Last updated June 25, 2017
Dateline: Port Vila, Vanuatu
There are an increasing amount of second residency and second citizenship programs on the market, and as I often say, the most heavily promoted options are often not the best. While Panama and Paraguay claim to offer turnkey solutions for westerners seeking a second passport, they are not the best solution for everyone.
Vanuatu is a South Pacific island chain on volcanic lands. The place is pretty small and sits north of the halfway point between Australia and New Zealand.
Even the cheap airfares from Kuala Lumpur make getting to the islands rather time-consuming and a bit expensive.
That said, Vanuatu offers both residency and citizenship programs that you probably haven’t heard about, but perhaps should have. For years, the country’s passport was rather inadequate; it allowed access to barely fifty countries — many of them the “usual suspects” that allow access to almost anyone — compared to the 170 or more that the world’s best passports do.
In 2015, however, the European Union signed a mutual visa waiver agreement, allowing Vanuatuans to travel freely to Europe’s Schengen Area, and elevating island nation’s citizenship from being one of the world’s worst passports to being a rather respectable one with access to nearly 120 countries.
In addition to all 26 Schengen Area countries, Vanuatuans may now visit the non-Schengen Member states of the Cyprus, Romania and Bulgaria, as well as continued access to the United Kingdom and Ireland which has existed for a long time thanks to the islands’ former ties to Britain.
With Vanuatu’s passport now packing more punch as a travel document, obtaining residency in the country with the goal of becoming a naturalized citizen in the future seems more appealing.
For one thing, Vanuatu has no income tax. None. Nor any estate taxes or capital gains taxes.
In fact, other than enforcing a rather lax VAT, Vanuatu has few taxes at all.
At one point, 15% of the entire economy was derived from the country’s tax haven status.
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On my flight here, I sat next to Australian guy whose wife goes around the world working with governments to impose strict anti-money laundering standards and cooperate with international tax information sharing. That means that Vanuatu’s halcyon days as a tax haven are behind it, but paying zero tax on almost anything is still appealing.
Vanuatu could easily serve as a tax residency for a digital nomad, for example.
However, as we frequently discuss the idea that the shady days of bearer shares and anonymous bank accounts are over, and Vanuatu’s status as a rather opaque banking jurisdiction means it may not be your best option to set up your e-commerce business.
There are currently two opportunities for those seeking residence and citizenship options. As of 2016, Vanuatu offers both a renewed economic citizenship program, and a residence by investment program.
How to obtain residency in Vanuatu by banking
Becoming a resident of Vanuatu is fairly simple. Besides the normal visa procedures for spouses, dependent children, and employees, residency can be obtained merely by proving a stable income — such as from a pension — or by making an investment in the country.
If you have a monthly income to bring to Vanuatu, becoming a resident can be as simple as applying as a “self-funded resident”. This option requires that a Vanuatu bank certify your ability to deposit 250,000 Vanuatu vatu (about US$2,250) per month.
If you are married or living with a “life partner”, you must double that amount. Not exactly peanuts compared to some Central American options, but most people with an active business or investment portfolio can qualify, and there is no need to subject the income to tax.
How to obtain residency in Vanuatu by investment
As with many other countries, residency by investment requirements have become more stringent in Vanuatu. Formerly, you could invest as little as 5 million vatu — less than $50,000 — and become a resident for one year, with the ability to renew that residency every year thereafter so long as the investment or land ownership continued.
Now, however, residency requires a 10 million vatu investment (approximately $89,000) in some form of real estate or agricultural project. That is similar to the necessary investment for Malaysia’s My Second Home program until their planned price hike; however, Vanuatu offers the carrot of future citizenship as well as an excuse to tell everyone you “live” in “Van-oo-ah-too”.
Anyway, Vanuatu is an emerging destination for agricultural investment, with plantations offering turnkey investments in papayas and other tropical fruits. These turnkey investments could be an easy way to obtain residency with an investor visa, but you must do your due diligence on the promoters as many agricultural investments are poorly managed.
One investment promoter here has been bothering me for over two years, yet his project never seems to materialize other than on paper.
Regardless, the good news about residency by investment is that you can apply for up to a ten-year visa by paying an additional government fee. That means that you can avoid having to renew your visa each year merely by paying more upfront.
How to get Vanuatu citizenship
There are two ways to become a Vanuatuan; either pay a lump sum upfront for their modified citizenship by investment program, or merely wait out the naturalization period and claim your passport years from now.
The cheaper, slower option is naturalization; Vanuatu allows those who have been resident in the country for 10 years to apply for citizenship rather easily.
As there are no taxes here, you could literally move in full-time, pay your dues, and not lose a dime in the process. While that is indeed rather rare, there is no requirement to live in Vanuatu full-time in order to be naturalized.
Once you become a naturalized Vanuatu citizen, the only way to lose your citizenship is to be sentenced to a prison term of ten years or longer. Dual citizenship used to be forbidden, but was recently allowed.
In 2016, the government naturalized 149 long-term residents of the country, and I am told none had to renounce their existing citizenships.
Citizenship by Investment
Sadly, Vanuatu was hit by a massive cyclone in 2015 which left many of their 82 islands wiped out. Eleven people died and dozens more were injured on top of untold damage to the nation’s infrastructure.
To raise funds to rebuild, the government re-introduced a Citizenship by Investment program that offered so-called honorary citizenships to those who donated a six-figure amount to the government’s coffers.
This program ultimately had to be tweaked due to some issues among the intended market of Chinese citizens. Awhile back, there was a scandal involving a government worker selling citizenships to Chinese investors for anywhere from $10,000 to $300,000, and the country wanted to make sure everything was transparent.
This is one of those times when internet research often causes more harm than good; many sites still indicate the government’s previous position of “absolutely not” selling citizenship. As of 2017, Vanuatu citizenship is available by making a donation to the Vanuatu Development Support Program.
In fact, the islands offer quite possibly the most straightforward, easiest economic citizenship option in the world, with a passport possible in as little as 45 days.
Vanuatu has streamlined its due diligence procedures for would-be citizens and moved the application process online in an effort to reduce paperwork.
Getting a second passport here isn’t your cheapest option, but it is an interesting one: for $200,000 all-in, a single applicant can become a citizen within two months and enjoy visa-free travel to most of Europe including Russia.
As far as I know, Vanuatu is the only citizenship by investment program that offers visa-free travel to Russia today, a benefit for anyone who needs to do business there considering Russia’s onerous visa process.
Your total contribution includes a non-refundable $130,000 donation to the DSP, as well as $40,000 in due diligence fees and $30,000 in agency fees. You could spend about $65,000 less in the Caribbean nations of Dominica or St. Lucia; your specific needs would determine which program is best for you.
Again, Vanuatu has recognized dual and multiple citizenship since 2013, so you will not be required to renounce your current nationality or worry about renewal of your passport.
Is Vanuatu right for you?
Vanuatu residency could be a good fit for someone who wants a tax haven residency that is off the grid. I’ll bet 99% of people couldn’t even find Vanuatu on a map, fun as it is to say. Many people might think you were just making it up.
While being from a country with poor name recognition may not work for all, it is a great flag to plant for those seeking privacy and a life of freedom.
To determine the best country for you to plant your flags, contact me and I’ll see if I may be of help.
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