Tuesday, August 7, 2018
As published in the Sunday Business Post, 5th August 2018.
Ireland, like many of our EU neighbours, includes among its myriad of immigration schemes a residence-by-investment programme for high net worth individuals. The Immigrant Investor Programme (IIP) was only introduced in 2012 and is still in its infancy. As it grows and expands, it learns. And learn it must.
But first, it must be understood. What is it, what is it not and what are its benefits?
The IIP seeks to attract foreign direct investment by offering incentives to high net worth individuals and their families to make sizeable investments in the state (whether into charities, investment funds, enterprises or real estate investment trusts). The incentive is that the investor and their immediate family are granted a right to reside in Ireland with freedom to work, study, set up a business or be self-employed as they wish.
This is called a ‘Stamp 4’ residence permission. Stamp 4 permissions are granted to EU nationals, to refugees, to spouses and parents of Irish and EU nationals, to people granted humanitarian leave to remain and to work permit holders after minimum periods of residence, among others. This is important; the IIP is not exclusionary of other legal migration routes into Ireland. It is additional and supplementary.
The programme is aimed at high-net worth individuals for two reasons. First, only a person with a net wealth of at least €2 million can afford to make the investments required. Secondly, this is to ensure that any person taking up residence under the programme will not become a drain on the public purse.
Crucially, the IIP does not offer fast-tracked Irish citizenship or any other form of preferential access to citizenship. An investor motivated by a burning desire to obtain an EU passport fast would be wise to look further afield. An investor (or their family member) will have to reside in Ireland for five years before being able to apply for an Irish passport – the same degree of integration and commitment to the state required for naturalisation ordinarily.
So the motivation for a person to donate half a million euro to an Irish charity, or to invest a million into an enterprise or fund in this country, is inextricably linked to their interest in Ireland. Taking some examples: they have a child who plans to study here, the political situation at home is increasingly volatile and Ireland is a country they would feel safe moving to if the need arose, they have business connections and prospects in Ireland or, in the words of a recent client: “Trump is making life in the US unbearable, we’ve watched social progress and democracy thrive in Ireland and feel it is time for a move.”
These aspects of the Irish programme set it apart from related, but radically different, immigration investment programmes in other jurisdictions. Recent EU concerns have emphasised a discomfort in granting citizenship (and by extension in some cases, an EU passport) on foot of the most minimal level of residence or integration in the country of investment. This does not arise in Ireland.
Another concern raised internationally is the risk that certain investors (acting illegally and fraudulently) may try to exploit their residence status for tax evasion or money-laundering purposes. However, a recent IGEES report (on foot of an internal evaluation of the IIP) does not appear to have associated any such risks with Ireland’s scheme.
In recent weeks, members of the Irish Naturalisation and Immigration Service (INIS) were grilled at length by the Oireachtas Committee on Justice and Equality on the content of that unpublished report, giving us some flavour of the concerns raised in it – and there was not one mention of money laundering, tax evasion or other nefarious uses of the IIP (if the report suggested any of the above, we can be sure it would have been seized on). Of course, it is vital that if there are any procedural frailties in the administration and monitoring of the IIP, these must be identified and remedied to protect against any such abuse.
Thankfully, these are not the key concerns arising for the IIP. In fact, the greatest concern raised in the Oireachtas was – wait for it – that Ireland is doing so well economically that we don’t need to create jobs or attract foreign direct investment through this programme any more.
Not four years ago, a similar debate in the Oireachtas saw pressure put on INIS to better market the IIP in the context of our Action Plan for Jobs 2014. And not four months ago, we were being warned that along with our positive economic forecasts came uncertainty regarding the possible impacts of Brexit and US tax reforms, to name the most obvious. So, while it may all seem well and good that we can be so blasé about the over half a billion euro injected into our economy through the IIP, it is hoped some measure of common sense will win the day.
Investments through the IIP have created jobs, supported emerging enterprises unable to otherwise access finance, facilitated development of social housing, primary healthcare centres and nursing facilities, and supported numerous community, charity-based projects led by reputable, well-known organisations in a number of areas including children’s health and disability.
A forthcoming external review of the IIP recently announced by INIS is to be welcomed. Greater transparency and an emphasis on compliance must be key to the further development of the programme. And while we certainly need to reassure the public of the benefits and opportunities offered by the programme, it would be short-sighted to dismiss the significant role played by investors.
As clichéd as it may sound, investors are people too, and deserve to be treated with respect and dignity in the same way as any non-Irish national deserves when engaging with our immigration services.
Aoife Gillespie is a senior associate at commercial law firm Philip Lee, and specialises in immigration law.
Any questions on this topic, please contact Aoife Gillespie.