African High Net-Worth Individuals (HNWI) with an interest in overseas investments in developed markets have, over the last few years, been attracted to the idea of increased international investment exposure.
There are several countries that allow an investor to acquire citizenship or residence through investment, with four citizenship-by-investment programs of real current interest, two in the Caribbean and two in Europe, as well as a further interesting residence by investment program in Europe.
Andrew Taylor, an international investment expert and Vice President of Henley and Partners, says each of the five countries offer something different.
“The programs in the Caribbean offer more banking and tax incentives and the benefit of travelling on a passport that offers a high level of visa-free travel. On the other hand, the European programs offer the ability to live and work in Europe, attend European educational institutions and also allow visa-free travel to more countries,” says Taylor.
“Investing offshore and doing business internationally in general comes with risks. However, these risks are quite manageable if you understand the system by working with the right global partners.”
The two citizenship-by-investment offers in Europe are from Malta and Cyprus. These are most attractive for EU citizenship but are also the most expensive, requiring investments starting from Eur 1 million.
St. Kitts and Nevis
St. Kitts and Nevis offers the best tax incentives compared to other programs. There is no direct taxation in St. Kitts and Nevis. Even if citizens reside on the islands, they will not be subject to personal income tax, estate duty, inheritance or succession taxes, gift taxes or net worth tax.
In St. Kitts and Nevis, there is a corporate income tax of 35% of net profits, but the country offers qualified companies a tax holiday on corporate profits for up to 15 years. Nevis does not levy tax on companies and foundations, as long as no business is transacted on the island. There is a 10% withholding tax payable by both individuals and companies remitting payments to persons outside of St. Kitts and Nevis. There is also an annual property tax in St. Kitts and Nevis which is minimal and calculated on the market value of the property. The current rate of VAT in St. Kitts and Nevis is 17%.
Antigua & Barbuda
There are no capital gains or inheritance taxes in Antigua and Barbuda. Personal income tax starts at 10% and increases to 25% on chargeable income in excess of *EC$25,000 per month or EC$180,000 per annum. Each individual has a personal allowance of EC$36,000 per annum. Temporary residents will only be taxed on income arising in or derived from Antigua and Barbuda. Individuals who have their permanent residence in the country, or who are present for at least 183 days a year, will qualify as residents of Antigua and Barbuda and will be subject to tax on their worldwide income, although this may change to taxation limited to locally sourced income in the future. The business and corporate tax rate is 25% of net profits, although attractive concessions are available to qualifying companies.
Property tax is levied on all properties in Antigua but not in Barbuda. The taxable value is based upon the property’s current market value construction replacement cost with the applicable tax rate dependent upon the classification of the property (residential or commercial).