High inflation, rising interest rates and international conflict, together with the legacy of the Covid pandemic, are continuing to pile pressure on government treasuries. As a result, many governments have been focusing on Foreign Direct Investment (FDI) to drive economic growth and create local employment.
Their aim is to attract experienced businesspeople and entrepreneurs, together with their families, by providing compelling options to set up businesses in their country that will offer good access to markets, enhanced commercial opportunities, corporate and personal tax incentives, as well as local residency rights.
While some corporate establishment programmes require a substantial initial investment, others provide a market entry and residency solution at a relatively low cost for individuals who intend to set up and manage a genuine business in that location. Good examples of the latter, include:
Malta
The Malta Start-Up Residence Programme grants a three-year residence permit, which is extendable for an additional five years. After five years of residency, applicants can also apply for long term residency in Malta.
A Malta-incorporated start-up company is required to have a minimum tangible investment and/or paid-up share capital of €25,000.
Specifically designed to facilitate the setting up of innovative start-ups and scale-ups in Malta, the programme also supports the immigration process of company founders, core employees and immediate family members.
All those benefiting from the programme are required to have a physical and tangible presence in Malta, not only from a business perspective but also personally residing in and paying taxes in Malta.
Cyprus
Foreign national who set up a business in Cyprus can qualify for an annually renewable Cyprus temporary residency permit.
To qualify, applicants must be able to demonstrate that they have independently sourced annual income of €24,000 (i.e., income that is not associated with the proposed business in Cyprus), which is further increased by 20% for a spouse and 15% for each dependent child.
Applicants must also be able to demonstrate they have purchased or rented a local residential property, hold private medical insurance, and have no criminal record.
It is essential that a holder of the temporary residence permit should not stay out of Cyprus for more than three months at a time because this could result in cancelation of the permit.
Temporary residence permit holders qualify for a Permanent Residence Permit after five years of continuous residence in Cyprus. However, if they invest around €150,000 or more into real estate in Cyprus, a Permanent Residence Permit can typically be obtained within 12 to 18 months.
Qualifying applicants can further apply for the Cyprus Tax Residency Programme, which provides a wide range of preferential personal and corporate tax incentives to qualifying non-domiciled individuals for up to 17 years.
Portugal
The Portugal Immigrant Entrepreneur (D2) Visa is ideal for business professionals and entrepreneurs who are looking to establish a new business, or a branch of an existing business, in Portugal.
Applications are assessed on the local social and economic benefits of the proposed business activity, with preference given to businesses that will create local employment opportunities.
To qualify, applicants must provide a structured business plan that clearly demonstrates the benefits and sustainability of the proposed business, together with evidence that they have established (and are able to sustain) a Portuguese company and private medical insurance.
Applicants must also be able to demonstrate their ability to support themselves and their dependants without recourse to income from the proposed business. In 2023, the threshold is a minimum annual income of €9,870 for the main applicant, €4,560 for a spouse and €2,738 for each dependent child.
Applicants are required to spend a minimum of four months in the Portugal during the first year, and at least six months per year during each subsequent three-year period.
Portugal currently offers a special tax regime for qualifying new residents under the Non-Habitual Residency (NHR) tax regime.
United Kingdom
A UK company holding a 'Sponsor Licence' is entitled to employ non-UK staff, provided the role is assessed by the UK Visas & Immigration (UKVI) department to be 'skilled' and 'genuine'. The employee must also be earning a minimum salary of £26,200 per year and, in some cases, more.
A company can apply for a 'Sponsor Licence' provided it has a genuine trading presence in the UK and is well established and well governed.
Owners of the company, as well as non-UK employees, can qualify for the Skilled Worker Visa, which will initially be granted for a period of up to five years. Applicants are required to demonstrate they are suitable for the role and have good English language skills.
After five years of continuous residence in UK, holders of the 'Skilled Worker Visa' may be eligible to apply for Indefinite Leave to Remain (ILR) or permanent residency. ILR is an immigration status that allows the holder it to live and work in the UK for an unlimited time, without any need to apply for a visa extension. ILR holders may also qualify for British citizenship after a further 12 months.
The UK currently offers a special tax regime to non-UK domiciled individuals residing in the UK.
Mauritius
Individuals who invest USD50,000 into a Mauritius-based business are eligible to apply for a 10-year 'Occupation Permit' (OP). Investors can also renew the permit after 10 years, provided the company has recorded annual gross revenue of at least MUR4 million (c. USD89,000) as of the third year of registration.
OP holders are also eligible to apply for a 20-year Permanent Residence Permit (PRP) after three years, if the company has recorded either annual gross revenue of at least MUR15 million for the three years preceding the application, or an aggregate turnover of MUR45 million for any consecutive period of three years during the current permit.
Both corporate and personal income tax is applied in Mauritius at a rate of 15%, with additional tax concessions available. Mauritius tax residents are taxed on Mauritius-sourced income only, and there is no capital gains tax or inheritance tax. The absence of foreign exchange controls and a strong tax treaty network makes Mauritius an excellent platform for international business expansion.
United Arab Emirates (UAE)
Registering and operating a company is one of the most popular routes to obtaining residency in the UAE. It allows entrepreneurs and business owners to combine the personal benefits of becoming a UAE resident with the commercial benefits of operating in a highly business-friendly environment.
Entrepreneurs can enjoy 0% income tax and 100% business ownership, alongside a strong banking system, first-rate infrastructure and a strategic location with easy access to emerging markets in Asia, Africa and Europe.
A residence visa allows the holder to travel in and out of the UAE without the need for additional entry permits and also enables the holder to sponsor family members to live in the UAE.
The first step is to choose the appropriate legal structure and location. You will then need to register your company and obtain a trade licence before you can proceed with the residence visa application. To qualify you will need to demonstrate a viable business plan and an adequate capital investment.
With many Mainland and Free Zone company options to choose from, Sovereign will assist in identifying the most suitable structure and location for your business and personal needs. We can then assist with all the applications.
Comprehensive Residency through Corporate Establishment and Tax Efficient Planning
Sovereign's extensive network of offices, experienced local teams and professional service partners ensure that we are well placed to assist clients in the development and implementation of the most suitable overall residence strategy for their needs.
Sovereign works closely with applicants during each stage of the planning and implementation process. When combined and managed correctly, the following Sovereign Group services will also enable clients to develop and implement a comprehensive, flexible and tax efficient strategy:
- International residency and citizenship programmes
- International residency and citizenship programmes
- Corporate structures and banking
- Tax residency programmes and planning
- Trusts and foundations
- Estate and succession planning
- International retirement plans
- Wealth management
- International life and medical insurances.
If you have any questions or would like to discuss how you and your family could benefit through the creation and implementation of an international residency, tax residency or citizenship-based strategy, please contact Sovereign's Residency and Citizenship Planning team.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
