The driving factors behind many people’s decisions to move abroad in retirement are financial ones. Whether you want to find a more affordable cost of living, you want to make your pension go further or perhaps you want to get more for the money you have to spend annually, a solution can be to retire overseas as some countries are certainly more affordable than others.
However, there is one factor that you may not be aware of, and that is that if you’re an American citizen and you retire overseas, the US still effectively ‘owns’ you and has the right to tax you, no matter where in the world you’re living.
For this reason alone a strikingly increasing number of US citizens are choosing to adopt a second nation as their home abroad by applying, entirely legitimately, for a second passport from a more taxation advantageous and financially free nation.
US citizens are not alone in seeking a second passport solution either…
Whilst Americans are the only ones so harshly affected by the taxation issue, there are other international citizens from the likes of Western Europe and the former Soviet Union who can benefit substantially from the acquisition of a second passport. Therefore, if you’re contemplating a retirement abroad and you want to ensure you’re well looked after, can travel freely and that your financial and political interests are best served, why retire abroad with one passport when you can have two?
In this report we’ll show you how you can potentially benefit from a second passport, why it makes sense for a large number of people to legitimately acquire a second citizenship, and how you can take action today towards getting your own second passport in place as soon as possible to help you save money and enjoy greater freedom abroad.
Who Needs a Second Passport?
A second passport is a particularly valuable asset if you herald from a nation that levies exceptionally restrictive taxation on your worldwide income, assets and gains such as America for example. Those who hold a passport from a country against which there are international travel restrictions can also benefit from a second passport. Furthermore, wealthy citizens from countries where there is high crime or a high potential price on such a high net worth individual may find personal security reasons lead them towards considering a second passport.
Therefore, anyone seeking financial advantages, personal security and confidentiality and international freedom of travel could potentially benefit significantly from holding a second passport.
10 Main Advantages of Holding a Second Passport
- If for some reason you have to renew your passport frequently you may find it beneficial to have a second passport from a nation where the renewal rate is 10+ years.
- If the nation you herald from is politically unstable and your right to your passport could be under threat at any time as a result, a second passport could help.
- If your nationality restricts the way you travel, invest, where you live or how you move or manage your money internationally speaking, a second passport may help you get around these restrictions.
- If you are not permitted extensive visa-free travel, a second passport may be a way around this barrier.
- If the government in your nation taxes your worldwide estate then a second passport may have advantages in terms of the better international protection and management of your money.
- If the passport you carry from the country you come from makes you a target for terrorists or criminals, a second passport could save your life.
- If you wish to have greater freedom from your government’s control and intrusion into your affairs perhaps a second passport will help you.
- If your passport is from a nation disliked by the one in which you wish to live or work then a second passport could prevent negative attitudes towards you.
- If the country you come from has National Service, forcing you or your children into military service, a second passport could protect against this demand.
- If you want to gain greater flexibility, freedom and control in your life, a second passport may be the key.
Could You Benefit from a Second Passport?
Americans who move abroad quickly discover that despite the fact they carry an internationally recognised passport and herald from what is arguably the most powerful and influential nation on earth, most international banks and financial institutions will not assist them when they want to open even the simplest bank account. These reputable institutions simply do not want the ‘hassle’ of having to contend with the all powerful US Internal Revenue Service, and many of them are extremely open about the fact. As useful as it is to know that most banks won’t assist you and that your nation will tax your worldwide income, assets and gains if you’re an American, it’s not a particularly advantageous position for you to be in, therefore a second passport could potentially be the perfect answer to your dilemma.
Europeans who relocate overseas such as British and Irish citizens soon discover that their passport is not such a financial restriction because their nation differentiates between residents and citizens when it comes to most forms of taxation – unlike America. However, there are still long-term tax planning advantages potentially available to those from Europe who obtain a second passport particularly when it comes to estate planning – and then there are the lesser talked about advantages such as the fact that some countries will discriminate against you if they don’t like the country you hold a passport from. This is a harsh reality – but if you prefer to think of it in a more politically correct or palatable way, consider the fact that on entry into international airports worldwide there are always different queues at immigration depending on which passport you hold. Well, wouldn’t it be nice if you could whip out the passport that allowed you to join the shortest queue possible and answer the fewest questions to gain entry into that country!
