do Internet check and also database, which shows whether you are in the terrorist list or politically exposed. We are very careful. We ask professional companies that specialize on background checks,” he says.
Steffen says some applicants are trying to acquire a new citizenship for the wrong reasons. “If they have convictions, you don’t take them. Often, it is also difficult. The reputation is very important for us. There are people here in the Philippines that we did not accept as clients. There are people who wanted a new citizenship for the wrong reasons,” he says.
He says even wealthy individuals from the US, Europe, Russia and China also want to move to other countries, for various reasons ranging from education, lifestyle, retirement security to tax jurisdiction.
Steffen says while other Southeast Asian countries have good investor programs for other nationals, the Philippines is not on the radar of foreign retirees.
“The Philippines does not have a real investor program, where you can invest money and get residence permit. Malaysia is a good example… It is now an interesting option for wealthy people,” he says. “We don’t have a lot of inquiries regarding the Philippines.”
Steffen says applicants need to prove their wealth in order to qualify for Caribbean or European citizenships. “For the citizenship program, the cheapest starts with $300,000 all inclusive for donation and for investment, around $500,000. If a family or a single applicant decides to do that, they should have, let us say at least $3 million to $4 million. They have to spend $300,000 to $500,000 for new citizenship,” he says.
He says the European citizenship program is three to four times more expensive. “The family of four in Malta costs around 1 million euros. In Cyprus, you need around $2.5 million in real estate investment. Clients usually have 20 million [euros] plus plus,” he says.
For the residence program, it ranges from $80,000 to $5 million. “In Malaysia, you have to put in around $80,000 in bank account. A lot of Europeans retire in Malaysia, where the cost of living is affordable. Australia, they have an investor visa. It is $5 million program. Again, clients have to be very wealthy,” he says.
On why people are willing to spend millions of euros to become European citizens, Steffen says: “the European citizenship program is for people who want to have more security.”
“It is like an insurance solution. When you have European citizenship, you can choose where you want to live in Europe. All the European countries have signed agreements of free movements. That means if you are European, you can actually move to any European country. You just have to prove you have basic health insurance and that you have sufficient funds in the form of bank statements. People like to have additional European passport because if something happens, somewhere around the world, you can choose any European country, and you can live there,” he says.
Steffen says even US or Israeli citizens prefer to use other passports for personal safety. “We have clients mainly from the US who are concerned when they travel with US passport because perhaps they are going to Middle East countries. They want another passport that they can travel with. Then they check in hotels with their European passports and nobody knows they are also US citizens,” he says.
“I had a client recently from Singapore office. They were an Israeli family whose children study in Singapore. They said if their children travel on a school trip to Indonesia, they cannot go because Indonesia does not allow Israelis to get a visa. Their family got another citizenship so their children can go on school trips. So there are things that you will never think about, but they are actually relevant,” he says.
Steffen says while around half of the countries in the world do not allow their people to switch citizenships, many countries offer investor programs that accept foreign investments in real estate.
“There are options in the world. It depends on where the family wants to live and how long the family will spend in these countries. But a lot of countries have interesting investor schemes,” he says.
He says St. Kitts & Nevis citizenship program is the oldest in the world, which started in 1984. “You can make a donation of $250,000 or you make an investment of $400,000 and you can get citizenship. You don’t even have to go there. Antigua is a new program which is now three and a half years old. It is available for a donation of $200,000 or a real estate investment of $400,000.”
“In Europe, there are two citizenship programs, mainly Malta and Cyprus. Malta is the smallest European country. They had only 420,000 inhabitants. You can travel visa-free to 160 countries. The program is not the easiest. You have to make a donation to the government of 650,000 euros for the main applicant. Clients have to get a residence permit in Malta. After one year, they get a citizenship. For six years, you have to be in Malta. Additionally, once they received the citizenship, they have to invest 150,000 euros in government bonds in Malta. It doesn’t sound easy for you, or it sounds expensive but it is up and running now. Over 900 families applied for it,” he says.
Steffen says with a Cyprus passport, one can travel to more than 150 countries. The difference is that the Cyprus scheme is an investment scheme, while Malta is a donation program. In Cyprus, you can buy residential, property or villa at the beach for 2.5 million euros. In Cyprus, you can get it in four months.”
He says the citizenship program is a fast growing multi-billion industry. “In Malta, there was an opposition against it. But you have to see that it also brings a lot to these countries. Some European countries were against it. The most important is the reputation of the program. If you ensure that not the wrong people get these citizenships, then usually it is not a concern,” he says.
Henley & Partners developed the concept of residence and citizenship planning in the 1990s, as globalization expanded. However, the quickening pace of globalization has given rise to a growing demand for greater transparency among financial institutions and tax authorities. The Organization for Economic Co-operation and Development has called for the global implementation of its Standard for Automatic Exchange of Financial Account Information, which addresses automatic disclosure of financial account information between countries and is comprised of detailed rules contained in the Common Reporting Standards.
“When the governments start exchanging information, they don’t know who sees the information. The same is true here in the Philippines. They fear the security impact on them because they don’t know who will get the information,” says Steffen.
Steffen says the CRS is a big step towards a globally coordinated approach to the disclosure of financial information from both individuals and organizations. “If governments begin to exchange information of income earned by individuals, then this could threaten the security of wealthy individuals and families, especially those in developing countries since there is a risk of this information becoming available to the wrong sources,” he says.
He says if wealthy families have security concerns regarding a possible exchange of information with their home country, an option is to consider moving to a country where the overall situation is more favorable with regard to security, tax, lifestyle and education.
Steffen says this is where Henley & Partners comes in, as it provides the best and most appropriate residence options in the world. He says other residence options that are tailor-made to the needs of wealthy families are the UK tier 1 investor program, Portugal’s golden visa program, the Australian significant investor visa, Singapore’s global investor program, the capital investment entrant scheme of Hong Kong and Malaysia’s second home program.
Steffen says wealthy Filipinos usually apply for residence or citizenship programs for the education of their children. “Usually, it is easy for education. But Filipinos usually, they do not move together with their children to the UK or to Canada. Their children go there, but their families stay here,” he says.
Steffen says even with a new citizenship, wealthy Filipinos choose to stay in the Philippines.
“What we see in the end, if they lived here their whole life, they don’t want to move to another country,” he says.
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