Ireland’s Immigrant Investor Programme – the allure of inward investment in return for residency
11 February 2021
How does the Irish government’s Immigrant Investor Programme work, what benefits does it have and how can high-net-worth individuals use it as a means of obtaining residency rights in Ireland?
The Immigrant Investor Programme (IIP) was launched in 2012 after the last recession, to encourage foreign investment into Ireland for the creation of business and to stimulate employment. It has been a relative success, with over 1,100 investors availing themselves of the scheme. Interest in the IIP is likely to increase post-Brexit, as professionals and international investors seek to maintain or establish a base in Europe.
The figures reflect the IIP’s success. Since its inception, figures from the Department of Justice (DOJ) show that it has attracted around €826.5 million’s worth of investment from non-European Economic Area (EEA) nationals. Each of those individuals has invested in Irish businesses or charities in return for the right to reside in the Republic of Ireland.
In its inaugural year, a total of €1.5 million was paid by investors. This steadily increased year on year up until 2017, when a high of €253.7 million was contributed by investors through the IIP. While there has been a small decline since then, the IIP led to €184.6 million being invested in the Irish economy in 2020, despite the Covid-19 pandemic.
What is the benefit to investors?
The IIP offers non-EEA nationals a route to residency in the Republic of Ireland by offering four investment options to investors who satisfy certain criteria – namely, that they are of good character and have a minimum net worth of €2 million. Residency may also be granted to the investor’s spouse, partner and/or children if certain criteria are met. In general, children under the age of 18 will be granted residency if the applicant or their spouse or partner has legal guardianship. In some cases, children between the age of 18 and 24 will be considered for residence where they are financially dependent on the applicant and unmarried.
One advantage of the IIP is that the period of investment does not determine the length of time the investor can maintain residence in Ireland. In contrast, in the UK, investors in a similar programme are required to maintain investment for as long as they reside in the country and must also satisfy minimum thresholds of investment in order to renew their residency permissions.
Under the IIP, once an investor has complied with its terms, they can potentially successively renew their residency permission for five-year periods at a time - effectively maintaining their Irish residency indefinitely. Moreover, investors are only required to maintain their investment for a minimum of three years over the course of their residency. After this period, the investment in Ireland is deemed completed for immigration purposes and investors do not have to make further investment in order to renew their residency. This is especially attractive to individuals seeking to maintain a foothold in Europe as a result of Brexit, where there may have previously been an intention to channel investment into the UK.
Who is eligible?
To qualify for the IIP, applicants must be high-net-worth individuals with a personal wealth of at least €2 million. An applicant must be independently wealthy and cannot rely on funds that are solely owned by another individual. No account can be taken of the applicant’s spouse’s assets save in cases where the assets are held jointly, in which case the spouse’s consent is required.
Additionally, the applicant must have the requisite amount available for investment (see below). This must be from the applicant’s own resources and cannot be financed through a loan or other such facility. The investor’s bank must provide confirmation that the investor has disposing power and that the money can be transferred without restriction to a bank in Ireland.
There is a good-character requirement for each investor and any nominated family member who is over 16 years of age. This can be satisfied by providing police clearance certificates for each jurisdiction in which the applicant lived during the requisite period. The applicant must also provide a due diligence report on the source of their wealth from a recognised risk agent.
What are the investment options?
There are four investment options for non-EEA nationals who wish to acquire residence in Ireland through the IIP:
- Enterprise Investment: a minimum investment of €1m in either a single Irish enterprise or spread over several enterprises, which must be left in place for at least three years. The enterprise may be a start-up established by the investor or an existing business registered in Ireland. It must be registered and headquartered in Ireland and the investment must support the creation or maintenance of employment.
- Investment Fund: a minimum investment of €1m in an approved investment fund, which must be left in place for at least three years. The funds and fund managers must be regulated by the Central Bank of Ireland to conduct business in Ireland. A list of approved investment funds can be obtained from the Immigration Service Delivery (ISD).
- Real Estate Investment Trust (REIT): a minimum investment of €2 million in any single Irish REIT or a multiple of Irish REITs listed on the Irish Stock Exchange, which must be left in place for at least three years. After three years, the investor may divest no more than 50% of the shares purchased for the IIP. Where an investor has divested shares during year three, they may, after four years from the date of purchase, divest no more than a further 25% of the shares purchased for the IIP. There is no requirement for investors to retain shares after five years from the date of purchase.
- Endowment: a minimum €500,000 philanthropic donation (or €400,000 if the applicant is one of five investors or more) to a project which is of public benefit to the arts, sports, health, culture or education in Ireland.
Where does this investment go?
The DOJ sets the IIP’s priorities to focus on investment in projects aimed at social housing, nursing homes, primary healthcare facilities and combatting climate change. The Irish Times reported last month that funding through the IIP had to date raised €245 million for social housing, €165 million for building nursing homes and €108 million for hospitality and tourism (with the remainder being accounted for through investments in various other projects and industries). The DOJ has subsequently confirmed these figures to us.
