Kirby Tarrant Managing Partner of O’Grady solicitors – TAB member. Kirby Tarrant is one of the most generous, solution driven, insightful lawyers I have ever come across and William Brophy one of his Partners is a really excellent diligent and generous lawyer also. William recently joined the Board of Drinkaware, a voluntary independent and well known Health Promotion organisation. In this article William shares how the Immigrant Investor Programme operates here in Ireland.
PJ Timmins TAB Ireland MD
IMMIGRANT INVESTOR PROGRAMME OVERVIEW
The Immigrant Investor Programme (“IIP”) was established in 2012 and offers non-EEA nationals and their families who commit to an approved investment in Ireland a route to obtain permanent residency in Ireland. The IIP requires a minimum investment of between €500,000 and €2.0 million (depending on the investment option), from the applicant’s own resources and not financed through a loan or other such facility, which must be committed for a minimum of three years. Applications under the IIP increased by 500% in 2016. A total of 329 individuals from 16 different countries applied in 2016. Of this figure, 313 were from China.
Individuals can apply, without committing any investment funding, on the basis of one of four investment options. Once the application is approved and funds are invested, the individual and his nominated family members will be issued with permission to reside in Ireland.
There are currently four investment options for foreign nationals who are interested in acquiring residence in Ireland through the IIP, as described below.
Under this option, a minimum investment of €1.0 million must be made in either a single Irish enterprise or spread over a number of enterprises for a minimum of three years. The enterprise may be a start-up established by the investor or an existing business registered in Ireland.
The enterprise must be registered and headquartered in Ireland and the investment must support the creation or maintenance of employment.
The investment must be made in the name of the individual seeking residence under the IIP. An investment by a corporation, even where owned 100% by the applicant, will not be acceptable. Investments in publicly traded securities will not be considered as an eligible investment under the enterprise option.
An investment in commercial or residential property for the purposes of leasing or renting that property to tenants will not be considered as an eligible investment under the enterprise option.
Under this option, a minimum investment of €1.0 million must be made in an investment fund that has been approved for the purposes of the IIP. The money invested in the fund must be committed for a minimum of three years. All funds have to be invested in Ireland and must represent equity stakes in Irish registered companies that are not quoted on any stock exchange. The funds and fund managers will have to be regulated by the Central Bank to conduct business in Ireland.
Real estate investment trust (REIT)
Under the REIT investment option, a minimum investment of €2.0 million must be made in one or more Irish REITs listed on the Irish Stock Exchange. A REIT is a listed company, used to hold rental investment properties. To eliminate the double layer of taxation which typically hinders the holding of property through a company, a REIT is exempt from corporation tax on qualifying profits from rental property. Instead, the company is required to distribute the vast majority of its profits to investors each year for taxation at the level of the investor. The full REIT investment must be held for three years from the date of purchase. During this three year period, the number of shares in the REIT approved for qualification under the IIP must be retained by the investor even if their value rises above the €2m original investment.
After three years from the date of purchase, the investor may divest no more than 50% of the shares purchased for the IIP. Where an investor has divested shares during year three, the investor may, after four years from the date of purchase, divest no more than a further 25% of the shares purchased for the IIP. After five years from the date of purchase, no requirements on the retention of shares will apply to investors.
Under this option, a minimum endowment of €500,000 must be made in a project of public benefit in the arts, sports, health, cultural or educational fields. Investors will receive no financial return or recoupment of the principal. Where a group of five or more investors wish to combine their philanthropic endowments to contribute to an appropriate project, a minimum investment of €400,000 per investor will qualify under the IIP.
Discount for education expenses
An investor may avail of a discount on their investment for educational expenses that they intend to commit to in Ireland. The following conditions apply:
• Investors may discount their approved investment with eligible education expenses that they commit to incur within the first five years after their permission has been granted
• The education expenses must be for an Irish University or Institute of Technology
• The expenses must be for an investor and/or a family member who has been accepted on an academic programme in one of the above educational institutions
• The maximum discount allowable is €50,000
• Retrospective education expenses cannot be
Applicants must supply supporting documentation as evidence of their net worth, a source of wealth and good character.
All applicants for the IIP must demonstrate that they have a minimum net worth of €2.0 million or equivalent. In addition, applicants must provide an explanation of all of their activities for the previous 12 month period, including their income, investments and loans. Funds for investment and source of funds The applicant must provide evidence of the funds that are to be used for the proposed investment, the provenance of those funds and the ability of the applicant to transfer those funds to Ireland.
Evidence of character
All applicants, as well as their nominated family members over the age of 16, must provide a statement of character from the police authorities of each country in which they have resided for more than six months during the 10 year period prior to making an application.
