Take It From Russia: Sometimes, Less is More by Ted Baumann, The Sovereign Investor
On November 7, 1917, Vladimir Illych Lenin ousted the Provisional Government of Alexander Kerensky. Russian aristocrats and capitalists, fearing for their wealth and safety, scrambled to find offshore havens. Many ended up in Paris, Geneva, and other western European capitals, typically with whatever wealth they could carry in hastily-packed suitcases.
Funny how times haven’t changed. Russians with money are once again fleeing westward 96 years later. These days, however, they’ve taken the lessons of 1917 to heart, and are making their offshore plans well before the doo-doo hits the fan in Mother Russia.
Their favorite destination? Unlike 1917’s émigrés, today’s well-heeled Russians aren’t satisfied with remaining on the same continental landmass as Russia itself. They’ve gone the extra mile, as it were, aiming for the island kingdom of Great Britain, where the number of Russians who were granted visas through the country’s economic citizenship program this year has soared by 69%.
But could they have gotten a better deal? You better believe it …
A Bit Steep for a Rainy Island
To get a U.K. investor visa, our Russian would have to invest £2,000,000 ($3.1 million) or more in U.K. government bonds, share capital or loan capital in active and trading U.K. registered companies. The visa is good for a little over three years, but he or she can apply to settle permanently in the U.K. after two years if he or she invests £10 million ($15.5m) — or three years for £5 million ($7.7m). Of course, there are various processing and other fees the applicant has to pay for him and his dependents.
That doesn’t include the import duties for the odd Mercedes Maybach or Aston Martin in their garage (even if the car originally came from the U.K.), and a due diligence process so thorough they’d think they’re visiting a proctologist.
That makes swapping status from a citizen of republican Russia to an hereditary subject of the House of Windsor-Saxe-Coburg-Gotha — i.e., Queen Elizabeth the Second — one of the world’s most expensive offshore residence transactions.
And as much as I admire Great Britain and its constituent England, Scotland, Wales and Northern Ireland, the prospect of dropping many millions to enjoy flat beer and overcooked roast beef would probably keep me looking.
Other Islands for Economic Citizenship
Our Russian could have opted for one of several gorgeous islands in the Caribbean for a tiny fraction of the cost of a U.K. investor visa, and gotten immediate citizenship to boot. Dominica would cost about $150,000; St. Kitts and Nevis or Grenada a little over $300,000; and Antigua and Barbuda $200,000. None of them would require that you actually live there, and only lovely little Dominica would ask for an interview.
What’s more, all of them would give our applicant full visa-free access to the Schengen area of the European Union, plus the U.K. itself.
Closer to home, the Mediterranean island nation of Malta would give our Russian permanent residence if his net worth is at least €265,000 ($320,000); or, he could have a net worth of just €17,500 ($21,000) and buy property worth €275,000 ($331,000), or simply rent property for a minimum of €9,600 ($11,500) per annum. Or he or she could simply buy citizenship there for €650,000 ($782,000) — about a quarter the price he’d pay in the U.K.
Perhaps the best deal of all would be to obtain permanent residence in Uruguay. All our Russian friend would need is an address in Uruguay (owned or rented) and proof of enough income to sustain his or her lifestyle (fine French champagnes and beluga caviar optional). On top of that, he’d get a practically tax-free existence, banking privacy and freedom (including deposits in any currency), and one of the most liberty-loving governments on the planet.
Doing the Homework
When revolution, ruin, or other peril actually breaks out, it’s generally too late to “make a plan,” as they say in South Africa, where I’m spending the holiday season this year. You need to think ahead and have your escape route already in place.
The Russians moving to the U.K. at great personal expense have no doubt done what I recommend in my Plan B Club — researched the pros and cons of various offshore residence options and found the one that best meets their needs. Given the weather in Russia, I can respect their decision to opt for gloomy England rather than the sunny Caribbean. If it were me, I’d head for the beaches of Dominica or Antigua, or the nightlife of Montevideo, Uruguay.
With the U.S. becoming more “iffy” by the day, isn’t it time you started on your own Plan B?
Offshore and Asset Protection Editor