This level of investment is clearly welcome. A lack of social housing has been a feature of the accommodation crisis with which successive Irish governments have been wrestling since the last recession. Importantly, investment through the IIP offers cheaper finance than traditional funding options. Many projects would not have commenced or succeeded without the availability of capital entering the country through the IIP, as Irish lending practices can often be restrictive.
In future, investment through the IIP could also assist in aiding Ireland’s economic recovery from the Covid-19 crisis, particularly in the hospitality and tourism sector.
What is the application process?
Once an investor has chosen their investment option, they should make an application to the ISD by completing the prescribed application form. Certain documents are required to be submitted with the form. Generally, applicants must provide copies of their passport, birth certificate, marriage certificate and evidence of net worth. All documents must be certified, notarised and/or apostilled.
Depending on the type of investment option, further documentation may be required. For example, if an investor is applying on the basis of making an Enterprise Investment in an existing Irish business, a relocating business or a new business, they must submit a comprehensive business plan completed in the template provided by the ISD. The template is designed to:
- Identify the financial investment being made in support of the application for residency under the IIP.
- Indicate how the investment will benefit Ireland, is in the public interest and will help create or maintain employment.
- Identify the extent of the equity in the business that the investor is acquiring and how they will receive a return on the investment. (As with any investment, the investor may or may not see a return).
Applications are vetted before being passed on to the Evaluation Committee, which is composed of senior civil and public servants from relevant Irish government departments and agencies. On average, the Evaluation Committee will process applications within six to eight months, but it can take longer.
Once the Evaluation Committee is satisfied that the application meets the required criteria, it goes to Minister for Justice for provisional approval. If the Minister signs it off, a letter of provisional approval is issued. There is no requirement to make the investment before this, but once provisional approval has been granted, the investor must do so within 90 days. On completion of the investment, a final letter will be issued allowing the investor to register their residency permission with the ISD.
Following stakeholder feedback, application windows will no longer apply and applications for the IIP can be submitted at any time. This is a welcome new measure and will hopefully encourage further interest in the programme.
What permission is granted to successful applicants?
Successful applicants and their nominated family members will be granted continuous residence in Ireland under “Stamp 4” conditions, which permit foreign nationals to work, study or start their own business without an employment permit. (Investors can, of course, choose to do nothing and simply enjoy our great country!).
Residence is initially granted for two years, which can be renewed for up to five years and beyond. Renewal is, however, based on the investment being in place for the required three-year period and certain other conditions being met. Essentially, the investor cannot become a financial burden on the Irish state, otherwise it is very unlikely their permission will be renewed. Investment progress reports should therefore be prepared on renewal dates, although successful investment performance is not a condition for continued residence.
Under the IIP, applicants are not required to continuously reside in Ireland in order to maintain or renew their immigration permission, which makes it an attractive option for applicants who reside in multiple jurisdictions. The only requirement is that applicants must prove at renewal stage that they visited Ireland at least once per calendar year of their residency.
The position is different if applicants want to rely on their IIP permission as a means of obtaining citizenship by naturalisation in Ireland, in which case they must also satisfy the relevant conditions for a citizenship application. They must, for instance, be legally resident in Ireland for at least five years out of the last nine years including one year of continuous physical residence immediately before the date of application. Successful IIP applicants therefore have the opportunity to show they meet the requirements for Irish citizenship.
While successful applicants will receive a multi-entry visa under the IIP, which allows them to travel in and out of Ireland as they please, this does not permit them to work or live elsewhere in Europe or the UK. Individuals would be subject to the immigration requirements in the relevant jurisdiction if they wish to enter, reside or work there. The IIP does nonetheless afford them a base location within the EEA.
The IIP has evident advantages for investors seeking to establish or maintain a foothold in Europe:
- Following the UK’s withdrawal from the European Union, Ireland is uniquely placed in being the only predominantly English-speaking country remaining in the EEA.
- The investment amount is competitive in comparison to other cash-for-residency arrangements in other similar European jurisdictions that have a higher investment value threshold. Interest groups in Ireland have previously lobbied for the investment amount to be lowered, to compete with other jurisdictions and thereby attract more inward investment. The Irish government may come under renewed pressure to lower the threshold in order to aid Ireland’s post-Covid-19 economic recovery.
- The residency requirements under the IIP may not be as restrictive as in other such schemes, as applicants are not required to reside in Ireland continuously in order to maintain their permission to live and work here. Also, there is no requirement for the investor to commit further investment beyond the three-year period in order to maintain residency.
- Residency can be continuously renewed for successive five-year periods, so long as the investor complies with the terms of their chosen investment fund and meets the appropriate conditions.