- 1 Citizenship-by-Investment Programs
- 2 Countries that Offer Citizenship-By-Investment
- 3 Considerations for Citizenship-By-Investment
- 4 Time to Complete the Citizenship-By-Investment Process
- 5 Investment Amount Required
- 6 Travel Rights
- 7 Tax Implications of Citizenship-By-Investment
- 8 What does the Citizenship Process Require?
- 9 Citizenship-By-Investment can be Complicated but Worthwhile
- 10 About Our International Tax Law Firm
What is Citizenship-By-Investment for US Citizens & Expatriation: When a US Person (Citizen or Long-Term Permanent Resident) wants to expatriate from the United States, it is important that they have already obtained citizenship in another country before completing the expatriating act. In fact, the United States will not approve an expatriation application without proof of other citizenship, because expatriation cannot be completed if it will leave a person stateless (aka without a country of citizenship). For some expatriates, it is relatively easy to expatriate because they already have dual citizenship or otherwise have lineage in a foreign country which allows them to claim citizenship at any time. For those who do not qualify in either of these two categories, there are about nine (9) countries that offer Citizenship-by-Investment — otherwise referred to as a Golden Visa Program (Citizenship or Residence). There are several more countries that offer Residence-by-Investment (including the United States and the EB-5 Visa) — and some of the Residence-by-Investment countries offer citizenship after a certain amount of time — but for some soon-to-be expatriates, they may need the citizenship ASAP.
Countries that Offer Citizenship-By-Investment
When it comes to countries that offer Citizenship-by-Investment (CBI), it is (currently) limited to nine countries, but this can vary as some new programs start (Montenegro) and others end. Each country has its own set of rules and requirements, and the amount of investment necessary to commence the citizenship process varies extensively. The nine countries currently offering Citizenship-By-Investment, include:
Antigua and Barbuda
Kitts and Nevis
Considerations for Citizenship-By-Investment
There are many considerations that a US expatriate has to consider when it is time to decide on a second citizenship in order to expatriate. There are pros and cons to each decision — but at least as to the tax ramifications in these countries, it is not the overriding concern. That is because most countries base their tax rules on residence and not citizenship. In other words, unlike the United States (which taxes US Persons on worldwide income regardless of where they live or where the income is sourced), most countries typically only tax their residents on worldwide income. Therefore, if an Expatriate obtains citizenship in a CBI country but does not become a Resident (in accordance with the specific residence rules which may differ per country but generally requires at least six months of residence), they will (generally) not be taxed on worldwide income.*
*Some countries have alternative taxes to be cognizant of — such as wealth taxes and investment taxes.
Time to Complete the Citizenship-By-Investment Process
For some taxpayers who prepare in advance, there is no immediate rush in terms of obtaining second citizenship — so the time to complete the process is not the primary concern. For other taxpayers, they needed the passport yesterday, so timing is important. For example, obtaining the Montenegro Citizenship-By-Investment can be done relatively quickly, while the time it takes to complete the Austrian program requires more time.
Investment Amount Required
Likewise, another very important aspect of deciding which program to apply for, is determining how much of an investment the person is going to make. For example, the investment required for Austria is upwards of $3.5 million USD — while the initial investment amount required for Antigua or Dominica can be less than $500,000 all-in.
Different countries offer different types of investments for those seeking Citizenship-by-Investment. Most countries offer a real estate opportunity so that a person can purchase a property, live in their property, not sell or transfer the property for a certain amount of time — and then use it as a rental property or sell it and make a different investment. The specific type of investment made by the Expatriate boils down to whether or not the Expatriate is seeking to make the Citizenship-by-Investment country their home or they are just purchasing citizenship with the intent to reside in a different country or countries.
One of the most important aspects of determining which Citizenship-by-Investment Program a taxpayer will apply to is the travel rights afforded to them by the passport. For example, many taxpayers seek a passport that provides visa-free travel throughout the Schengen Zone. Other Expatriates, they may require Visa-Free or VOA (Visa on Arrival) travel to very specific countries — and this will impact which specific passport holds the most benefits.
Tax Implications of Citizenship-By-Investment
In general, unlike the United States — most other countries do not tax citizens on worldwide income. Therefore, when it comes to issues involving tax, it is usually not a huge concern unless the taxpayer is going to actually reside full-time in the country of citizenship. While the United States is one of only two countries in the world that taxes its citizens on worldwide income no matter where they reside — most countries still tax their citizens and residents on worldwide income, only if they qualify as a resident of that country.
What does the Citizenship Process Require?
The process of Citizenship-by-Investment can be relatively extensive, although it is not necessarily difficult. Most of the programs require the applicant to show that they are a person of solid repute and do not have any felonies nor aggravated misdemeanors on their record, depending on the specific country. There are various background applications, charitable donations, and investments that must be completed — and the time to complete the process varies based on the country.
Citizenship-By-Investment can be Complicated but Worthwhile
US Citizens who are seeking to expatriate from the United States but requiring new citizenship (or other Expatriates who are seeking second citizenship for travel purposes) may want to consider one of the various Citizenship-By-Investment programs. Not all Citizenship-By-Investment programs are the same and the US Citizens should carefully evaluate which program benefits their needs the best before pulling the trigger.
About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
Contact our firm for assistance.