Dateline: Tbilisi, Georgia
Second passports. They sound like the stuff of fiction novels where international spies like Jason Bourne and James Bond carry around half a dozen personal passports next to stashes of cash.
But these days, second passports have leaped out of the pages of fictional spy stories and are increasingly showing up in the pockets of successful businessman, investors, and otherwise regular, but globally-minded folk.
At the beginning of this decade, I was just beginning my journey toward becoming one of these people. I had been traveling on and off for several years and had just made the leap to full-time international travel. One of the first things on my mind was discovering how I could get a second passport of my own.
I had been very interested in becoming a Norwegian citizen because I strongly identified with my Norwegian roots, but when I found out that I could not be a dual citizen as a Norwegian, I began to seriously research my other options.
It didn’t take me long to discover something called economic citizenship, or citizenship by investment.
The basic idea was to invest or donate a certain amount of money in a country in exchange for a passport in a relatively short amount of time.
I had just sold one of my US businesses and had a nice chunk of cash and quite a bit of animosity toward my home country burning me up at the time, so the thought of simply using some of that money to buy a Dominica passport and renounce my US citizenship was a very tempting proposition.
Ultimately, I decided to let myself cool off and go with some of my other second passport options that had longer timelines toward citizenship.
Personally, I had to go through a process of obtaining different passports and traveling around the world to really come to grips with why I wanted to renounce my US citizenship. By the time I did, I had obtained several different citizenships through various different means, including investment.
But it was no longer an emotional decision.
Because I went through that process, I am now able to help people who are considering citizenship by investment to go through the paces much more quickly because I know the emotional hot buttons.
To the average person, citizenship by investment is a very strange concept. When most people first learn about it they tend to think, “What is this?! You can buy passports?!”
For many people, citizenship is about where you’re born – that’s the country you are a citizen of and you’ll never change it. But it’s not that way for everyone. As we’ll discuss in a minute, there are very valid reasons why someone would seek citizenship beyond the borders of their birth country.
And for many of these people, citizenship by investment (CBI) is the fastest, easiest, and surest way to get that second passport.
Having personally been through three CBI processes, I feel uniquely qualified to speak on this subject. And, having helped numerous others to go through the process for themselves, I am very familiar with the questions you are probably asking yourself right now.
Don’t worry, we’ll answer them all.
I’ve spoken extensively on the subject of citizenship by investment both here (on the blog) as well as on my YouTube channel, but today I want to go back to basics and answer the most fundamental questions about citizenship by investment. In this article, we’ll answer the following:
- What is citizenship by investment?
- What does NOT qualify as citizenship by investment?
- Who should get citizenship by investment?
- Are there objections to citizenship by investment?
- Where can you get citizenship by investment?
What is citizenship by investment?
Citizenship by investment (CBI) is a process whereby an individual can make an investment in a country and get citizenship and a passport in exchange.
Of the programs currently in existence, the investment cost ranges from as low as $100,000 to as much as $2.5 million. Investment options include everything from non-refundable cash donations to investments in real estate, business, or government bonds.
Approximately 5,000 people obtain citizenship via investment each year after undergoing meticulous financial assessments and criminal background checks.
The average processing time is six months, but some programs can approve an applicant in as little as two to three months while others take over a year. Relatively few CBI programs require the applicant to set foot in the country in order to become a citizen, let alone reside there.
St. Kitts and Nevis began the first and longest-running CBI program in 1984, followed by Dominica in 1993. Others have joined their ranks over the years while some programs have died out.
Interest in these programs has accelerated in recent years thanks to a combination of factors including improved visa-free travel in many CBI countries, the introduction of FATCA in the US, and cuts in prices to the Caribbean CBI programs as they seek to attract more investors and increase their funds to rebuild after the 2017 hurricane season.
The majority of economic citizenship investors come from emerging market economies like China, Russia, India, Vietnam, Mexico, Brazil, Turkey, and various countries in the Middle East. However, there is a growing demand for economic citizenship in the developed world as well.
A survey conducted in the UK in 2017 found that 89% of Brits would like to own a second passport. And the introduction of FATCA in 2009 has pushed more and more US citizens to consider citizenship by investment as a path to renunciation since giving up US citizenship is their only means of real tax relief.
Not all citizenship by investment programs are the same, which can often create confusion about which programs are legitimate. There are just four criteria you need to keep in mind to judge whether or not any given program is legitimately offering citizenship by investment:
1. Fast – There are other paths to citizenship that do not cost nearly as much as citizenship by investment, but they will require more time and commitment on your part. The big draw of citizenship by investment is that it is a quick process. Malta is the only CBI passport available that takes more than a year to acquire. All the rest take a matter of months.
2. Commoditized – This means that everyone can take part. Whether you’re from Pakistan or the United States, you can get a Dominica passport for the same price and they’ll accept you just the same as long as you pass the due diligence. The only difference is that it might take them a few weeks longer to do the due diligence on a Pakistani or Qatari or Bahraini than it would take them to examine an applicant from the US. Other than that, they don’t really care where you’re from. After all, the vast majority of CBI purchasers are Chinese, Russian, and Middle Eastern.
