Terra Incognita: Citizenship as a Factor Determining the Investment Attractiveness
Leonid Gilevich, Counsel at Ilyashev & Partners Law Firm
The possibility of multiple citizenship can be a powerful argument for attracting foreign investors to Ukraine. Together with a well-thought-out tax and investment policy, the dual citizenship can not only protect state interests, but also return human and intellectual capital to Ukraine, for which all developed states have fought long battles.
The practice of multiple citizenship does exist in Ukraine, yet somewhere in the shadow. Ukrainian law does not directly allow multiple citizenship, but, in fact, does not exclude the possibility thereof, determining that, despite any other citizenships, the Ukrainian passport holder for Ukraine will be a citizen of Ukraine only.
The conflict is hidden in the citizenship law. The principle of single citizenship in Ukraine, established by Article 4 of the Constitution of Ukraine, is defined in Article 2 of the Law of Ukraine On Citizenship of Ukraine as excluding the possibility of citizenship of the administrative and territorial units of Ukraine, and stipulating that where a citizen of Ukraine acquired the citizenship of another state or where a foreigner acquired citizenship of Ukraine, in legal relations with Ukraine they should be recognized as citizens of Ukraine only.
Pursuant to Article 25(1) of the Constitution of Ukraine, a citizen of Ukraine shall not be deprived of citizenship and of the right to change citizenship. Yet, Article 19 of the Law of Ukraine On Citizenship of Ukraine provides that one of the grounds for the loss of citizenship is a voluntary acquisition by Ukrainian citizen of the citizenship of another state. However, the effective legislation envisages no mechanism to implement such a norm.
It must be admitted that the Ukrainian citizenship laws really require amendments and that the existing situation violates one of the general law principles, namely, the principle of legal certainty.
In recent years, the team of Ilyashev & Partners has been witnessing a significant interest of foreigners in Ukrainian citizenship. The reasons vary: from an intention to develop a business in Ukraine and permanently live here to marrying a citizen of Ukraine and just wanting to get a passport allowing visa-free travel to many countries. We can display dozens of successful cases of obtaining all types of residence permits and permits for our clients, despite the procedure complexity and all legislative traps and pitfalls. Yet, only the comprehensive and well-weighed legislative changes will help increasing the demand for Ukrainian citizenship while preserving the existing one. Naturally, any changes should be carefully worked out having due regard to the international commitments of Ukraine.
Recently, the draft Law On Amending Certain Laws of Ukraine Concerning Citizenship Issues No. 2590 was submitted to the Parliament for consideration. It proposes expanding the list of persons who are entitled to acquire Ukrainian citizenship by territorial origin. The document provides for the possibility for some foreigners not to file an obligation to terminate their foreign citizenship when registering the Ukrainian one. Thus, it is assumed that the Cabinet of Ministers will draw up a list of states (except for aggressor and occupying states), whose citizens will have the right to take an oath of a citizen of Ukraine instead of filing the aforementioned obligation.
In general, the draft law requires certain finalization: according to the Main Scientific and Expert Directorate of the Verkhovna Rada of Ukraine, its provisions “somewhat ease the requirements for avoiding multiple citizenship”, while “any legalization of dual (multiple) citizenship... shall be possible only after appropriate clarification of the provisions of the Constitution of Ukraine”, i.e. after introduction of amendments to the Constitution. And this is quite a long story.
In the context of globalization and residence of several million of ethnic Ukrainians in other states, there are good reasons to preserve the country’s connection with those who – for personal reasons – acquire foreign citizenship, in no case shut the door on them, and ensure legal clarity for those holding passports of other countries. A similar approach to their citizens has recently been observed in the EU member states. In turn, the opportunity for foreign nationals to retain their citizenship upon obtaining Ukrainian citizenship may be an additional argument for attracting foreign investors to Ukraine. Citizenship by investment is also a common global trend.