The CBI Index: demystifying CBI - citizenship vs residence

Although ‘citizenship by investment’ is now a major talking point for governments, international organisations and the media, confusion persists as to the unique nature of citizenship by investment and the qualities that set it apart from other forms of investor immigration.

At the heart of the citizenship by investment process is the promise that a successful applicant will receive ‘citizenship’ – that is, membership of the nation under whose laws the application was lodged. With that membership comes an array of civil, economic and political rights and duties which, other than in extreme circumstances, are permanent and irrevocable. These can range from the right to work, to the obligation to respect and defend the constitution.

The relationship that is formed between the state and the individual – the ‘economic citizen’ – is one that lasts a lifetime. This distinguishes the economic citizen from the ‘economic resident’. Economic residents are those who, having applied under a residence by investment programme, receive a set of temporary and fluid rights, the most prominent of which is the right to live and work in a country. Loss of economic residence remains a real possibility for those who fail to abide by the conditions of their residence, which often include physical presence, the retention or development of an investment, and continued good behaviour.

Despite these significant differences, citizenship and residence by investment are often collapsed into a single category: investor immigration. 

The result can be misperception. In February 2018 for example, the OECD likened citizenship by investment to residence by investment for its perceived susceptibility to abuse by wrongdoers seeking to conceal their tax residence. 

In so doing however, it overlooked the fact that economic citizens do not automatically become residents of their country of citizenship, and that most citizenship by investment jurisdictions – particularly in the Caribbean – do not issue documents that indicate residence, let alone tax residence. It also did not draw distinctions between the robust due diligence processes that characterise the citizenship by investment industry and that allow it to stand above residence by investment.

The CBI Index sheds light on citizenship by investment both as a concept and as a process. Its goal is to dispel unfounded fears, to ensure assessments and critiques are based on fact, and to empower the prospective economic citizen through knowledge and education.