3. Structured – The program should have a clear structure. That means fixed investment amounts and a clear path to citizenship. CBI programs operate almost like a business; any country that offers a murky path to a second passport most likely falls under another category.
4. Legal – This seems obvious, but there are plenty of economic passport scams. A real citizenship by investment program will be enshrined in the country’s constitution or clearly and obviously stated somewhere in their law.
What does NOT qualify as citizenship by investment?
Because of the nature of my business, I hear from a lot of people with plenty of incorrect notions about what, where, and how they can obtain citizenship by investment.
Let’s put an end to those notions here and now and clarify exactly what economic citizenship is by understanding what it is not.
1. Hybrid Programs/Exceptional Citizenship
There are many programs that look like citizenship by investment because they involve an investment of sorts and you get citizenship in return, but they are typically not structured or commoditized and they usually aren’t fast either.
Of the four ways to get citizenship, these hybrid programs fit better under the exceptional citizenship category. You may be able to buy real estate in Cambodia or donate €3 million to Austria and get a second passport out of the deal, but these programs are highly subject to political whims and are not available to every willing applicant.
Those aren’t real citizenship by investment programs.
2. Getting Paid to Get a Passport
There are other programs where you can invest money and essentially get paid for a passport. But, again, these programs are not commoditized.
I have done programs like this where an American can invest $150,000 in real estate and get citizenship in a year and then sell their investment for a profit. However, if you’re Iranian, forget it. You could invest $2 million and they wouldn’t accept you.
If you can only get a passport if they like you and you’re from a good country, that’s not citizenship by investment. However, if you think you might qualify for a program like this, you can read all about them here.
3. Residence by Investment
Residency by investment is not the same as citizenship by investment. Numerous countries will grant residence to those who invest money in their country, but they do not guarantee that the resident will obtain citizenship because of that donation.
All that the investment grants is entrance into the country.
Countries have various criteria that an individual can meet to qualify for a residence permit, from having a job offer to starting a company to marrying one of their citizens. Some countries decide to add an extra option and allow those who make an investment to reside in the country as well without having to meet the other criteria.
That’s not selling citizenship, that’s just allowing someone another way to become a resident. Once they are a resident, they can be naturalized the same as everyone else.
This is the case with the many different Golden Visa programs in Europe like in Portugal and Greece. While you can eventually get a second passport out of the deal, it will take at least six years of residence and you must pass through the naturalization process to finally get your citizenship.
Many people like to talk about the US EB-5 program as if it were a CBI program, but it is a residence by investment program, not a citizenship program. You can fast-track your ability to get into the US, but you have to go live there, the same as everyone else.
4. Old/Rumored Programs
There is also the problem of people who think that programs exist that have never existed or have since been canceled. Because the offshore industry changes so frequently, there’s a lot of confusion about what programs even exist anymore. In recent years, for instance, both the Ireland and Comoros CBI programs were suspended.
There are also situations where a country will talk about starting a citizenship by investment program but then never follow through.
Not long ago, there were rumors that Armenia was going to introduce a program. However, it turned out that it was just a lot of people in the industry speculating and Armenia was kind of going along with it. However, there is now a new administration and any possibility of an Armenia CBI is dead.
And then there are the scams. I get a lot of questions from people about this program or the other and I have to tell them, “Yeah, that’s a scam!” I’m never surprised when the websites promoting these scammy programs suddenly disappear.
The key to getting a second passport is to do so legally. Avoid any program that involves paying off corrupt officials. Any citizenship program you take part in should be referenced in the country’s laws. If the person promoting a program can’t show you the legal basis for your citizenship, run away.
Remember, a true citizenship by investment program is commoditized, structured, legal, and fast. Anything that cannot meet all four requirements does not qualify as a CBI. That does not mean that non-CBI programs won’t work for you (unless, of course, they’re illegal), but it is important to know what you’re getting into.
If you want fast, easy and secure, make sure you are investing in a real citizenship by investment program. Everything else comes with a certain element of risk.
Who should get citizenship by investment?
Citizenship by investment is not the second passport solution for everyone. However, it is often the best option for people in three specific circumstances:
1. US Tax Planning
US citizens are among the only people on earth who must pay taxes on their worldwide income no matter where they live. Even if you are living abroad and have not set a foot in the US for years, you still must file and pay taxes to the US government. Forever.
While there are many different strategies you can use to reduce your US tax burden, the only way for US citizens to completely liberate themselves of all reporting and tax obligations is to renounce their US citizenship.
Pragmatically, renunciation requires a second passport and, if your income is high enough, how quickly you can obtain that second passport can make a dramatic difference in how much you will save in taxes – even on the level of hundreds of thousands of dollars.
If you are in that situation, the cost of citizenship by investment may be far less than the tax and compliance costs of remaining a US citizen, especially now that tax laws have become even more unfavorable for business owners overseas.
