Buying Your Way Out of Brexit

If you are rich enough or have the right ancestry, staying in the EU after Brexit without changing residency is achievable, says Roger Williams.

Despite recent events the UK is still on course to leave the EU this year and UK citizens will lose the rights they have to travel, study, trade or bank. Different rights might yet be negotiated of course, but if you’re British and want to keep the rights you have today, you’ll need a EU passport. And to get one, you’ll need to gain citizenship in another EU country. This means you can ‘stay in the EU’ even if the UK has left it – and in so doing, it means you will be able to work, travel or even live anywhere in the EU.

And if it’s your business that needs to stay in the EU, you can set up shop by creating an e-resident company. This may not give you everything you need, if physically trade comes to and from the UK but, in all other circumstances, it may well be a solution to continuing in business as part of the EU.

So what do you do if you want to stay an EU citizen? The easiest and cheapest route to an EU passport is by dint of birth: if you have parents or grandparents from an EU country, meaing you have a good chance of gaining citizenship by descent. There are a number of EU countries offering this including Ireland, Italy, Poland, Spain and Hungary. Though residency and bureaucratic delay are factors in all these, Ireland offers the most likely route to an EU passport for many in the UK.

Ireland issues the most passports relative to its population in the EU. There are an estimated 13 million Irish passports – and yet the population of Ireland is just 4 million. Consider that as many as 10 per cent of the UK have a grandparent born in Ireland and this may be sufficient to get an EU passport. That’s not to say gaining Irish citizenship through birth or descent is simple, but at least the rules are clear and well-explained on the Irish Nationalisation and Immigration Service website.

If you can’t claim citizenship by descent, then you might simply be able to buy it. Although tests of residency are often used to stop the purchase of a second passport, many governments have found the lure of inward investment enough for them to create programmes to enable high net worth individuals to obtain a new passport.

The first programme to be recognised by the European Commission belongs to Malta, and the executive body of the European Union has now acknowledged its legality formally. Called the investment citizenship programme, over the two years following its launch in 2014, some 700 passports were issued to wealthy individuals. Applicants were required to make large donations to the government (650,000 Euros donated to a government development fund) and invest in Malta but were not required to be resident. All that was required, was ‘an intention to reside in Malta’ for any fiscal year, usually evidenced by the purchase or rental of property, together with a visit to the island.

The scheme is an attractive option if you don’t wish to reside outside of the UK. There is a catch though – while it remains in operation, the minimum investment required has been raised to 1.15 million Euros. With the citizenship and passport can come effective control over a company, which may enable your commercial activities to remain in the EU too.

The government of Malta says it is committed to the highest standard of due diligence and vetting of investor applicants ensuring only persons of impeccable standing and repute will be admitted. Applicants must have no criminal record and the government says checks are made at the International Criminal Court and Interpol. They quote a one-in-four rejection rate for applications but it is a tried and tested method to get an EU passport and citizenship.

A limited number of passports were to be made available under this programme – so move quickly if it’s of interest. If you are successful, you will be granted citizenship in Malta by a Certificate of Naturalization, which can also be extended to include your family, at an added cost of up to 50,000 Euros per person. Maltese citizenship, which includes EU citizenship, gives you have the right of establishment in all 28 EU countries and Switzerland. You can set up business in Malta, and can get a Maltese passport and enjoy visa-free travel to more than 160 countries across the world, including the USA.

A little further east in the Mediterranean, Cyprus offers a similar, albeit more expensive programme, Naturalisation of Investors in Cyprus by Exception. The programme requires an investment of Euros 2.5 million but, unlike Malta, no donation is required. You have to buy a residence in Cyprus, though you don’t have to live in it. This must meet a minimum cost of Euros 500,000. The balance, up to 2 million Euros, can be put into property or a new or existing business in Cyprus or in listed shares or bonds of companies in Cyprus. Importantly, these can be sold off after three years.

Like with Malta, investors must be free of a criminal record and will need advice to ensure that the residence and investments meet the scheme’s criteria. The Cypriots pride themselves in efficiency and the entire process can mean you can have your EU passport within three months.

But if it’s your company that you want to stay in the EU with the same rights as it has now, it looks impossible. That said, you can create a new company within the EU using e-residency from an EU country: Estonia.

Since 15 January 2018, for the first time, the management board of an Estonian company does not have to reside in Estonia. This, combined with Estonia’s new e-residency scheme, means you can have a company in Estonia and full banking services without being an Estonian citizen or being physically resident.

You apply for e-residence on-line and then you will receive a government-issued, digital ID. All you need then is a copy of your UK passport, a digital passport photograph, a motivation statement saying why you want the e-residency and pay the 100 Euro fee. Once you are e-resident, you can apply online to start an Estonian company and open a bank account.

Although you will require a local contact in Estonia, this person is simply someone to receive documents on your behalf. They are not required to have any power, be a shareholder or employee or board member. You can remain with 100% control of the company and its bank account. An Estonian business services company can provide the local contact person and the company’s local address, just like the practice in the Isle of Man or Channel Islands.

A payment institution called Holvi, licensed and supervised by Finland’s financial services regulator and owned by BBVA in Spain has partnered with the Estonian government to enable e-residents to set up their companies without going to Estonia to open their company’s bank account. From day one, you can monitor all transactions of your new Estonian company, invoices, expenses, receipts and payments, the entire cash flow in real time. You will be offered payroll services, if required, an e-commerce store and a MasterCard account with the bank account.

An Estonian company created this way on the back of e-residence, has residency in the EU. It will enable the company to engage in cross-border operations within the EU and, depending on the type of business it transacts, could mean your commercial activities are able to remain inside the EU after Brexit – and you can still live in the UK.