Dateline: Ulaanbaatar, Mongolia
I’ve been thinking a lot about the different opportunities and freedoms that you enjoy as an economic citizen. It’s one of those things where you don’t entirely know what it looks like until you have it.
But what are some of the freedoms that people seek when they want to become economic citizens? To name a few: privacy, banking, travel, identification, and insurance. This certainly isn’t the whole list, so if you’re not concerned about these specific freedoms, know that there are others.
Also, know that if you are here because you are interested in getting a second passport, going offshore and following the three pillars we discuss here at Nomad Capitalist — financial/tax reduction, second passport and investments — then you don’t have to have those concerns. Nevertheless, historically, these are some of the most common reasons people want to be economic citizens.
What’s happening right now is that a lot more people are getting interested in this stuff. It’s like the guy who wrote a book about nomadic working back in 1997 and nobody cared. Now, everyone is talking about it and it’s all over the place. Because of the spreading knowledge and interest in offshore strategies — and, in this particular case, being an economic citizen — it’s important to stop and think about what it is we actually want and why it is that we want it.
So let’s take a look at the various freedoms I listed above to see if being an economic citizen will actually help you achieve those ends.
Economic Citizen’s Freedom of privacy
The first freedom that most people will name when listing their reasons for obtaining economic citizenship is privacy. People want privacy. They are tired of the government looking at what they’re doing and feel like their emails are being read, their phone calls listened to, and their bank accounts spied on. And it’s not just a personal issue, many people also feel they need to protect their companies as well.
In terms of emails being followed, phone calls listened to and everything regarding being spied on, we don’t really talk about that kind of stuff here at Nomad Capitalist. Certainly, we’ve had guys like CryptoHippie write a couple articles for us and he talked about how to protect yourself.
In all honesty, it seems that following those strategies is a much better way to go about protecting your privacy. One of the challenges of pursuing economic citizenship for greater privacy is that, even if you become an economic citizen, you will still be a citizen of the country that has you worried. Only if you renounce will a second citizenship give you the freedom of privacy that you are looking for. A much simpler route to this freedom is using legal, online protections to safeguard your privacy in the first place.
The idea of getting a second passport just to have privacy seems like an inefficient way to solve your problems. Even if you were to get an economic citizenship, you hear the speculation about the Five Eyes countries (the UK, US, Canada, Australia and New Zealand) that share information between themselves.
Donald Trump got a little paranoid by the agreement and made a ridiculous claim. While he wasn’t wire tapped by the NSA, the Obama administration had asked the British intelligence to do it and then share the data. While the Brits denied the claim, it goes to show just how entrenched spying is in the system.
One Privacy Benefit for Economic Citizens
Now, one aspect that economic citizenship helps with in terms of privacy is for individuals from a country like China. Is Comoros going to report you to the Chinese government as a Comoros citizen? No. In fact, most economic citizenships don’t. There are some countries where, if you’re naturalized, your name gets published in a register. However, in general, countries’ citizenship databases are pretty safe. So, if you’re from a country like China and you’re looking for a backup passport, then the privacy of not having to give up your current citizenship may apply.
And, obviously, you should follow all the laws. Fortunately, most of us in the western world enjoy the freedom of being able to have dual citizenship. So that’s not an issue. I can go online and talk about my multiple citizenships and nobody really cares. But that’s one way where privacy could help you.
Freedom of Banking Privacy As An Economic Citizen
US citizens will often call me and ask how they can get around FATCA. Well, you better get a good economic citizenship. Don’t go to Comoros. I’ve had people who did want to bank with more privacy so they got a better economic citizenship like Antigua or St. Kitts and then they renounced the US passport.
Simply having a second passport does not allow you to violate the requirements of the first. People often mistakenly think that whatever they do as a citizen of the Comoros doesn’t count toward the US and the US doesn’t have to know. Well, to the US, you’re always a US citizen.Particularly when you’re in the United States and when you are a US resident — but really you’re a US citizen to them wherever you go. They don’t view you as a Comorian, they just allow you to also be Comorian.
I guess, in some kind of crude way, it’s like an open relationship where you don’t really approve of it, but you each go out and see other people. One partner probably doesn’t really like the idea, but maybe they’re just resigned to the idea that the way to keep the relationship intact is to let them go out and be with someone else on occasion. That’s not such a nice thing for them, but that’s how these governments look at it.
So, the idea that you’re going to get around FATCA or hide your bank accounts isn’t going to work. We previously talked about the idea that they put your country of birth on your passport. So if you want to get the best offshore bank accounts that are worth their salt — especially in places like Switzerland, Singapore or Hong Kong, places where people are looking to go — they’re going to say “You were born in the US, are you still a US citizen? Did you renounce your US citizenship? Can you prove that to us?” And if you haven’t renounced, their answer will often be, “Well, then we can’t help you”.
At the very least, you’ll have to comply with FATCA. There’s really no way around it.
Here’s the deal, a lot of banks just have everyone fill out the FATCA paperwork. And that’s not necessarily reported to the US government. But you have to sign a paper saying that they’re not a US citizen. I think pretty much every bank does that. I told you last week that when I went to Azerbaijan, they asked me to sign that I was not a US citizen and I told them that I was. So getting an economic citizenship without renouncing is not a way to get around FATCA.
If you’re thinking that paying to quickly get a second passport is a way to get around FATCA, forget it.