2. Travel Planning
Every passport has travel gaps. Even Germany – which has visa-free access to 177 countries – does not give its citizens the ability to show up in Russia without a visa, for instance. Some passports have bigger travel gaps than others, but a second passport can often fill these gaps, no matter how big or small.
If you have a relatively decent passport, you may only need a second passport to complement your first. If you don’t want to wait to get that second passport, citizenship by investment is the fastest way to fill those gaps.
It is also a good solution for those who want to renounce their US citizenship but are worried about losing their travel privileges. Most CBI passports offer visa-free access to the Schengen area in Europe as well as to important business destinations like Hong Kong. Some also offer visa-free access to countries like China, Russia, and Brazil that even the US passport cannot offer.
However, the people who benefit the most from investing in economic citizenships are those with passports from emerging world countries with bad visa-free travel.
Chinese, Arab, and Russian citizens make up a large part of the CBI investor pool simply because they are losing more opportunities due to their bad passports and can afford the cost of a CBI in exchange for the greatly increased travel benefits.
They can invest once and quickly obtain a passport that will save them from wasting weeks and months on expensive visas.
3. Citizenship Insurance
There are also people who simply want a second passport for peace of mind, protection, and as a backup policy in the event of potential political, economic, or natural disaster in their home country. For these people, a second passport is essentially an insurance policy in the form of citizenship.
And, if you’re a really wealthy person living in France with €10 million, what’s $100,000 to get a backup plan in case France goes nuts?
Citizenship by investment almost never comes with residency requirements, making it the most convenient solution for someone with a lot of money who doesn’t want to go live in another country or deal with (often exhausting) citizenship by descent paperwork just to get a passport.
People in France, Canada, Australia, Greece, and other western countries may not need a second passport to avoid the high taxes in their home country, but if they’re doing really well for themselves, they may ultimately decide that in a time vs. money cost comparison, paying $100,000 to Saint Lucia or Dominica to get a passport in a matter of months is the better option.
Citizens from emerging countries may also use citizenship by investment as an insurance policy against the corruption and instability in their home country. These folks may prefer to avoid CBI programs in the “Banana Republics” of the Caribbean and instead make a larger investment to get citizenship in Cyprus or Malta, giving them the greater insurance and travel privileges that come with EU citizenship. For anyone else, an EU passport may be a bad idea as it will likely be an albatross in the coming years.
Are there any objections to citizenship by investment?
Of course, there are objections to the practice of buying and selling passports. It’s a strange concept for most people to wrap their minds around and some even like to object to it on moral grounds saying that it is just another unfair privilege of the rich.
I object to both objections.
Being able to purchase a citizenship may sound like a strange concept until you compare it to the one that everyone else seems to accept: birth.
Think about it, we all become subject to the laws of one country or another based solely on where our mothers went into labor. If my mother had gone into labor just 50 miles north, I would have been born in Canada instead of the United States.
And, had that been the case, I could have simply left Canada, done some tax non-residency work, and been done with my tax problems forever while still maintaining my Canadian citizenship. Instead, I was faced with the decision to pay taxes forever no matter where I chose to live or to renounce my US citizenship.
Two completely different scenarios, both completely dependent on a difference of 50 miles at the time of my birth – a decision I had no say in.
And then there’s the objection that giving people the ability to buy passports gives the rich unfair privileges. This is the kind of do-gooder mentality that frustrates me. The reality is that citizenship by investment programs lift poorer countries out of debt, sustain their economies, and even help them rebuild after devastating events like the hurricanes that hit the Caribbean in 2017.
Where can you get citizenship by investment?
There are currently nine available citizenship by investment programs, five of which are in the Caribbean. You can read a summary of each program here or view the resources we have listed below for each individual program.
St. Kitts and Nevis
- Pros and Cons Video
- Second Passport Page
- Neil Strauss discusses how he got CBI in St. Kitts and Nevis on the Nomad Capitalist Podcast
Antigua and Barbuda
- Pros and Cons Video
- April 2017 Introduction Video
- The new, cheapest economic citizenship to get (it takes 4 months)
- How to get Cyprus citizenship by investment – Video
- Living in Cyprus for digital nomads: Pros and Cons – Video
- How to get Vanuatu second residency and citizenship
- The fast economic citizenship you’ve NEVER heard of…
- Turkey citizenship by investment: buy real estate and get a passport
- How to get Turkish citizenship by investment (and should you?)
Additional CBI Reading
- How to get a Second Passport and Second Citizenship
- The Best Citizenship by Investment programs for 2018
- Four Ways to Obtain a Second Citizenship
- Why I decided to get citizenship through investment
- Second Passport Myths, Scams and Black Market
- Are economic citizenship programs worth the cost?
- Comparing visa-free travel for economic citizens
- What is economic citizenship and citizenship by investment? – Video
- The next easy European citizenship program? (Montenegro – Video)
Citizenship by investment is not the perfect solution for everyone. Depending on your situation, you may have better options, but if you want a nearly 100% guarantee of getting citizenship in 4-12 months, citizenship by investment is the best way to go.
If you are an entrepreneur or investor interested in citizenship by investment or other ways to obtain a second passport, feel free to contact me for help.