Is Citizenship by Investment Dying? Why Citizenship by Merit and Residency by Investment Are the Next Frontier

Citizenship by investment is on its deathbed, and a lot of our investor clients have already moved to the two replacement routes we'll discuss today. It's James from the Freedom Files, and in this video you'll learn why these direct citizenship programs are under fire, how the US and the EU are attacking them, and how the two alternate routes work. This video alone may save you hundreds of hours of research and hundreds of thousands of dollars.

Let's start with the death certificate. Citizenship by investment was born in St Kitts and Nevis in the Caribbean in 1984. Essentially, you wire money to a government as a donation, or you buy real estate, and in return you receive a passport: nationality, citizenship in that country. Since then, 30 to 40 programs have come, stayed, and gone, and about 25 remain alive today. The count grows most years. In the past 12 months alone, Nauru opened at around $105,000 and is now back down to about $90,000 to compete. São Tomé and Príncipe came in near $90,000, and Sierra Leone joined them, while Argentina, the Solomon Islands, and Botswana have announced plans for programs of their own.

I've worked in this industry for a decade, and a huge majority of my colleagues and I expect at least one new program introduction per year. So no, the product is not disappearing entirely. It is in fact getting cheaper for middle-class Americans and spreading to more jurisdictions that need capital to fund projects for their citizenry. This is democratization at work. What is dying is the version that powerful governments tolerated at first. Let me explain.

In 2025, the European Court of Justice ruled Malta's popular direct citizenship by investment program illegal. That was the last citizenship by investment program inside the European Union, erased with a single EU ruling. Then in June of this year, the European Commission sent letters to the five Eastern Caribbean CBI states, and the conversation on the ground shifted to what a 2-year wind-down of those programs would look like. The ultimatum: lose visa-free access, or end your programs entirely. The islands' counter-offer, a proposed 30 days of physical presence plus annual application caps, has convinced almost nobody, and very few of us in the industry think the Caribbean governments will enforce it. Washington and Brussels have leaned on these programs for years to raise prices and tighten due diligence, and because of that, the price floor doubled, and processing times with it.

Demand did not die with that pressure, though. Americans, Canadians, and even Western Europeans with capital want a second citizenship now more than ever, as insurance against their own government's next policy swing or tax hike.

Before I show you the two routes that replace the front-door direct citizenship programs, you need to see the weapon Europe is building to gut the value of a second citizenship. It's called ETIAS, the EU's new travel authorization system, and if a Caribbean passport is anywhere in your plans, you need to understand it.

ETIAS has already launched and becomes mandatory in 2027 across EU member countries. On paper it is not a visa: a small flat fee, an online form, and an approval that can take minutes or 30 days, depending on who you are. Visa-free access to the Schengen Area used to mean booking a flight to Paris tonight and simply presenting your passport, whether you landed in Paris, Madrid, or Frankfurt. Under ETIAS, you must first ask the EU for permission, from the same bureaucracy that spent the last 5 years attacking these programs in public. And the EU has already shown what enforcement looks like: it suspended Vanuatu's visa-free access in 2022 and revoked it permanently in 2024, after Vanuatu reformed its program to satisfy the EU's demands. The reforms didn't save them, and I'm not certain the Caribbean's reforms will save them either. We cover that in another video, on your screen now.

My colleagues and I fully expect the EU to use ETIAS to discriminate against CBI passport holders specifically: approve the natural-born Caribbean traveler, deny the CBI citizen with the same nationality seated right next to them. Who eats that loss? Not many of our American clients. American passport holders already have visa-free access to Europe's Schengen Area. Americans buy the Caribbean plan B as a fallback option if politics, the economy, or the dollar turn at home, and for a small consistent group, the second passport is the legal precondition to renouncing, since it's generally unwise to renounce American citizenship without another nationality in hand. The citizenship investors who paid for Schengen access are Nigerian, Indian, Egyptian, Chinese, and Lebanese families, and Gulf expatriates with no path to naturalization where they live. Nigeria's Schengen refusal rate reached 46% in 2024, and African applicants paid roughly €60 million in non-refundable fees for European visas. For them, European visa-free access was and is a very big deal. For you, watching from Texas or Florida, it likely is not.

So the right response to all this pressure is not panic. It's redesign. Route your European access through Europe itself, and route your citizenship strategy through channels the powers that be cannot touch. Here are the two options, and I think they are the future of investment migration and international optionality.

Route number one is citizenship by merit, which many of you may never have heard of. More than 130 countries, about seven in ten, have a provision in their nationality law that lets the government grant citizenship to any individual it considers of value to the nation: scientists, athletes, doctors, philanthropists, economists, entrepreneurs, investors, you name it. But there is no published price. There is no program, no processing agency, no application portal. The government decides whether you're worth having and signs a decree.

If citizenship by investment was the front door, with a posted price, a published checklist, and a queue anyone with clean funds could join, the EU chained that front door shut. Citizenship by merit is the side door. There's no sign above it and no price on the glass. It's a speakeasy, and the owner decides who comes through. You can regulate a menu; you cannot regulate an invitation.

This is not political theory. Austria has used its side door for decades, granting hundreds of citizenships to mostly businesspeople who created jobs or made significant investments, and Brussels has not complained. And look what Malta did after its EU court loss. In July 2025 it repealed the citizenship by investment program, as the EU demanded, and then rewrote the law: merit-based naturalization under Legal Notice 159 of 2025 is now the only route to Maltese citizenship outside the ordinary track. A proposal letter, due diligence, an independent evaluation board with sector experts, and a minister with final discretion. The EU banned the transaction. Malta answered with discretion, because discretion is sovereign prerogative, and the EU has no legal tool against it.

