EESC: the EU insists on cessation of work schemes “citizenship for investment”

EESC: Евросоюз настаивает на прекращении работы схем «гражданство за инвестиции»

Citizenship is the relationship between the citizen and the state, whether by birth or naturalization. However, in recent years in several member States of the EU scheme created by the citizenship and residence of investors to attract investment. According to the opinion adopted by the European economic and social Committee (EESC) at the October plenary meeting, this practice creates serious risks and should be banned in all member States of the EU.In recent decades, the financial crisis has caused the need to increase revenues in many member States of the EU, which has developed a scheme allowing citizens of third countries to obtain quick access to the nationality or place of residence in exchange for a significant investment: so-called “Golden passport” or “Golden visa”. EESC questioned this practice and urged States to reject such schemes.The opinion of the EESC welcomes the recent report of the European Parliament, which also calls for the termination of all existing schemes as soon as possible. The report, released by the European Commission, also indicated that these schemes pose risks from the point of view of security, money laundering, tax evasion and circumvention of EU rules.Currently in the EU there are between 17 to 20 schemes of nationality and residence of investors. According to a joint report published by Transparency International and Global Witness in 2018, these schemes have given the EU more than six thousand new citizens and 100 thousand new residents since 2008, and member States attracted about 25 billion euros of foreign direct investment.Jean-Marc Rouran, Rapporteur of the EESC, stressed that these schemes often do not meet the fundamental rights underpinning European cooperation and insists on the need for phasing out these schemes across the EU.In conclusion, States that no distinction should be made in ways to eliminate risks associated with public investment and residence by investment. These risks include:— the money laundering and corruption: the scheme of “Golden visa” and “gold passport” provide quick access to the nationality or place of residence, sometimes for several months; however, the profile and origin of applicants often make it difficult to conduct adequate security checks, and not all member States are equally selective. Moreover, intermediary bodies through which channeled funds paid by the applicants, are not subject to EU legislation on money laundering;— governance: lack of transparency in many of these schemes exposes the state and public officials at risk of corruption because of these weaknesses, as wide discretionary powers in decision-making, lack of independent oversight and the risk of conflict of interest affecting private agents and intermediaries involved in the process of application and due diligence process;— transparency: The EESC would like to see more official data (size of investment, number of applicants, beneficiaries, nationality, scope and impact of investment, etc.);— the dimension of the EU: EESC acknowledges that the lack of harmonised standards may lead to reduced transparency. Not only that, EU citizenship is used as a sales tool to attract investors, but the decision of a member state to issue a visa or passport may affect other member States and the EU as a whole, as it provides access to the entire Schengen area and the internal market;— the tax evasion: schema “citizenship by investment and residence by investment” can be misused in order to evade taxes, because they allow investors to remain tax resident in their jurisdiction at the same time receiving benefits from the proposed tax benefits of these schemes;— other risks: as also pointed out by the European Parliament, there are other potential risks, such as volatility in investment flows, social and economic risks arising from inflation of prices in the real estate market, or political risks such as the deterioration of confidence in the EU institutions or the reputation of EU citizenship. It also highlights the risks of increased discrimination between categories of migrants.To address these potential risks EESC endorses the work of the group of experts established by the European Commission. According to EESC, as long as the schema of the “Golden visa” and “Golden passports” will not be withdrawn from use, this group should focus on establishing minimum standards for due diligence and security checks, as well as on the operational integrity of the circuits.EESC also recommends that the Commission establish a coordination mechanism that will allow member States to exchange information on successful and rejected applications for citizenship and residence permit in order to avoid “buying a passport” or “visa shopping” between jurisdictions risky entities. Also recommended that all agents and brokers providing services to applicants, subject to EU rules to combat money — laundering, it is necessary to clarify the role of the private sector with the introduction of a mandatory code of conduct, supervision of regulated professionals, and creating a public registry of service providers in this area.Finally, the EESC recommends that, when working on phasing out existing schemes acceding countries were not allowed to run their own schemes in their accession to the new schema is not added to the existing ones.Defense attorney Eli gerwitz, an expert in the field of second citizenship, believes that the call to completely abandon the “Golden visas” and “Golden citizenship” de facto from the sale of the status, whether the purchase of expensive real estate (often significantly more expensive than its objective market value, or “sewn” into the cost of huge commissions) or for investment (often more like a donation, or simply a constraint) is, of course, the end point of the route.”But the attentive passengers and those who chose to remain on the platform or chose other trains, I had noticed that the train had already left in that direction, and gaining speed.The publication Cyprus and Malta, lists of people who have received this status for investment, in itself shouldn’t scare you — something to fear law-abiding citizens of the countries of origin. Go explain to Europeans the difference between what you reported about the second citizenship under the law of the country of residence, and the fact that the existence of you and of citizenship and the amounts of money needed for its purchase, is published in all Russian resources”, — says the lawyer gerwitz.He also believes that the inspection Malta already issued citizenships, and the UK have already been issued residence permits, “also did not seem to bother those who have purchased them lawfully, lawful money, and no one is hiding: I will check, will be quieter “new Maltese”. But we can assume that doing these checks would be the twins staff of compliance departments of banks which target function is not reasonable to hedge risks and to reduce them to zero. That is, the primacy of negative over positive response. Who tried recently to transfer large sums of money from one country to another, he will understand me”.So long before “program status in exchange for money” will be officially buried (if at all), they run the risk of being reduced to “no” to trivial human error, officials reinsurers.And the world will again remember that the main way of acquiring a new citizenship, not by birth is naturalization and repatriation. And the anecdote about what a Jew is not a luxury but a means of transportation, again it will remember and start to tell him about the Germans, Greeks, Romanians and a lot of other people, the lawyer said.

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