Investment Opportunities, Tax Benefits and Security in Traveling in Turbulent Times
We can no longer travel freely throughout the world without thinking of our safety. As the world grows increasingly more conflicted, it becomes important for us to protect ourselves and our families. This is not just in the U.S. People, as well as governments across the globe, are beginning to feel the effects of conflict.
Even though we enjoy great freedom, today we have less say so over our own destinies in such matters as how we earn a living, our cherished financial privacy, even how we raise our children. We are all being increasingly scrutinized by both the governments who we pay to protect us, as well as criminal elements.
There is a way out, and it is to make sure that you have a safety net. There are countries all over the world that you never hear anything about. They are not in the news. There is no political, economic, or religious conflict. The people from these countries live their lives in a peaceful, quiet fashion and do it quite comfortably. The governments are stable. These are the perennial neutral countries like Switzerland, Canada, Sweden, Monaco, Gibraltar, Belize, Costa Rica; and some of the lesser known: Barbados, Malta, St Kitts & Nevis.
Would there be an advantage to be a citizen in one of those peaceful, friendly countries in addition to your present citizenship? Yes, if you have assets you’d like to remain private, there is an advantage of dual citizenship. Financial privacy in some of these countries is protected by law. If you need tax protection from high tax rates, yes; there are tax advantages for citizens of these countries—if you know which ones to offer them. And if you travel a lot, yes—there would be a distinct advantage. These countries offer "Neutral" passports that don’t attract attention.
Advantages of Dual Citizenship: Is it the best of both worlds?
Countries, including the U.S., recognize the right of their citizens to have duel citizenship. With dual citizenship, it is permissible to have two passports.
There are many reasons to obtain a second passport. Governments are becoming very intrusive into the affairs of its private citizens, at times using documents such as passports to monitor citizens activities. Governments often strive to restrict travel of its citizens. In some parts of the world, simply being of a particular nationality can make one a target for terrorist groups, or susceptible to political or religious persecution.
People may not be welcomed in countries due to conflicts between governments. Many countries do not allow other citizens to work, invest money, do business, buy property or settle in their country without restriction, hindrance, or extra taxation. Some countries do not allow other citizens to invest, conduct business, buy property or settle in another country without restriction or extra taxation. By legally obtaining a second passport in the right jurisdiction, all of these problems may vanish and you are free to live an active lifestyle with less interference.
First Step, Assess your needs
It is important to closely scrutinize all of the ramifications of dual citizenship before deciding which country will best suit your needs. Consider your objectives: are your primary goals ease of travel and personal safety? If so, ask how well accepted is the country’s passport? Is the country currently in conflict with other countries?
Do you want to do business in other countries, or enjoy more favorable tax laws? In all cases you should study the laws and tax requirements of a country you are contemplating citizenship beforehand, or have a good, experienced offshore advisor. Some of the romantic sounding countries are costly tax-wise.
How soon will you like to start enjoying the benefits of your new citizenship? How long is the process? What are the requirements? How do I qualify? What are the required documents? An offshore service agency can answer these questions.
Which country is best for your needs?
The best country for you becomes a matter of finding the best combination of legal, governmental, economic and social environment to meet your exact needs and objectives. The principal of a good offshore facility will have the knowledge of the various programs currently available. The most common objectives we see are 1. people looking for ways to lessen their tax burden, 2. to get better returns on their investments, 3. to find less restrictive environments to conduct business, or 4. simply trying to find a peaceful, tropical paradise for vacation and retirement – with their assets intact. Once you figure out which options are best for you, you can figure out which country meets your needs.
How to apply for citizenship in a foreign entity
There are many ways to get citizenship in a foreign entity and a second passport along with it. The easiest is ancestry. Countries such as Ireland, Italy, Germany, Spain, Greece and some UK countries consider descendents of citizens of that country eligible for citizenship for several generations. When asked about the easiest way to get a second citizenship and passports, I always look at a client’s ancestry first. So, the first step here is to check your ancestry, and presto - that may be enough. It’s just that fast, just that easy. There are countries that encourage you to claim your birthright to the citizenship of your ancestors. Ireland and Italy are two of them; with membership in the EU, citizenship in these countries highly desirable.
Marriage is another way to acquire citizenship, although there are some who consider this a steep price to pay for gaining dual citizenship. In the U.S., if a person from another country marries a citizen from the U.S. they automatically become a U.S. citizen. Birth on U.S. soil is also automatic grounds for U.S. citizenship.
