Dateline: Belgrade, Serbia
In the book Nomad Capitalist, I talked about two unique but often complementary strategies: second residence, which gives you the ability to live in a country and perhaps benefit from a favorable tax regime, and second citizenship which gives you the ability to have a second passport from a country and gain government protections and a place to go.
Both of them give you more options, and a residency can sometimes lead to citizenship.
We’ve talked before about paper residency that does not require you to move to another country full time to eventually become a citizen. There are all types of ways that these two things work together.
But not always.
In this article, we’ll review seven countries where a second residence does not lead to citizenship even though people think that it does.
NO GUARANTEED CITIZENSHIP BY RESIDENCY
The countries I want to talk about today are ones that have a problematic track record of not granting folks citizenship by residency. I’m not talking about programs where there’s not a pathway to citizenship. For example, in Malaysia, you can get a residence permit to live there but there is no way to get citizenship through that.
What I am talking about are the countries like Panama, which currently has its Friendly Nations Visa program that should technically lead to citizenship, but often doesn’t in practice. Many of the offshore conferences and newsletters will tell you to put five thousand dollars in a bank in Panama or open up some little company to get this instant permanent residence.
What these conferences and newsletters fail to mention is the reality of what is actually happening on-the-ground, in Panama, and in other countries like it.
No one gets it 100% correct.
Sometimes countries change on a dime. Even if there’s a possibility of citizenship through a program today, that doesn’t mean it’s guaranteed to be around tomorrow. And applying for citizenship doesn’t guarantee you’ll be granted citizenship.
In Panama, you are allowed to apply for citizenship after five years of permanent residence. There’s a chance you’ll get that citizenship if you spend most of those five years living in the country. And there’s a chance you won’t. And the law could always change in the future, too.
There are other countries like Latvia which has a Golden Visa program where you don’t have to live there to keep the residence active, but you do need to spend the vast majority of the year there if you want to become a citizen.
These aren’t the programs I’m talking about because those programs tell you what you need to do to become a citizen.
If you need to spend nine months a year in a country for five or ten years to become a citizen, it shouldn’t be any surprise when you go there three days a year and never end up getting their citizenship.
A lot of folks really don’t understand that a residence does not have to turn into a citizenship. If you are looking for a guaranteed second citizenship, citizenship by investment versus citizenship by residency and naturalization is probably the way to go.
Some fast-track naturalization programs could also work, or you could do a couple of different residency programs to see which one eventually leads to citizenship. I’ve had numerous people who have come to me and started two or three of these programs because they know that there is a good chance one of them will fall through and they want to have a backup plan.
That said, let’s look at the countries that you shouldn’t count on from the get-go if you’re looking to turn a residency into a citizenship.
Let’s start in the East and work our way West. About seven years ago, I reported a conversation I had with some top attorneys who had said that was your last chance to easily get a residence permit in Singapore – primarily as an entrepreneur through the EntrePass program.
They were right. It’s now very difficult to even get a residence permit in Singapore.
If you’re an entrepreneur, you’ve got to have a much better business plan than you used to. They’re much more particular.
If you wanted to be in Singapore, the chance was seven years ago, really maybe even 17 years ago to get in on great terms and get a great passport. Once these countries become very popular, they don’t really need more citizens and Singapore is a perfect example of that.
Singapore is one of the best citizenships in the world, but it’s hard to get. I’ve worked with a number of expats living in Singapore who have either been rejected for permanent residence or know so many people who have been rejected that they haven’t even bothered to try.
If you can’t become a permanent resident, you’re not going to become a citizen. This is a trick that countries sometimes use. If they don’t want people to become citizens, they will bury them in bureaucracy and call it “just following the rules.”
I’ve been a resident of Montenegro, which uses the same kind of tactic that Singapore does. You generally get temporary residence one year at a time for five years and then after five years, you can apply for permanent residence.
Generally, around the fourth year, they start making problems for people. They’ll say you can’t renew it or they’ll stall for so long that your application gets canceled but then you can come right back and apply for the temporary residence again.
They don’t want you to get the permanent residence because then you’re on the track to citizenship.
However, Montenegro now has a citizenship by investment program that allows you to skip all that and get citizenship right off the bat. They really want to encourage people who are using their tax-friendly residence programs to make an investment. So, if you want citizenship, that’s what you should do rather than just applying after so many years of residence.
The same can be said of Malta, which has both a residence and citizenship by investment program. Both programs involve buying or renting a property along with other investments or contributions, but the price tag for Maltese citizenship is obviously much higher than for its residence program.
While there is a pathway to becoming a Maltese citizen after roughly a decade of living there, it is a lot more difficult than it seems. I haven’t heard as much about problematic bureaucracy in Malta but they do make it difficult and likely for similar reasons as Montenegro.
If you want citizenship, they want the big investment.
Malta’s citizenship by investment program was recently updated and will now cost you a minimum of €690,000, most of which is money you will never get back. It’s also much slower than most citizenship by investment programs with the fastest option taking one year and the cheapest option now requiring three years of residence.
But if you want EU citizenship on a nice beautiful island chain in Europe, you have a better chance of getting through the Malta’s CBI program rather than its different residence programs that are normally used by folks for tax purposes.
But in general, I’m not the biggest fan of Maltese programs. I think there are better options out there.
Another country that has a residence by investment Golden Visa program is Greece. Greece has historically been rather difficult about naturalizing people who aren’t ethnically Greek.
If you want a pathway to being able to spend as much time as you’d like in Europe by making a real estate investment in Greece, the terms for that are pretty good as long as you can put up with Greece’s bureaucracy and the taxes and the threat of ever-increasing taxes on real estate.
What you probably shouldn’t rely on is citizenship.