You may find you are treated better, charged less and welcomed more openly in certain nations depending on the passport you hold too – with the likes of Britons and Americans often over-charged in many international locations because they are thought of as so very wealthy. Those who move to live in a country that traditionally has less than positive feelings towards their original country of citizenship may enjoy greater security and peace of mind with an alternative passport when they travel to and from as well as around their new nation of residence as well.
Finally, anyone who is in a financially strong enough position and who can choose the nation they acquire a second passport from thanks to the economic citizenship programs that exist around the world, may well be able to buy themselves taxation freedom, travel freedom and personal freedom in the form of a second passport.
How to Obtain a Second Passport
Having quite possibly convinced you that you can no longer leave home without a second passport if you want to get anywhere in this world with your privacy, freedom and financial integrity intact, I expect you would like to know how you go about obtaining a second passport. The good news is that there are a number of options available to you, but whether any one is suitable for you will depend on your own personal circumstances. If in doubt, seek specialist advice about the best way to proceed in your own individual case.
Ireland, the United Kingdom, Germany and Italy are possibly the most generous countries in the world in terms of handing out passports to the likes of Americans and Australians who can prove qualifying ancestral links. Other countries such as Canada and New Zealand are relatively considerate when it comes to granting citizenship and therefore a passport to those who marry one from that nation. However, if you’re struggling to prove that your Great Grandmother came from Dublin, that you genuinely married a stranger from Toronto for love rather than just a passport, or you don’t want to have to wait the average of between two and five years to get your second passport, your easiest way of obtaining a second passport is the financial route.
A number of nations in the world have what are called ‘economic citizenship programs’ – whereby, for a given financial commitment, you are granted a second passport from that country. This is an entirely legitimate route to gaining second citizenship, and one used increasingly frequently by those who want to retire abroad, by international business persons, frequent global travellers and by anyone who requires greater personal and financial freedom.
Economic Citizenship Programs – Your Passport to a Second Passport
Economic citizenship programs are also often referred to as citizenship-by-investment schemes; they are implemented by governments which use the incentive of a valuable passport to gain investment into their nation. The form that these programs take differ slightly from country to country, but basically you are usually required to invest a given sum of money into a nation, typically on a non-refundable basis, and in return you are granted citizenship and therefore, a second passport.
America has been responsible for placing great pressure on nations such as Belize, which were traditionally very popular with US citizens seeking a second passport, to rescind their economic citizenship programs. As a result there are fewer and fewer economic citizenship programs in existence – this means that if you want to gain a second passport you should act sooner rather than later to obtain one as you never know how quickly all doors will be shut, barred and locked to you, thus meaning you are potentially restricted by your current passport for life.
The most popular destinations still offering second passport programs to international citizens willing to invest are Dominica and St Kitts & Nevis. They have typically the fastest, most straightforward programs in place. Note however that these are not the only countries in the world that will grant second passports and citizenship in return for economic investment. Countries such as Paraguay, Uruguay, the Dominican Republic, Argentina, Peru and Ecuador have perhaps less well-publicised and administered programs, but are worth consideration and exploration if you feel a passport from any of these countries would benefit you more.
The reason why so much focus is however placed on the programs in place in Dominica and in St Kitts & Nevis specifically is that everything is well documented and processed in these countries when it comes to the economic citizenship program. Therefore, if you want it easy, perhaps consider either of these two countries.