The right religion can bring an immediate acceptance into citizenship in some parts of the world. For example, being of the Jewish faith will get you citizenship in Israel.
Permanent residence. If you are willing to pack up your household, live in a chosen country year round, make your way through the bureaucratic maze of forms and documentation you can become a citizen in most countries. However, if you want to have the advantages of dual citizenship without the waiting and hassle, there are options that will give you advantages of dual citizenship now, without having to change domiciles.
The Best Values
Most countries grant residency to wealthy investors: USA, Canada, Australia, Switzerland and Great Britain for example. However, very few countries will grant citizenship to anyone without living there for a period of years. With the world wide crack down on emigration standards (post September 11, 2001), the countries of Grenada and Belize, both British common wealth nations, no longer have clear provisions in their laws to grant citizenship for economic considerations. However Belize, as well as Panama and several other countries still offer various very attractive tax incentive and business programs which include residency packages.
However, there are many quasi-legal programs, as well as black-market programs and a variety of semi-legal, official-looking accompanying documents. Even some legally acquired genuine government documents, if not issued under a legitimate government program, are technically illegal. Use of this documention could result in exposure, deportation, and even possibly arrest.
Economic Citizenship Programs: Commonwealth of Dominica and St. Kitts & Nevis
There are two countries that offer a legally spelled-out and clearly defined Economic Citizenship Programs on a statutory basis. They are St. Kitts & Nevis and the Commonwealth of Dominica.
St Kitts and Nevis
St Kitts and Nevis is a small Caribbean island state composed of two islands, St Christopher (St Kitts) and Nevis. The official language is English, it is a member of the Commonwealth of Nations, British Commonwealth, as well a United Nations member. The two islands host a population of 45,000. Both islands offer excellent opportunities to establish businesses. The government has passed extensive favorable legislation which has served to attract many financial and business services to the islands. There are numerous attractive tax incentives, including a 15 year tax break for repatriated profits. There are strong trade agreements in place with both US and European markets.
This former British colony was granted it's independence in 1983 and has the longest running Economic Citizenship Program. The program was established in 1984 to attract investors and provide a means to develop the country. The St Kitts and Nevis passport is highly regarded around the world and as such permits the bearer visa-free entree to over ninety countries including the United Kingdom, Canada, Switzerland, and Sweden.
The economic citizenship program is a unique method by which you can obtain a legitimate passport and invest in real estate on an attractive tropical island. There are some excellent real estate developments that qualify under the St Kitts and Nevis Economic Citizenship Program. The Economic Citizenship Program requires a real estate investment of US $250,000. Costs include a US$ 35,000 government fee as well as US $15,000 for each additional family member. Lastly there is a US $15,000 application and due diligence fee. Total cost for a single person is US $300,000 making it a relatively expensive program.
The fact that it is costly makes it a more exclusive program and as a result relatively few passports have been issued under this arrangement. While the St Kitts and Nevis passport enjoys an excellent reputation and is more widely accepted internationally, the Dominican passport has recently come under heavier scrutiny by foreign governments due to its reputed ease of acquisition (corrupt government officials have been selling them for years.) The Canadian government now requires a visa for holders of a Dominican passport.
Real Estate in St Kitts and Nevis has proved a good investment over the years and it will makes a wonderful vacation spot or place in the sun for one’s retirement years.
Offshore Residency and Tax Advantages in Panama and Belize
While it is not the same as citizenship, there are also numerous advantages to obtaining residency abroad. There are great tax advantages gained by securing residence in two of the more attractive settings in Central America, Belize and Panama. The cost of living is a fraction of what it is elsewhere, combined with the tax savings it will enable most people to live in a manner that would be out of their reach in the US, Canada or the EU. As there is no time requirement for you to stay in Belize or Panama to qualify, you may live there permanently or keep a residence there for your vacations.
Belize is a beautiful country located on the Caribbean seaboard of Central America. It is a 2 hours direct flight from the USA, and several flights are offered daily to and from Miami, Houston and New Orleans. It is 9,000 square miles with a population of 250,000. The major commercial center is Belize City, population 80,000. It has a diverse population including descendants of the original Mayan culture and a mix of Caribbean people, Caucasians, Chinese and East Indians. The primary language spoken is English. Belize has a long history of peace, stability and democracy. It became a British Crown Colony in 1862 and achieved it's independence in 1981. It is a member of the British Commonwealth, The United Nations and the Non Aligned-Movement.