Technically speaking, if you spend the majority of your year in Greece (which means you’ll be paying Greek taxes) and learn the Greek language, then you can be naturalized after seven years. But that doesn’t really happen in practice.
This is not a country that I would trust, particularly if I’m paying large sums of money for the privilege of living there and I’m putting down roots there. It’s just, historically a place that has not been reliable for naturalizing folks.
Now let’s go to Latin America. Latin America has a lot of interest from folks because there are many different residence programs. People can get confused because a lot of companies will inaccurately promote that a residence will become citizenship
Earlier, I mentioned the Panama Friendly Nations Visa program. This is the perfect example of a country where what is said on paper is not always true in practice.
I know people who are not just doing the Friendly Nations Visa where they get the permanent residence and only come back one day a year to keep the thing active, they actually lived in Panama for 10 or 15 or 20 years and their application for citizenship is still sitting on a desk waiting to be signed by the President.
They learn the language. They put in their time. This isn’t just a paper residency, they live there and they’re still having a hard time getting citizenship.
Understand that being able to apply for citizenship is not always a guarantee that you will get citizenship.
Every time I mention a program doesn’t mean you should automatically do it. I don’t talk about every opportunity here because I don’t want 100,000 people to go out and do it and then it would get too popular and the program would be changed or canceled.
The Panama and Paraguay programs have become much less reliable because everyone’s hurrying to apply and they are doing it sloppily. And what country wants to have tons of people descending on it just to get passports for no time commitment?
Do you think the United States wants a bunch of people going down and getting Panamanian passports that give them more privileges? No.
Panama residence is very convenient as a place to live, it’s a tax-friendly place if everything is structured properly, but I would not rely on it for citizenship, because there’s a chance you won’t even get it. I would get my citizenship elsewhere.
Peru has come on the scene recently. If you put in substantial time there, there’s a better chance that you will get citizenship than some of these other countries, but here’s the caveat: getting in is different than they suggest so on paper.
People are still talking about the $30,000 investment in Peru to get a residence permit. And then they say it’s relatively quick to get the citizenship.
In reality, the government has said that they’re not taking $30,000. For all practical purposes, it’s closer to $150,000 or sometimes even more. And they generally want you to hire people if you’re making a business investment.
It’s not just a matter of putting some money in a bank.
Just because some country’s law says that $30,000 can get you residence doesn’t necessarily mean that you are for sure going to get residence. We’ve seen this with a growing number of countries where they just fly under the radar and keep people out by having some guy with a smirk on his face at a government desk says “no thanks” rather than actually changing the law.
If you really commit yourself to the country, Uruguay may be one of the easier places to get citizenship on this list, but you’ve really got to be there. And it’s not such a bad place to settle down for a quiet, peaceful life.
A couple of years ago, I started talking about how people were being rejected for Uruguayan citizenship. What people from the West – especially from common-law countries – don’t often understand is that in some of these Latin American countries, bureaucrats often wield more discretion.
In some Latin American countries, judges make the decision on citizenship. And in a civil law system, judges can just kind of do what they want based on the mood of the day.
So, I’ve said before that it can be difficult to get Uruguayan citizenship.
A couple of Uruguayans responded to that claim and said I was mistaken. But how would they know? They had been citizen since birth. If you’re asking folks who live in a country how easy it is to get citizenship there, they probably won’t know how to even go about getting one, let alone how hard it is.
Most people view a second citizenship from the perspective that you are leaving your country (for instance, the United States) and you’re moving to Uruguay, buying a home, joining the chamber of commerce, planting a garden, and sending your kids to school.
You’re moving from Point A to Point B. That’s the typical perspective people look through when talking about moving overseas.
But that’s generally not what we talk about here at Nomad Capitalist. We talk about diversification, and for people who are not moving every part and parcel of their life to one single country, it can become harder to get citizenship in these places.
I’m all for putting in a little bit of effort or making some kind of contribution to a country. I’m really starting to look at this “fast, easy, and cheap” path to citizenship where you drop seven dollars in a bank account and ask them to FedEx you the passport as a little vulgar.
Put in some money to start a little business or invest in some property or buy a few bonds. Why? These “fast, easy, and cheap” options don’t really work. They are not sustainable.
But do you need to build your entire life in one country for years on end in one single country just to get citizenship? No, not entirely. I’m all for the Nomad Capitalist lifestyle, diversifying yourself around the world, and that includes your physical presence.
But if you’re not willing to put in substantial time in Uruguay it’s one that I would probably skip.
BONUS COUNTRY: DOMINICAN REPUBLIC
The process in the Dominican Republic is really slow, really bureaucratic, and comes with lots of hurdles. It has been a challenging program for a lot of folks to figure out.
Technically, you can apply for citizenship after two years of permanent residence, but it just doesn’t work out that way.
Latin America, in general, has great residence programs that are very open to immigrants and are to giving citizenship to people from different countries. But it is a bit more difficult in the Dominican Republic.
CITIZENSHIP BY RESIDENCY TAKES COMMITMENT
The future lies in people who are making some kind of commitment.
If you’re buying a property somewhere, you can feel a lot better about your chances of getting citizenship in that place later because you’re showing some connection.
The country is going to be more predisposed to help you if you put in either a time commitment or a money commitment. The days of doing absolutely nothing are pretty much over.
Making a small investment in a country with an average passport – investing$25,000 in bonds or $50,000 in real estate or $100,000 in a bank deposit – is going to better your chances.
It doesn’t have to millions of dollars, but I do think you’re going to start to see more of a correlation that the more you invest or the more you commit to living somewhere – be it three to five months or a year – the more likely you will be able to obtain citizenship.
If you would like to find a residency program that will lead to citizenship or that will work within a larger, holistic offshore strategy, feel free to reach out for our help.