Russia is on the path to joining a host of other countries that have introduced programs for obtaining residence with a potential to acquire citizenship by means of investment in the given country. The so-called ‘Golden Visa’ program is expected to fully roll out by mid-2022 with the main purpose to establish a stable immigration population growth while focusing on attracting high quality human capital.
The Golden Visa programs in a number of countries worldwide are established to accelerate the inflow of foreign investment and boost local economic development. A number of smaller countries have been implementing this scheme successfully for years and Russia is looking into ways to introduce its own program accordingly. The Golden Visa program could come just in time given the sluggish economic growth in the past decade and a rather negative sentiment investors worldwide have at the moment towards the investment environment in Russia. It would be the first time Russia introduces permanent residence and naturalization visa economic contribution to the world’s largest country. Successful applicants are expected to gain a number of rights similar to the citizens of the country alongside simplified procedures to work and reside in Russia.
The introduction of the Golden Visa program is likely to attract a number of investors from Middle Eastern states as well as African nations, but it is anticipated that interest from Mainland China would be strong as well. Given the already strong relationship between the two countries on a number of levels, the new incentive is likely to attract Chinese investors who may also look into growing the number of business opportunities in the country. Participants in the scheme would be able to benefit from a simplified process of starting their own business, without the need to first obtain work and residence related permits, as well as the ability to participate in the national medical and other social programs and services.
Moreover, there is another incentive for establishing a business and moving residency to Russia that could be advantageous to some foreign investors. While a number of countries utilize the progressive personal income tax regime, with the highest income bracket tax rate in some jurisdictions going as high as 40% to 45%, Russia’s personal income tax is set at 15% on all worldwide income for the tax residents of the country. While it is far from some of the most favorable personal income tax rates (or even tax exemption on personal income) worldwide, it still offers rather attractive terms for personal taxation.
Although the bill is yet to be confirmed and no exact timeline is known at the time of writing this article, a consensus seems to exist on how the program is going to function. One of the ways to obtain the Golden Visa would be an investment of RUB 30 million (USD 400,000) into either Russian Government bonds or real estate. Another path would be a foreign direct investment of RUB 10 million (USD 135,000) to establish a business and employing at least 10 local people in the business. The latter would be one of the cheapest methods for obtaining a Golden Visa among countries worldwide.
Real estate might be the primary segment which would be attractive to investors from Mainland China. Since 2005, Chinese companies invested over USD 55 billion into the Russian economy, with real estate accounting for roughly 9%-10% of the total investment. Given an increased interest from both Chinese businesses and individuals in the Russian economy, real estate could prove to be a booming segment. Furthermore, in the luxury real estate segment Moscow has been one of the leading destinations in Europe for attracting high-quality real estate projects and with the abundance of financing and demand, real estate prices in the Russian Capital have been rising steadily.
In conclusion, Russia is likely to launch its Golden Visa program in 2022 with the goal of attracting foreign capital and offering attractive conditions for international business, personal taxation, and a number of opportunities that are yet to be unlocked in the country. Should you have any questions, or require any additional information, please do not hesitate to contact us at info@dandreapartners.com.
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