The US Investor Visa Program (EB-5) Gains Popularity with Russian HNWIs
Historically, seeking permanent residency (Green Cards) in the United States has not been the first choice for High Net Worth Individuals (HNWIs) from Russia for a multitude of reasons. Taxation on world-wide income – which all US residents are subject to – was the main deterrent. Another obstacle was the distance between the two countries, which can be prohibitive to maintaining a business in Russia while residing in the US.
However, the political and economic developments over the last few years are causing new waives of Russian HNWIs to leave their home country, with an increasing number of investors from Russia and CIS seeking the EB-5 Investor Visa (Green Card). The main reasons for the increased interest in the US investor program can be summarized as follows:
- The economic decline and sanctions against Russia led to a significant decrease in domestic annual income for many HNWI Russians. With lower world-wide income, the US income taxes became less of a concern, while the need to preserve one’s net worth is now a higher priority. Many US cities offer a high quality of life at a lower average cost of living than the leading European cities.
- Sanctions against Russia have put many Russian companies out of business. The HNWIs that lost or gave up their businesses no longer have the need to make frequent work trips back home. Thus, the US became a feasible destination for residency.
- The US offers significant educational and economic opportunities for children and young adults. Many people believe that work and economic opportunities are generally better in the US for young adults and thus seek to raise their kids in the country where they will be able to stay and work in their adulthood.
- Brexit and anti-Russian measures are causing a wave of Russian HNWIs to consider the US as an alternative to the UK In February of 2018, Britain began implementing a law that allows the government to demand source of funds documents from Russian nationals who own assets or real property in the UK, forcing some investors to prove a lawful origin of funds years after they purchased properties in England. This was followed by more sanctions implemented after the Skripal poisoning event. These measures, coupled with the migration and the economic uncertainty of Brexit, are causing high net worth Russians to look to the United States as an alternative migration destination.
- The US EB-5 program is being actively marketed in Europe. Traditionally, the US Regional Centers responsible for attracting investment through the EB-5 program have focused their marketing efforts on China, spending approximately half a billion US dollars in marketing funds in that region annually. The Chinese flow of investors has stopped abruptly in 2017 when Chinese nationals reached their annual visa limits for the next 10+ years. The Regional Centers are now diverting significant marketing funds to Russia and Europe, thus attracting more investors from that region.
Therefore, we can expect an increased demand for the EB-5 program from Russian HNWIs.
Author: Irina Rostova
Founding Partner, Rostova Westerman Law Group, P.A.