The route has gone celebrity, too. Kevin O'Leary from Shark Tank announced Emirati citizenship a few years ago. In April of this year, Albania's president signed a decree granting former New York mayor Eric Adams citizenship, at Adams's own request, passport included. A weird one, but there it is. I'm curious: would you accept citizenship by merit if a government offered it? Comment below, and name the country you'd most want it from.

The trade-off is the flip side of that discretion. No published price also means no guarantee. Timelines are completely case by case, and if the minister says no, there is no appeal. This is a subjective process. You might say: come on, I don't have a TV show and I've never been a mayor. Fair enough. But the bar is national interest. Prove that your skills, credentials, or capital serve the national interest and you're in the conversation. Austria's hundreds of grants went mostly to founders and investors nobody knew outside their industries. A meaningful business exit, a patent, or capital aimed at a sector a country wants to grow can qualify. Hire 50 workers in a country and you're making a serious mark on its economy. The work is presenting your case to the right government leaders, and that is precisely what we do; contact us on the website. Or, if you want to know which structured programs fit you, not the merit route, go to freedomfiles.co/begin: 10 questions, 90 seconds, and a custom report on the routes that fit your money, timeline, and goals.

Route number two is not so subjective, and gives you something tangible in the meantime. Residency by investment with a pathway to citizenship works like this: you invest, the country grants you residency, sometimes with minimal presence requirements, special tax privileges, or a fast track to naturalization, and then the years pass and citizenship arrives through ordinary naturalization, the same channel almost every immigrant to that country uses. No court can call that transactional, because the passport comes from time in the country's system and checking the boxes required for naturalization.

And notice what a European residency permit gives you that a Caribbean passport no longer can. Residency rights in Europe bypass ETIAS altogether. With a Portuguese residence card, you do not ask Brussels for permission. That is the premium for certainty, and it is why so much capital has shifted from buying citizenship outright to buying residency.

Start with Portugal, and reserve your judgment for a second. You and I are both frustrated with what's happened there. The property route died in 2023. They dropped the foreign income tax exemption. Golden visa processing has slowed to 30 to 40 months to approval on average. They start the citizenship clock at approval instead of application. And in the last few months, they doubled the naturalization clock to 10 years from 5. To say the program and the country's attractiveness have changed is an understatement. But, and this is a big but, the physical presence required of golden visa investors remains 7 days in your first year and 14 days per two-year period thereafter, an average of seven days a year, the lightest requirement of any residency program in Europe. Your capital goes to work in a managed investment fund instead of vanishing as a donation (a non-refundable contribution route exists too), and you can exit the fund once the qualifying period ends. So while naturalization will take 14 or 15 years in practice, permanent residency arrives at year 5 either way, and citizenship eventually, on that seven-day-a-year presence. Residency by investment programs with perks like these, minimal stay, tax regime access, defined paths, are the future.

Panama's Qualified Investor Visa is similar. Purchase $300,000 of Panamanian property, invest $500,000 through the stock exchange, or place a $750,000 bank deposit, and you get permanent residency from day one, with approvals in 30 to 90 days, usually the later end, but that's 3 months against Portugal's 40. Presence in practice is one visit every 2 years to preserve the residency, and after 5 years you can apply for citizenship through naturalization. Our attorneys on the ground expect rule changes that would write the 5-year route and the minimal stay into the regulation itself, which is exciting. Add Panama's territorial tax system on top: foreign-source income is exempt from Panamanian tax if you become a tax resident there. Relocation isn't necessarily a bad thing either.

Residency by investment prices like term life insurance. You buy the policy while the premiums are low, before you need it, because the premium only moves up. Portugal's premium went up in May when the citizenship timeline doubled. Panama's may follow in October, when the Qualified Investor Visa threshold may or may not rise from $300,000 to $500,000; they've canceled scheduled raises before, which is why I say maybe. The family that waits for perfect certainty typically pays the price. If you're enjoying this video and you like the inside baseball, drop a like and subscribe; it tells us to make more like it.

Now, you might be thinking: if the EU succeeds in killing citizenship by investment, what stops them from coming after these other two routes next? Fair question. The court's objection to Malta's program was not the investment. It was that those investors had no real connection to the country, or so the court said. Residency routes build that connection by design, because time in the system is the product. Merit grants have survived decades of scrutiny because discretion is written into a nation's own sovereign law. Does the EU have the appetite to overrule its own member states' civil codes? Maybe. I don't think so.

So which route fits you? If you have a meaningful exit behind you, or capital aimed at a sector a government wants to grow, citizenship by merit deserves your consideration. If you want predictability and a defined timeline, residency by investment is your lane: Portugal for the European foothold at 7 days a year, Panama for speed and the friendlier tax base, provided you move soon. Many programs worldwide offer investors incentives like these, and we cover them in the video linked at the end. And if a Caribbean CBI fits your plan B anyway, it can remain the right call, and we would tell you either way. Book a call with us directly on the website and we'll have that conversation. If you're undecided, freedomfiles.co/begin gets you a personalized Blueprint report in about 90 seconds.

Speaking of residencies you can maintain from the US, from your couch, we broke down the top nine golden visas that don't require you to move, presence requirements included. It's on your screen now. Talk to you soon, and thank you so much for watching.