The Benefits of Dominica for Your Second Passport
If your application is successful you are granted citizenship for life with a 10-year renewable passport that grants you visa-free entry into many leading nations such as the US and the UK. You have the option of changing your name and as a citizen you can benefit from the fact that there are no taxes levied on your foreign sourced income unless you decide to reside in Dominica and remit your funds to the country. There are no taxes levied on capital gains, gifts, wealth or even your estate upon death – and you don’t have to give up your current citizenship either.
You are not obliged by Dominica to report your new citizenship to your old country, you are not obliged to reside in Dominica to obtain or retain citizenship, the application process is fast and relatively affordable with your requisite investment not required before you’re granted citizenship. Finally, the program is based on the nation’s law and is guaranteed by the government.
The required investment is as follows: –
Single applicants: a non-refundable donation of US$75,000 is required – in addition there will be professional and legal fees in the region of US$15,000. Finally, you need to factor in costs associated with due diligence procedures of circa US$3,000.
Family applicants: a non-refundable donation of US$100,000 will qualify a family of four the right to citizenship in Dominica. This will therefore cover the main applicant, their spouse and two children under eighteen. Add on additional professional and legal fees of about US$25,000 and the cost of conducting due diligence on all the family which will cost circa US$10,000. Note, if you have more children or your children are over eighteen then the following applies: – US$15,000 for each additional child under eighteen, US$25,000 for every child over eighteen but under twenty-one and ‘children’ over the age of twenty-one are required to apply separately under the single applicant option detailed above.
The Benefits of St. Kitts & Nevis
Again you get full and irrevocable citizenship for your lifetime and visa-free entry to leading international nations. You can choose to change your name, you needn’t give up your current citizenship and you don’t need to be living in St. Kitts & Nevis when you apply. In addition however you can choose the way you invest by either making a governmental donation or investing in real estate.
You are not subject to personal income taxation and there is no gift, wealth or inheritance tax, no long-term capital gains taxes and no estate duties. Your investment is not required until you have been granted citizenship, the investment program is guaranteed by the government and protected by law and it is believed to be the longest standing economic citizenship program of its kind having been inaugurated in 1984.
The required investment is as follows: –
Cash investment: between US$200,000 and $400,000 is required and made payable to the Sugar Industry Diversification Foundation (this is known as the SIDF option).
The amount required depends on the number of applicants within a family group and the donation covers all registration and due diligence fees. Additionally you will be required to pay legal and service fees of any promoting agent you use and these are usually in the region of US$15,000 for a single applicant and up to about US$25,000 for a family of four.
Real estate investment: definitely a preferable option for economic citizenship is investment into a government approved real estate development. The minimum value of investment that will qualify you is US$350,000. At the moment there’s a choice of luxury villas and apartments in several resort development projects that are approved for investment by the government of St. Kitts & Nevis. Note, after 5 years you can resell your property – although it will not qualify the next buyer for citizenship, it does mean your investment is relatively ‘safe.’
Note: the registration fees under the real-estate investment option are US$35,000 for the head of the household or any other adult applicant, US$15,000 for a spouse, US$15,000 for each child under 18, and US$35,000 for unmarried dependent children of the applicant between the ages of 18 and 25. The same legal and service fees as above apply and the due diligence fee is in the region of US$3,500 per each person over the age of 18.
There are additional expenses associated with the purchase of real estate including fees for the real estate closing process, insurance, tax on the land and property for example.
To Wrap it Up
There are certainly many potential benefits and advantages to having a second passport, and there are a number of solid paths that an interested party can follow to reach their goal of obtaining citizenship in another nation. However, whether the benefits and advantages outweigh the costs and the hassle factor involved in obtaining a second passport is only something that you can determine on an individual basis.
About the author: Susan Beverley is a writer and editor for Escape From America Magazine and also writes for and maintains Expat Daily News – the expat news blog for EscapeArtist.com. She traveled extensively before becoming an expat herself having found a place to call home in South America where she has lived since 2005. She understands the concerns, needs and difficulties that expats face from first-hand experience and is dedicated to supporting and encouraging anyone who is looking for a new nation to call home.