Citizenship by Investment: More Choices than Ever

Citizenship by Investment: More Choices than Ever

By Mark Nestmann • December 18, 2018

The advantages of a second citizenship and passport all boil down to one principle: freedom. Your passport is the property of the government that issued it. Your government can revoke it anytime, leaving you trapped in your own country.

Indeed, a second passport could literally save your life. During World War II, the Nazis invalidated German citizenship for millions of Jews. Most were shipped off to concentration camps where they died, but a few thousand Jews had a backup plan: a second passport they could use to escape to freedom.

Dual citizenship coupled with a second passport can offer numerous additional benefits, such as improved visa-free travel options; the right to reside in another country or countries; and the ability to cross international borders if your primary passport is lost, stolen, or revoked.

Clearly, almost everyone can benefit from a second citizenship and passport. Wouldn’t you feel safer with a second passport stashed away – just in case?

Unfortunately, legitimate second passports are difficult to obtain unless you qualify through ancestry, marriage, religion, or long-term residence in a foreign country. Without meeting one of these criteria, the only way for you to acquire one is through a citizenship-by-investment program (CIP).

Only a handful of countries offer a path to citizenship and passport with a clear legal basis through a contribution or investment. But that number is increasing rapidly. Today, 13 countries have CIPs. Three nations – Jordan, Moldova, and Montenegro – introduced them in 2018.

Here are the countries with legitimate CIPs in effect:

  1. Antigua & Barbuda
  2. Cambodia
  3. Commonwealth of Dominica
  4. Cyprus
  5. Grenada
  6. Jordan
  7. Malta
  8. Moldova
  9. Montenegro
  10. St. Lucia
  11. St. Kitts & Nevis
  12. Turkey
  13. Vanuatu

The most affordable CIPs—Antigua, Dominica, and Moldova—require a total outlay of at least $130,000 to obtain a second citizenship and passport. The most expensive program is in Cyprus, which requires a minimum investment of €2 million, plus fees.

For cash-strapped governments, CIPs offer powerful benefits.  According to the International Monetary Fund, the St. Kitts & Nevis CIP has helped the country reduce its debt-to-GDP ratio to 63%, down from 175% in 2008. (In contrast, the US has a debt-to-GDP ratio of 105%.) Malta is a similar success story. Fueled by the revenues from its CIP, the country’s budget surplus in 2017 reached 3.9% of GDP, higher than any other EU country and fourth highest in the world.

But there’s been a pushback against CIPs as the number of countries offering these programs has increased. The European Commission says it devalues EU citizenship. Transparency International expresses concern about “abuse and corruption.” And the US Treasury claims citizenship by investment can “facilitate financial crime.”  

Indeed, a man who learned I was in the citizenship and passport business once told me, “Citizenship shouldn’t be bought and sold like a pair of shoes. I think it’s scandalous that some countries are selling their citizens’ birthright.”

That attitude is unfortunate but understandable. The historical record suggests Homo Sapiens lived in small groups for at least the first 100,000 years of our existence. Around 10,000 years ago, we started living in larger urban areas. And even today, most humans believe they are irrevocably tied to the country or territory where they were born.

Popular attitudes, as reflected by governmental policies and judicial decisions, reinforce that belief. For instance, until the 1960s, federal courts routinely stripped US citizens of their citizenship if they obtained citizenship in another country. It wasn’t until 1967 that the Supreme Court ruled that the only way a native-born US citizen could lose their citizenship was to make a voluntary relinquishment or renunciation of it.

Still, in a world where nations continuously erect new barriers to the free movement of people, it’s also understandable that a market has developed to overcome these obstacles.

But do you really need a second citizenship and passport? Clients from the US ask me that question a lot. After all, a US passport is one of the world’s best travel documents. If you live in the US, don’t travel much internationally, and have no interest in living outside the US, you can probably do without a second passport.

On the other hand, if you’re a US citizen living abroad, you’re dependent on your US passport for your everyday existence. Your visa requires possession of a valid passport. Indeed, your visa may be physically affixed to your passport. Under those circumstances, having your passport revoked or non-renewed can be catastrophic. You’ll need to come back to the US to deal with the problem, and you’ll have to leave your friends, family, property, and business relationships behind.

It’s also becoming much more common for the US to revoke passports. In 2016, legislation came into effect that requires the State Department to cancel or non-renew your passport if you have a “seriously delinquent tax debt.” This is defined as a federal tax debt of $50,000 or more that the IRS is in the process of trying to collect by lien or levy. According to the IRS, 362,000 Americans could be affected by this provision.

But the actual number of Americans at risk of having their passport canceled or non-renewed is probably a lot higher. I recently heard from two clients living abroad who owed the IRS nothing but still had their passports revoked. They had defaulted on their student loan payments, and the notifications they received indicated their passports were being revoked for that reason. And more than one million borrowers default on student loans each year.

Another reason to acquire a second passport is if you’re considering expatriation – giving up your existing US citizenship and passport. It’s a radical step, but US citizens must pay tax on their worldwide income no matter where they live, and expatriation is the only way to permanently and legally eliminate US tax obligations.

Unfortunately, scam artists have become involved in promoting second citizenship and passports. That’s not surprising, given the high costs to acquire a second passport legitimately. But it’s best to stay away from bogus passport offers, even if you think you can save a bundle of money. Penalties for entry to almost any country using false documents almost always include imprisonment – in some cases up to 10 years.

We are in the process of updating the Nestmann Guide to 2nd Passports, a report available to Nestmann Inner Circle members area. It will be available this week.

If you could benefit from a legitimate second citizenship and passport, we can help. We’ve assisted well over 100 clients from the US and other countries obtain citizenship by investment in Dominica, St. Kitts & Nevis, and numerous other jurisdictions. And we’re licensed agents for the Dominica and St. Kitts & Nevis CIPs. For more information, contact us at service@nestmann.com.

Protecting your assets (and yourself) against any threat - from the government, the IRS or a frivolous lawsuit - is something The Nestmann Group has helped more than 15,000 Americans do over the last 30 years.

Feel free to get in touch at service@nestmann.com or call +1 (602) 688-7552 to learn how we can help you.

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About The Author

Since 1990, Mark Nestmann has helped thousands of clients seeking wealth preservation and international tax planning solutions. He is the author of highly acclaimed Lifeboat Strategy and other books & reports dealing with these subjects.

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