Offshore

INTERVIEW: A Dominica Resort And The Evolving World Of Citizenship-By-Investment

Tom Burroughes, Group Editor, London , 27 February 2017

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Dominica is seeking to make the running in the citizenship-by-investment world, and an upcoming property development sheds light on how the programme works in the country.

In the relentless competition among international financial centres, one tactic is to offer wealthy individuals investments into smart real estate. And if that comes with sun, sea and glorious views, so much the better.

One jurisdiction that hopes its citizenship-by-investment programme will prove a winner is Dominica, the Caribbean island. And a 12-acre development taking shape and due to be fully complete in 2019 sheds light on how these citizenship-by-investment programmes are evolving. (See more on the subject here.) The resort in question is being developed by locally-based organisation Oriental Developers (Caribbean) and marketed by Silver Beach Development. The company is working in conjunction with the Marriot International group, and will open its resort in 2019 as an Autograph Collection Hotel.

The resort, for which official approval was given in September last year, offers the option of investing in shares at $220,000 to capture future profits in the development, with the benefit of being able to stay in the resort for one week per year. As well as investing in the development as a general business proposition, Silver Beach also offers two types of units – Calypso Suites ($300,000) and Swim-up Suites ($320,000). Investors who buy these units will get a title deed for a unit, and yearly returns until the resort is finally built. Thereafter, investors, who purchase units receive 55 per cent of the net income earned from the rent of their unit. For the first three years of the resort’s operation, the minimum return that these investors will receive will be 2.5 per cent of the cost price of the investment. These investors will also earn the right to reside in the resort for up to two weeks per year.  

These are some of the benefits that Silver Beach is offering and they are being pitched at high net worth individuals looking to spread the range of jurisdictions in which they can live amid a time of rising geopolitical uncertainty. Terms and conditions vary widely: some jurisdictions, such as Dominica, do not require holders of such citizenship to spend more than a few days or weeks there, raising potential risks of abuse unless there are robust due diligence programmes in place, a point made in October 2014, for example, by the Migration Policy Institute. These programmes are now big business globally. A range of countries, including those in the developed world such as Spain, Malta, the UK, Portugal, Singapore, the US, and Australia, offer programmes of varying cost and terms.

The Dominican system is competitive without compromising on standards, Silver Beach told this publication in a recent call.

“The Caribbean programmes are very well positioned. Their passports are strong, they offer favourable tax regimes, and they do so at a fraction of the price of most other programmes,” a spokesperson for Silver Beach said. Dominica offers visa-free access to more than 130 countries, including the UK, the Schengen area of the European Union, and Singapore. Dominica does not levy global taxes, wealth and inheritance taxes, estate duties, or capital gains tax. It also charges no income taxes, so long as income is not earned in Dominica. There are no limits on the repatriation of profits or imported capital to Dominica.

The price tag on buying passports varies widely. According to Silver Beach, a Cypriot passport, to give one example, can cost about €2.5 million ($2.67 million), as compared to a Dominican passport that can cost about $100,000 when a donation is made to the country’s Economic Diversification Fund, or a minimum of $200,000 through investment in an approved real estate project like that of Silver Beach Devlopment. At the start of January, as if to underscore the price competition under way, the government of St Lucia in the Caribbean scrapped the old requirement for an affidavit to declare financial resources of at least $3 million; meanwhile, minimum contributions to the country’s Economic Fund were cut to $100,000, half the previous requirement for single applications. The old cap of 500 permitted applications was also lifted.

Such hard numbers will tell only part of the story around the attractiveness of a particular jurisdiction. For as Silver Beach put it to this publication, the plus points of its development look very easy on the eye: it has partnered with Marriott International, and will operate as an Autograph Collection Hotel. It sits on a gentle beach side slope, on one of Dominica’s best beaches, and is just a short walk from DeVry University-owned Ross University School of Medicine – a US offshore medical school. On top of that the CEO of Silver Beach Development, Alick Lawrence, is considered the most experienced lawyer in the field of economic citizenship in Dominica.

The citizenship-by-investment industry continues to expand, and in a world where spreading risk is about much more than asset allocation, having access to different jurisdictions will make sense to some HNW individuals. That certain places happen to be in the Caribbean will likely make them a very enticing option indeed.

 

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