A new proposal currently passing through the Russian parliament could allow foreigners to "buy" Russian citizenship for as little as $300,000. The legislation identifies three groups of individuals that would be allowed to apply for citizenship.
Firstly, entrepreneurs could apply if they have worked for at least 3 years in the Russian Federation and if their annual income is no less than 10 million roubles (≈$300,000).
Secondly, investors with an official stake of 10% or more in a Russian legal entity worth more than 100 million roubles ($3 million) could apply. In effect, this means that a $300,000 would be enough. This includes investment in Russian property - a 10% stake worth more than $300,000 in a privately owned property (condominium) would also enable an individual to submit an application for citizenship after three years.
Finally, students who graduate from a Russian university would be entitled to apply for citizenship after living and working in Russia for 3 years.
Business daily Kommersant, quoting a source in the State Duma, claims that the amendment to section 14 of the law on “Citizenship of the Russian Federation” has already been discussed by the government and will soon be enacted.
The move, perhaps unsurprisingly, was welcomed by Madzhumder Amin, head of the Association of Migrants to Russia, who thinks that the state initiative could improve the investment climate.
“From 2007 we have been promoting this type of policy. If the law is passed, then businessmen from China, India and European countries will increase their investment activity in Russia. And as Russian citizens, it will be easier for the government to oversee their activity.”
Aleksey Solovev, Managing Partner at Prostor Capital, disagrees. When we asked him whether the new law is likely to affect the venture sector he replied
“If I’m honest, no I don’t. Most probably, the bill will be passed and go unnoticed by the venture investment industry”.
One major reason for this is that the proposals do not include any provisions for family members of entrepreneurs. While $300,000 is, in comparison to most European countries, a low price for “investor citizenship”, the absence of provisions for family members means that a family of three would need to invest $900,000 - more than the required investment for permanent residency in many European countries.
In Latvia, for example, you can get temporary residency by purchasing a property worth more than €71,500 in a rural area, or €143,000 in a city. After five years this can be converted into permanent residency. In Bulgaria you can get permanent residency by investing €512,000 in a "priority sector" of the economy, while the Maltese and Portuguese governments offer citizenship to anyone willing to invest in excess of €650,000. However, in the UK investors must commit more than £1 million in order to get an investor’s visa. If they subsequently invest £5 million they (and their families) can get permanent residency after five years, and if they invest £10 million, after 3 years. In Austria a €3 million investment in a socially meaningful project (a museum, institute or foundation), or a €6 million investment in the local economy (not including property) is enough to gain citizenship.
While it remains a point of contention whether the law will have a positive impact, some argue that its impact will actually be negative. Vladislav Grib, head of the civil society department at top Moscow university MGIMO and the Council Vice-President of Russia’s Public Chamber (a civic parliament for NGO-representatives and social activists), suggests that the $300,000 minimum is too low.
“The sums proposed in the document are too low when compared with the amount that the government is likely to spend on the new citizen (pensions, healthcare etc). As for students - to offer them citizenship after just three years is too early. They ought to work for five years, and then we could consider offering them permanent residency.”
However, the Federal Migration Service believes that this is a price worth paying in pursuit of one of its main policy goals for 2012-2015 - “to naturalise specialists in a variety of fields, including entrepreneurs and investors, while also encouraging the permanent migration of young people with professions and skills that the country requires.”
Top image via Shutterstock
Thank You! RusBase Team will connect you soon
Thank You! RusBase Team will connect you soon
All important news and analytics on Russian venture capital market weekly in your inbox
Now you're one step closer to Russia. RusBase weekly digest will be in your inbox soon