I’ve met people who want to do this and I’ve just told them that it’s not going to work. It’s not what you want to do. You’ll have more rights if you renounce your US or citizenship, but then you’re going to be Antiguan. So that’s a question that you have to ask yourself.
The Freedom of Economic Citizens When Travelling
One of the things that I think is a variation of freedom — and we’ve talked about this before — is the ability to have a passport to use as an ID. Nobody, once, has questioned me about really being from the Comoros — not the people at Qatar Airways, EgyptAir, hotels, nobody.
There have even been times where I’ve handed my passport over in Cambodia and asked for a Vietnam visa and they said they weren’t sure if that passport would work, but when they came back they said that it worked out very well because they looked at me and I was white.
That’s the kind of stuff that people say in Asia. It may not be the nicest thing, but they say it. In a lot of places they still have that stereotype. They think “Well, he can’t be that bad, he’s a blonde guy.”
It kind of offends me, but I guess if we’re looking at freedoms, there you go, you get some of the easier privileges of getting a visa.
By the way, I did this recently with another citizenship when I got a visa to go to China and I walked in and they said, “Oh yeah, you’re the American guy whose lawyer called in the other day.” So I think they were almost kind of a bit more lax for that reason.
Now, again, some of those privileges are curtailed. For example, I have a passport that states “Born in USA” that allows me to go to Iran. I can get a visa on arrival and go to Iran pretty easily, but does Iran want to let a guy in who may no longer be a US citizen, but it says on his passport that he was born in the US? I’m not entirely sure I feel comfortable with that. That said, I do have more freedom to travel. I don’t have to be an American or a British person whose country may not have a good relationship with the rest of the world.
Insurance: The Freedom of Choice
Many of the freedoms of privacy, banking and travel come either after renouncing your first citizenship or by making a little extra effort. But there is one freedom that you obtain the moment you have a second passport.
I maintained US citizenship for a long time, until I renounced my US citizenship in 2017. Most people I’m working with don’t plan on giving theirs up. They plan on making it an extreme insurance policy, which is completely fine so long as it’s still serving you.
And that’s the freedom that you have the moment you receive your second passport.The freedom of knowing that tomorrow you can decide to no longer be a US citizen, British citizen, or whatever else. You have the freedom that you can go out and travel and, while you may have to get more visas, you don’t have to be judged as an American.
The biggest freedom for me is just day-to-day life. The biggest freedom for me is knowing that I have options. I don’t see a lot of the things that people think a second passport will solve getting solved by merely obtaining the passport. They’re mainly solved by getting rid of the first passport.
And, again, I do know and have worked with people who have spent anywhere from $200-$600,000 buying those passports. I do not know anyone who’s done the Malta or Cyprus programs because it’s not targeted toward westerners. Why leave the US and become a citizen of the EU if your concerns are privacy and banking? These are the motivations I have seen behind their decisions to renounce.
These are the big freedoms. And having options is the ultimate freedom.
I have always been an entrepreneur, but being a little neurotic I was always afraid that something wouldn’t work out and I would have to go do something else. As such, I was continually building up what they call a “screw you” fund, which gives you the financial freedom to just quit whatever you’re doing and walk away.
I feel like I’ve gotten there with different businesses and success. All that’s left is to add the extra layer, which is the citizenship layer that will give me the physical freedom to go wherever I need to go and not be constrained to the rules of one government.
For me, that’s the greatest freedom. It’s important to be careful and focused on the right freedoms for you and understanding how an economic citizenship can aid you in achieving your end goals.
Lessons Learned from Obtaining An Economic Citizenship
Having US citizenship served me in some ways with what I’m doing with Nomad Capitalist, despite the fact that I do have to file tax returns. However, I wanted the flexibility and the clarity of knowing that that citizenship is always serving me and that if one day it doesn’t, I had the option to opt out.
Which is exactly what I did.
This is an interesting experience and an interesting reminder of what I tell everybody — because I’ve experienced this before — that when you do something you start off with questions, you start off thinking strategically and thinking about the hard (vs. soft) topics.
Can I renounce my citizenship? What are the tax consequences? etc. Those questions are important. Strategy is important, but it’s interesting that when you dive in and do something and the result is in or on its way, that there is a great clarity that comes with that.
And I think this is what a lot of people face — especially when they’re looking at getting a second passport, but really with anything related to going offshore and the subjects we talk about at Nomad Capitalist — but everyone talks about, “Well, if I get a second passport I could do this, I could do that.”
Okay, great. Go do it and then you’ll have more clarity. And that’s where I’m at right now.
Flexibility Is Best When You Have It
I’ve been doing this stuff for a long time, but there’s a clarity from getting this passport. I started out saying that, for me before, being a US citizen was still serving me, but I still liked the flexibility. For people who want that flexibility, let me tell you that flexibility is best when you actually have it.
It’s easy to think that if you get a Dominica passport, you’d have the ability to renounce your US citizenship. Well, guess what, you feel differently about it — in my experience — when you actually have that passport. It causes you to reevaluate your choices in a way that you can only really do when you actually have the thing that gives you flexibility. Just imagining Hey, if I pay $100,000 and I get that flexibility… is very different from the conversation you would have if you already had that second passport.
Those who already have the flexibility, knowing that they’re okay, knowing that they have the option is important. Options are important; that’s been a lesson that I’ve relearned throughout this process.