Where should you plant your citizenship flag?
This past weekend on my radio show, I spoke with passport guru Mark Nestmann about who is calling him for a second passport and where they are moving. If you didn’t hear it, you should definitely listen here.
Mark helps people get passports largely through so-called “citizenship by investment” programs like those in St. Kitts and Nevis and Dominica. For a six-figure sum, you can get citizenship rather quickly.
Whether you want to fork over a sizable chunk of money for citizenship or want to go about it in a more traditional way, there are several things you should consider.
We have no choice where we’re born; it’s a genetic lottery akin to being born into a royal family… or into poverty in a shantytown. I personally don’t believe in a system where you’re indebted for life to a country you may not care for just because you were evacuated from a birth canal on their soil.
Or in some cases, your parents were and conferred their citizenship on your no matter where you were born. In order to determine what citizenship you want, you should determine what it is you don’t care for about your current country and citizenship.
Is it taxes? If you’re not a U.S. or Hungarian citizen, I doubt it; you could simply move out and declare yourself tax non-resident. Problem solved. Yet, despite the howling of “Occupiers” who want traitors like you to pay your largely vague “fair share”, I don’t think even most Americans who expatriate do so for tax reasons.
However, even if taxes aren’t at the top of your list, I doubt most people, especially entrepreneurs and investors, would want a citizenship that signed them up for higher tax obligations.
There are enough countries to choose from. Canada, France, and Germany have or are considering new citizenship-based taxation. I presume other broke EU states will follow. It wouldn’t make sense to renounce your US citizenship to sign up for the same slave treatment from your new country.
If comparing two countries, one that taxed your worldwide income merely by living there, and another that taxed only local source income, would that help make your decision?
If you’re planning on a citizenship by investment, you should consider that Dominica has relatively high-income tax rates; St. Kitts and Nevis has none.
If you wanted to live in the Caribbean, or planned on at least spending some time there, it is worthwhile to consider whether you might be subject to the same high taxes you left behind in the future.
Perhaps your concern is government policy. The U.S., for example, has reached its hand out further and further to meddle in people’s business not just domestically, but worldwide.
While I believe U.S. tax policy to be counterproductive to new investment, it frustrates me to be a constant political target painted as a scofflaw for not paying enough, and made subject to increased taxes and scrutiny so the government can hand out more goodies to people who blame me, not thank me.
My irritation with US taxes lies not so much in the taxes themselves (although plenty of countries have shown you can tax less) but with the public discourse and being used as a political toy for politicians to use to their advantage.
Finally, there’s lifestyle. Perhaps you don’t feel at home in your home country. You feel out of place, something about you isn’t accepted (or is even illegal)… whatever the case may be. If you don’t approve of the culture in your country, you may want to cut all ties. If you’re a U.S. citizen, for example, you might not find the Canadian culture different enough.
It’s important to determine all of the things you’re looking for in a new country if you’re planning to obtain a new citizenship. You want to make sure your decision is a good one today as well as years from now to avoid playing the citizenship shuffle.
While there are benefits to having multiple citizenships, make sure you know exactly why you’re doing it to avoid the same problems that led you to consider it. The winds of change are blowing throughout the world and shifting the balance of power.
Governments can change on a dime in response to these winds and a place that’s friendly to you today may not be in the future.