What are 'Golden Passport' Schemes?

What's the best way ensure a spot in paradise?


What are 'Golden Passport' Schemes? How do they enable tax dodging?


What's the best way ensure a spot in paradise? To some ancient Greeks, the answer was burying themselves with golden tablets engraved with ritual texts. These served as passports by confirming the initiates’ identity and purity and allowing them to move easily between the mortal and divine realms, protecting the dead from any evils that might haunt them along the way.


To some ancient Greeks, the answer was burying themselves with golden tablets engraved with ritual texts

Tax evasion: A list of 21 'high risk' countries, including three European destinations operating golden passport schemes has been released by the Organization for Economic Cooperation and Development, stating that those specific schemes threaten international efforts to combat tax evasion. Malta, Monaco and Cyprus are included on the list for selling residency or citizenship.


The practice of issuing 'golden visas' isn’t restricted to these blacklisted nations alone. In a conjoint report, Transparency International and Global Witness stated that the UK, Spain and Portugal benefited the most from selling residencies within Europe.

The Paris-based body has raised the alarm about the fast-expanding £2.3bn citizenship by investment industry, which has turned nationality into a marketable commodity.


Citizenship for sale: how tycoons can go shopping for a new passport


In exchange for donations to a sovereign trust fund, or investments in property or government bonds, foreign nationals can become citizens of countries in which they have never lived.


Three European countries – Malta, Monaco and Cyprus – are among those nations flagged as operating high-risk schemes

Three European countries – Malta, Monaco and Cyprus – are among those nations flagged as operating high-risk schemes that sell either residency or citizenship in a report released by the Paris-based think tank.

  • Monaco is one of the countries flagged as operating high-risk schemes which sell either residency or citizenship in the OECD’s report.

  • Even the UK has a special visa available for those who invest £200,000 in a UK business, although this doesn’t come with a passport. The Tier 1 Investment Visa allows individuals to apply for residency in exchange for US$1.15 million investment, suggesting citizenship is already marketed as a commodity.

  • Canada has an 'immigrant investor program' available for those with a net worth of at least $1.6m and an $800,000 investment.

What are these golden passports? Who offers them? How do they interfere with the battle against tax dodging? And what action will be needed to crack down on this practice?


They are schemes which essentially allow rich foreign investors to buy citizenship, or long-term residency rights, in a country. The Paris-based body has raised the alarm about the fast-expanding $3bn (£2.3bn) citizenship by investment industry, which has turned nationality into a marketable commodity.


For instance Cyprus offers citizenship within six months to those who invest €2.68m in local real estate. There is no language requirement or interview required. For permanent residency an investment of just €300,000 is required.

Cyprus offers two types of schemes: citizenship by investment, naturalization of investors by and residence by investment.

According to the OECD the schemes offered by Cyprus and 20 other countries 'potentially pose a high-risk to the integrity of CRS' (Common Reporting Standard).


Malta has an 'Individual Investor Program' which offers citizenship in return for a €650,000 contribution to the government, an investment of €150,000 in government-chosen assets and five years of residence.

Malta, a member of the European Union has sold citizenship to more than 700 people, according to a report by the OECD. The Maltese government offers an "individual investor program" which includes citizenship in return for a $660,000 contribution to the country's development.


The program operated by Malta is particularly popular, because as a European member state, its nationals, including those who buy citizenship, can live and work anywhere in the EU. The country has, since 2014, sold citizenship to more than 700 people, most of them from Russia, the former Soviet bloc, China and the Middle East.


There are similar schemes offered by countries ranging from Antigua to Bahrain, from Malaysia to Panama.

Also on the OECD blacklist are a handful of Caribbean nations that pioneered the modern-day methods for the marketing of citizenship. These include Antigua and Barbuda, the Bahamas, Dominica, Grenada, St Lucia, and St Kitts and Nevis, which has sold 16,000 passports since relaunching its program in 2006.


In exchange for donations to a sovereign trust fund, or investments in property or government bonds, foreign nationals can become citizens of countries in which they have never lived.


If a UK national declares themselves as Cypriot, for example, information about their offshore bank accounts could be shared with Cyprus instead of Britain’s HM Revenue and Customs.

The OECD believes the ease with which the wealthiest individuals can obtain another nationality is undermining information sharing. If a UK national declares themselves as Cypriot, for example, information about their offshore bank accounts could be shared with Cyprus instead of Britain’s HM Revenue and Customs.


After analyzing residence and citizenship schemes operated by 100 countries, the OECD says it is naming those jurisdictions that attract investors by offering low personal tax rates on income from foreign financial assets, while also not requiring an individual to spend a significant amount of time in the country.


The OECD warns golden passports could be sold to dangerous criminals, and countries including Bahrain, Colombia, Malaysia, Mauritius, Montserrat, Panama, Qatar, Seychelles, Turks and Caicos Islands, United Arab Emirates and Vanuatu have simplified the process.

Concern is growing among political leaders, law enforcement and intelligence agencies that the schemes are open to abuse by criminals and sanctions-busting business people.

Noting the key link between golden visas and corruption, the report stated that the scheme had been used to allow in many residents of China, Russia and the Middle East through countries in the EU.


Who has used such schemes?


A number of Russians close to Vladimir Putin have used the Maltese system.

Two Ukrainians accused of corruption, Gennady Bogolyubov and Igor Kolomoisky, were granted citizenship of Cyprus.

Several members of Angola’s ruling class seem to have used the Portuguese route.


A recent report discovered that the EU has created more than 6,000 new citizens and nearly 100,000 new residents in this way over the past decade.


The OECD has established a “Common Reporting Standard” (CRS), which compels financial institutions in member states to automatically exchange information on who holds bank accounts. It is designed to make it more difficult for people to evade income tax by holding money offshore.


The OECD said on Tuesday that golden visa schemes 'can be misused to undermine the CRS due diligence procedures by helping some people under-declare their assets and mislead about their tax jurisdiction.


These are countries that charge a very low rate of income tax on offshore assets and which do not require the investor to live for any significant period during each year in the country.


What does the OECD want to happen?


The OECD essentially says that banks should police the system more assiduously and determine whether the information they have been given by account holders on their assets is 'incorrect or unreliable'.

Second passports can be misused by those wishing to 'hide assets held abroad', according to the think tank. Its flagship initiative is a framework for countries to cooperate in the fight against tax evasion by sharing information.


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A number of Russians close to Vladimir Putin have used the Maltese system.

The OECD believes the ease with which the wealthiest individuals can obtain another nationality is undermining information sharing. If a UK national declares himself as Cypriot, for example, information about their offshore bank accounts could be shared with Cyprus instead of Britain’s HM Revenue and Customs, thus misrepresenting an individual’s jurisdiction of tax residence.


Together with the results of the analysis, the OECD is also publishing practical guidance that will enable financial institutions to identify and prevent cases of avoidance through the use of such schemes, by making sure that foreign income is reported to the actual jurisdiction of residence.


Will that be enough to stop the problem?


Not according to the pressure group Transparency International, which wants much firmer multilateral action, led by the EU, to crackdown on abuse.


“Only a unified and coordinated approach will prevent risky individuals from ‘passport-shopping’ between jurisdictions and avert a race to the bottom in terms of standards,” it says.


The full list of blacklisted nations:


– Antigua and Barbuda – Bahamas – Bahrain – Barbados – Colombia – Cyprus – Dominica – Grenada – Malaysia – Mauritius – Monaco – Montserrat – Panama – Qatar – Saint Kitts and Nevis – Saint Lucia – Seychelles – Turks and Caicos Islands – United Arab Emirates – Vanuatu











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