International Entities

What to Do When Your Country is “Cancelled”

It’s Wednesday evening, and I’m sitting on the porch of my cottage overlooking the Atlantic coast of Nevis.

I’m here with my business partner Trey Wyatt to deal with matters relating to the company we jointly own here, Fortress Trust Ltd.

Over glasses of island rum, Trey and I reflect on how fortunate we are to be here, and not, say, Russian citizens now effectively trapped in their country. That’s a theme we’ll return to momentarily.

Nevis is part of the two-island Federation of St. Kitts & Nevis. This region of the Caribbean, the “Lesser Antilles,” was originally occupied by Native American tribes around 1,600 years ago. The first Europeans to see St. Kitts & Nevis were probably part of the second voyage of Christopher Columbus in 1493. But the first permanent European settlement didn’t come until 1623.

The arriving English colonists put slaves (first Native American, and later African) to work tending cash crops for export; most importantly, sugar cane. As Europe’s taste for sugar increased, plantation owners grew rich. Indeed, by 1652 Nevis became the richest British colony in the western hemisphere.

Following a series of wars involving French, British, Dutch, and Spanish forces, British control over both islands was formalized under the Treaty of Versailles in 1783.

But the islands’ fortunes waxed and waned with sugar prices, with periods of depressed sugar prices corresponding with widespread poverty and social unrest. In 1883, Great Britain established an elected assembly for the islands of St. Kitts, Nevis, and Anguilla. A century later, the Federation of St. Kitts & Nevis came into being in 1983, when the islands were granted independence from Great Britain.

Still, the citizens of the newly formed country, mostly descendants of African slaves, were forced to deal with the same problem as their former colonial masters: how to diversify the economy away from sugar production.

The national legislature came up with an innovative solution. It was to offer the world’s first modern citizenship by investment program. In exchange for an approved real estate investment, applicants acquired citizenship and a passport from what was then the world’s newest country.

At the same time, each island retained the right to pass laws pertaining to their respective territories. Thus, in the years following independence, the Nevis Island Assembly enacted laws providing for the establishment of international business corporations, trusts, limited liability companies, and multiform foundations.

Even then, at the dawn of the 21st century, despite the success of the citizenship program and the growth of Nevis as an international financial center, the Federation remained dangerously reliant on sugar production. And protectionist policies in both the United States and Europe meant that Caribbean source sugar could no longer compete in those markets.

Thus, in 2005, St. Kitts & Nevis made the difficult decision to shut down commercial sugar production. But that left thousands of former sugar workers unemployed.

Once again, an innovative solution was found. It was to introduce a new option for citizenship: a donation to a foundation dedicated to improving the lot of displaced sugar workers: the Sugar Industry Diversification Foundation (SIDF).

The results have been dramatic. In 2009, in the depths of the last global financial crisis, St. Kitts & Nevis had a crushing national debt to GDP ratio of 185%—one of the highest in the world. But by 2014, the ratio had been cut by more than half to 81%. By 2019, it stood at 45%.

In the meantime, the Federation’s citizenship by investment laws have continued to evolve. Today, there are three options to acquire citizenship by investment:

  1. A donation of $150,000. This amount qualifies a primary applicant for citizenship. A married applicant can add their opposite-sex spouse and up to two qualified dependents to the application for an additional $25,000. Additional dependents, regardless of age, cost $10,000 each ($20,000 for siblings).

  2. An investment of $200,000 into an approved real estate project. Government fees of $35,050 apply to a single applicant, $20,050 to the spouse of the main applicant, and $10,050 for each qualified dependent regardless of age. You can sell this investment after seven years.

  3. An investment of $400,000 into an approved real estate project. The same government fees apply as for the $200,000 real estate option, but you can sell this investment after five years.

For all three options, the required investment is conveyed to the government or to the real estate developer only after you receive approval for your application. 

But why might you want to get a second passport at all?

There are many reasons. Perhaps the most important one is, as we mentioned at the beginning of today’s letter, playing out before our eyes in the Russian invasion of Ukraine. In response to Russian aggression, Russia—along with Russian citizens carrying Russian passports—have effectively been globally cancelled. Numerous countries have suspended visas for Russian citizens, mainly those that detest President Vladimir Putin’s decision to attack Ukraine.

Most Russian citizens are effectively locked inside their own country. But those fortunate few with a second citizenship and passport can leave Russia if they choose to do so. For instance, St. Kitts & Nevis passport holders can travel without a visa or obtain a visa upon entry to nearly 160 countries, including all EU members, the United Kingdom, Switzerland, and Singapore. Citizens of the Federation also enjoy visa-free entry to Russia, which recently announced entry restrictions for US, UK, and EU citizens.

Just as important are restrictions your own country can impose to lock you in. For instance, Putin is reportedly considering introducing exit visas for Russian citizens with certain in-demand skills. If exit visas come back to Russia (they also existed during the Soviet era) and you have a skill deemed crucial to the state, you won’t be going anywhere. Similarly, if you’re a US citizen and have a “seriously delinquent tax debt,” the State Department is legally required to revoke your passport until you pay up.

As well, a second passport can expand your ability to live in other countries in addition to the country that issued it. For instance, a St. Kitts & Nevis passport not only gives you the right to take up residence on either island in the Federation, but also to live and work in any other member of the Organization of Eastern Caribbean States (OECS). These countries are Antigua & Barbuda, the Commonwealth of Dominica, Grenada, St. Lucia, and St. Vincent & the Grenadines along with the associate members of Anguilla, the British Virgin Islands, Guadeloupe, and Martinique.

Further, a second passport can also protect you, should you need to keep your nationality a secret for safety reasons. That could come in handy if you ever find yourself in a terrorist situation where you’re confronted by someone who’s an enemy of your government. For example, as a holder of a St. Kitts & Nevis passport, that’s not likely to happen to you because St. Kitts & Nevis is a neutral country. It also isn’t lobbing cruise missiles at anyone.   

Finally, for US citizens, a second passport has another benefit—it’s a prerequisite if you want to permanently disconnect from the US tax system. The only way to eliminate all US tax and reporting liability on your non-US income or assets is to cease being a US citizen. But before you do so, you must obtain citizenship and passport from another country to avoid becoming stateless.

Fortress Trust, Ltd. is a licensed agent for the St. Kitts & Nevis citizenship by investment (CBI) program, and The Nestmann Group, Ltd. is an international marketing agent for it. The Nestmann Group, Ltd. is also a licensed agent for the Commonwealth of Dominica CBI program. For more information on second citizenship, please contact service@nestmann.com or follow this link.

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