RESIDENCY IN IRELAND
Once an applicant has been approved and has invested funds in the preferred investment option, the applicant and his or her nominated family will be issued with permission to reside in Ireland.
Residence in Ireland under the Immigrant Investor Programme
All successful candidates and their nominated family members will be granted continuous residence in Ireland, with permission to work, study or start their own businesses in Ireland. An applicant is not required to reside in Ireland in order to maintain the immigration permission. The only requirement is that the applicant visits Ireland at least once per calendar year.
First five years
Immigration permission is initially for two years and will be extended for a further three years subject to certain conditions being fulfilled.
After five years
After the initial five years, the investment in Ireland will be deemed as having being completed for immigration purposes. There will be no further conditions requiring an IIP participant to make an investment in Ireland. Thereafter immigration permission will be extended for further five year periods without limit subject to two conditions:
• The participant has not become a financial burden on Ireland
• The participant has not been investigated, indicted or convicted in relation to any criminal offence in any jurisdiction
Eligible family members
Residency under the IIP is also available to spouses/partners and children under 18 years of age for whom the applicant and/or their spouse or partner has legal guardianship. In certain cases, children between the ages of 18 and 24 will be considered where they are unmarried and are financially dependent on their parents.
The IIP does not provide for preferential access to naturalisation for successful applicants. Successful applicants are free to apply for naturalisation in the normal manner under the provisions of the Irish Nationality and Citizenship Acts 1957-2004. In summary, this legislation requires applicants for Irish naturalisation to be physically resident in Ireland for the 12 months prior to application and to be physically resident in Ireland for four of the preceding eight years, i.e. five years. Only residence where the applicant physically resides in Ireland is considered for the calculation of the minimum residency period in naturalisation applications. Investors and their family members who exercise their right not to reside in Ireland under the IIP will not fulfil the residency requirements for naturalisation. A person can be regarded as physically resident in Ireland and still travel abroad for business or leisure. However, the person’s home must be in Ireland and they should spend the larger part of the year there.
START-UP ENTREPRENEUR PROGRAMME
The Start-up Entrepreneur Programme was established by the Irish Government in 2012. It is a more suitable option for entrepreneurs who will be actively engaged in the establishment of a business and have a lower level of funds to commit to a project. The programme provides a route for non-EEA nationals and their families who commit to a high potential start-up in the innovation economy in Ireland with funding of €75,000 to secure residency in Ireland for the purposes of developing their business.
The sort of businesses intended for this programme are so-called “High Potential Start-Ups” (“HPSUs”) that are part of the innovation economy, in areas of high potential growth in the future.
To qualify as a HPSU, the start-up venture must be:
• Introducing a new or innovative product or service to international markets
• Capable of creating 10 jobs in Ireland and realising €1 million in sales within three to four years of starting up
• Led by an experienced management team
• Headquartered and controlled in Ireland
• Less than six years old
The scheme is not intended for retail, personal services, catering or other businesses of that nature.
Applications that centre on small or medium enterprises in domestically orientated business areas such as retail or hospitality are not appropriate for the programme.
Applicants are required to have secured funding of a minimum of €75,000 for their business proposal from one or a combination of the following sources:
• Their own resources
• Business loans
• Business angel/venture capital funding
• Grants from an Irish State agency
Funds must be capable of being transferred to Ireland and convertible to euros. Many jurisdictions have controls over the transfer of currency and it will be necessary for the applicant to prove that the funding can be transferred to Ireland if the application is successful.
Where a proposal has more than one principal, other than family members, seeking to avail of the Start-up Entrepreneur Programme, then each
principal will be required to demonstrate access to €75,000 funding.
EVIDENCE OF CHARACTER
Applicants must provide a statement of character from the police authorities of each country in which they have resided for more than six months during the 10 year period prior to making an application. They will also be required to arrange for the submission of an affidavit attesting to their good character and affirming that they have no criminal convictions. This affidavit must be produced by a legal practitioner who is registered to practice law in Ireland. A similar affidavit will be required from all family members of 16 years of age or more who are
availing of residence under the scheme.
Successful applicants and their nominated family members will be granted residence in Ireland for two years which will be renewable for a further three years. After five years’ residence, participants under the Start-up Entrepreneur Programme will be eligible for long-term residence in Ireland.
The Start-up Entrepreneur Programme does not provide for preferential access to citizenship for successful applicants. Successful applicants are free to apply for citizenship in the normal manner under the provisions of the Irish Nationality and Citizenship Acts 1957-2004.
For further information on any of the issues discussed in this article please contact:
Partner, O’Gradys Solicitors
Phone: +353 (0)1 6613960
E-mail: [email protected]
The material in this document is provided for general information purposes only and does not purport to cover every aspect of the themes
and subject matter discussed, nor is it intended to provide, and does not constitute, legal or any other advice on any particular matter.