Tax-Free in Belize
In September 15th 1999, the government of Belize announced its new residency program officially called the Belize Retired Persons Program. Designed to attract foreign retirees (and their funds,) it passed into law in 2000. You need not be retired to qualify to live tax free. The Ministry of Economic Development operates a comprehensive investment scheme which is available to Belizean and foreign investors alike. It provides a tax holiday up to 15 years and up to 100% exemption from trade taxes on import of capital equipment and raw materials and there is no restriction on the repatriation of profits, dividends, fees, capital (including capital gains) arising from foreign investments in the country provided all such investments are registered with the Central Bank. Many of the better known international banking names are represented there as well, Barclays Bank Plc., Bank of Nova Scotia and Atlantic Bank Ltd..
Requirements: Any citizen of the United States, Canada, the U.K. and Northern Ireland, Belize and Europe qualify (other nationals may apply upon request). You must be at least 45 years old. Your dependants automatically qualify if they are your spouse or children under 18, or up to 23 if enrolled in a university. You must have either a pension or annuity, including Social Security of at least US $1,000 per month, or US $12,000 annually, or an income from any source outside of Belize of US $2,000 per month or US $24,000 per year. Applicants are required to deposit this money in U.S. funds in any bank in Belize each month or by April 1st annually.
Under this program you are exempted from taxes on income earned outside of Belize. You are also eligible to bring with you up to US $15,000 of your personal affects, these can be new or used and there is no specification as to what you can include. You may also import duty free any type of motor vehicle up to three years old, any type of boat used for personal purposes or pleasure, or private aircraft (weighing less than 17,000 kg).
A non-refundable application fee of US $100 must be submitted with the application. Once you are accepted, a fee of US $500 is required, another US $100 is required at the time your Qualified Retired Person Status identification card is issued. You can terminate your participation at any time.
PANAMA Residency Program
Panama has become one of the world’s top international banking centers, in part because they do not report any of your financial information to anyone, including the Panamanian government. There are no taxes placed on interest or capital gains income. In addition Panamanian banks offer as high as 6% interest on saving and eight and a half on timed certificates of deposits (CDs). Panama banks have adopted many of the policies that have made the Swiss banks so successful in regards to maintaining the strictest laws and ethics of confidentiality.
In 2001 and 2002, the prestigious International Living Organization ranked Panama among the world’s top retirement heavens in their Annual Global Retirement Index. In 2001 Modern Maturity Magazine selected Boquete, Panama, a small town in the Province of Chiriquí, fourth in an article entitled The World's 15 Best Places to Live Abroad.
Panama offers several residency programs. There are two relatively inexpensive investment venues that while not rating a top producer in returns will offer a nice safe secure return on your investment dollar. In addition, these programs offer you residency in one of the top ranked places to live (or retire) in the world.
The Reforestation Investment Program in Panama involves the US $40,000 purchase of ten thousand square meters (2.4acres) of teak reforestation property entitling you to immediate residency in Panama. After five years, participants have the option to become Panamanian citizens and upon maturity of the teak trees in year twenty, owners receive harvest revenue.
The Self Economic Solvency (Bank Deposit Program) has a minimum investment of US$100,000 in a 1 year time deposit at any licensed bank in Panama. Dependants can qualify for residency under this program with an additional $5,000 per dependant. The interest earned from the time deposit (CD), will be deposited monthly into any savings account at the bank that you designate, which need not be in the name of the applicant. The interest is not taxed in Panama or subject to any tax reporting requirements.
Under the Pensianodo Program, if you are in good health and receive a verifiable monthly income of $500, you qualify for immediate residency. There is no tax on foreign income and you may import your household goods tax free.
While there are many ways to obtain a second citizenship and the accompanying passport, most involve living in that particular country for a considerable time before you are eligible. If you have a large amount of capital to invest in a foreign jurisdiction you can very often cut corners and speed up the process. If you are not so fortunate, however, there are other options to gaining a second passport legitimately. Having spent considerable time investigating the various options to gain the advantages of dual citizenship, I found that without a doubt the St Kitts and Nevis Economic Citizenship Program offers the mostly widely accepted travel document and the greatest freedom from taxation. If you are looking for financial benefit over the ability to travel safely and securely there are other programs that might be better suited to meet your needs.
Jonathan Curshen is an expert in offshore asset protection strategies. He specializes in wealth protection, foreign asset protection trusts, international business corporations, worldwide investing, yacht registrations, and global banking. Jonathan Curshen is a member of APOI (The Asia Pacific Offshore Institute), ITPA (The International Tax Planners Association) and has been a featured speaker at countless seminars.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.