Vanuatu: the programme seeks to restore its credibility

Vanuatu enjoyed a short-stay visa exemption for the Schengen Area, granted under an agreement with the European Union. This exemption was the main selling point of its citizenship by investment programme.

The Union suspended it and then called it into question, citing shortcomings in the programme's checks and the security risks associated with the rapid issuing of passports.

The effect is measurable: the Vanuatu passport now gives visa-free access to only about 95¹ destinations, well behind Caribbean passports from comparable programmes — about 154² for Saint Kitts and Nevis.

The programme itself continues. The contribution for a single applicant is about $130,000³, plus $5,000⁴ in due diligence fees, making $135,000⁵ in total, excluding agent fees.

We do not publish the exact date of the European decision, its precise legal basis or the content of the reforms undertaken since: we have not been able to verify them in an up-to-date official source.

Citizenship by investment rests on two elements of a different nature. Nationality, which is acquired and in principle irrevocable. And the visa-free access it provides, which depends entirely on decisions taken by third countries.

The issuing state controls the first and does not control the second. It can tighten its checks, publish its procedures and cooperate — but the decision to restore the exemption is not its to make.

The asymmetry is even more marked for the buyer: they paid in full for the second and legally acquired only the first. They have neither recourse nor compensation.

A second effect, less discussed, concerns banks. A nationality obtained through a criticised programme becomes a risk factor in the compliance procedures of European institutions, which complicates opening accounts — the opposite of the intended effect.

This reputational damage outlasts any reform, because it becomes embedded in financial institutions' assessment frameworks well beyond the decision that caused it.

The significance of the precedent for other programmes should be measured. The European decision did not target an individual abuse but the very design of a scheme considered insufficiently controlled. Any programme based on rapid issuance and light verification is therefore exposed to the same reasoning.

Vanuatu retains a tax system with no direct taxation: the rate applicable to company profits is 0%⁶, and the government investment promotion agency states that there is no income tax, no capital gains tax and no inheritance duty.

This advantage, however, requires actually living there, which remoteness, exposure to cyclones and weak medical infrastructure make demanding. The programme, for its part, imposes no presence requirement.

There is no tax treaty between France and Vanuatu, which deprives a taxpayer of any treaty mechanism in the event of dual residence.

Finally, the land system is a limitation in its own right: land belongs to customary owners, and a foreigner can only acquire a long-term lease, whose remaining term determines its value.

• Acquired nationality remains acquired; the visa-free access that made it attractive has been withdrawn.
• The issuing state does not control the decision to restore it.
• The banking damage outlasts the reform of the programme.
• There is no tax treaty between France and Vanuatu.
• For a French national, the programme today offers neither mobility, nor tax protection, nor easier banking.

The lesson goes beyond Vanuatu and applies to this entire asset class. When an advantage depends on a unilateral decision by a third party, it should not be valued as an asset but treated as an option, whose price factors in the probability that it will disappear. Few applicants reason this way, and it is the main source of disappointment in the sector.