- 1 Golden Visa Programs
- 2 How a Golden Visa Works for Expatriates
- 3 Golden Visa Does Not Mean Illegal Tax Haven
- 4 Not all Golden Visas are the Same
- 5 Understand the Golden Visa Tax Consequences
- 6 Tax Liabilities Per Category
- 7 Golden Visas Can Offer Accelerated Opportunities to Expatriate
- 8 About Our International Tax Law Firm
Golden Visa Programs
Golden Visa Programs: When Expatriates hear the term Golden Visa, it conjures up visions of Willy Wonka and the Chocolate Factory and a Golden Ticket (the original version, of course). A Golden Visa is a nickname given to international tax visa/passport programs in which a person may apply for citizenship or permanent residence in a much more streamlined fashion than going through more traditional avenues. Two common types of Golden Visas are the Portugal Golden Visa and St Kitts and Nevis Golden Visa. Due to its popularity, even Portugal recently confirmed that it is modifying its Golden Visa Program terms to move investment opportunities away from the coastal properties and toward more rural areas. So, if you are considering a Portugal Golden Visa, it is important to get in while the going is good — unless your goal is to move to Portugal and live 50 miles outside of Lisbon.
How a Golden Visa Works for Expatriates
Let’s say a US citizen wants to give up their US citizenship and move overseas to a foreign country. In order to do so, the individual cannot be “stateless.” Therefore, the US citizen must obtain second citizenship before expatriating. That way, when the US citizen takes an oath and renounces their US citizenship at an overseas consulate — there will be no issue with their expatriation (this is not a big issue for US Long-Term Permanent Residents who are also considered expatriates, because they already have citizenship in another country and are only permanent residents in the United States.) Therefore, in order to accelerate the process of foreign citizenship, Americans can apply for a Golden Visa — which is also referred to as a Citizenship by Investment Visa (CBI). With a Golden Visa or CBI, the expatriate is investing in another country in order to pay for the opportunity of receiving expedited citizenship.
Golden Visa Does Not Mean Illegal Tax Haven
Don’t be misled by the concept that Golden Visa Programs are only located in tax haven countries, because the US has its own version of the Golden Visa — and it is quite popular. It is referred to as an EB-5 investment visa and it can lead to permanent residency and citizenship.
Not all Golden Visas are the Same
Not all Golden Visas are the same. Some Golden Visas are Citizenship by Investment while other Golden Visas are Residence by Investment. Sometimes, the Golden Visa is used as a second passport or travel card, since it may provide access to certain locations that the person’s citizenship passport does not. For example, some Golden Visa Cards (non-passports) provide access to travel such as the Portugal Golden Visa which allows travel throughout the Schengen Zone/Area. Other Golden Visas provide a very quick and efficient route to citizenship, which can be accomplished in just a few months. Deciding which Golden Visa to apply for depends on the purpose and the strategy of the taxpayer — and why they are obtaining the Visa.
Understand the Golden Visa Tax Consequences
There is a major misconception that once a person obtains a Golden Visa and expatriates from the United States, they no longer have any tax liability — but that is incorrect. What makes the US tax system so unfair is that a person is taxed on their worldwide income no matter where they reside (CBT). Most countries tax individuals based on the concept of Residence-Based Taxation (RBT). Therefore, if a foreign citizen is a citizen of Country B but does not reside in Country B, then they generally are only taxed by Country B on income sourced or generated from Country B — and not their worldwide income. Conversely, if the person lives in Country B full-time then that country will tax them on their worldwide income. Thus, when deciding which country to obtain a Golden Visa from, it is important to understand whether that particular country will become the Expatriate’s tax home or if the Expatriate is just using that passport to travel — but will be seeking residence in a different country(ies).
Tax Liabilities Per Category
In some countries, even after a person has obtained citizenship, there are additional requirements they have to follow in order to avoid certain taxes. In addition, some countries have different categories of taxes that they do not have in the United States, such as a wealth tax. Therefore, it is very important that taxpayers consider all of the potential tax consequences before obtaining a Golden Visa and make sure that they understand how the country’s tax operations work. For example, if the Expatriate owns and operates a business with worldwide clients, their tax planning strategy is going to be different than a taxpayer Expatriate who is retired — and generates all of their money from passive income sources.
Golden Visas Can Offer Accelerated Opportunities to Expatriate
When a US citizen who is not a Dual-Citizen wants to expatriate from the United States, they need to obtain citizenship in another country first. It can be very difficult to obtain citizenship in a foreign country, which is why the Citizenship by Investment Programs (Golden Visas) was developed. The Golden Visa program is a great opportunity for US Citizen expatriates to obtain foreign citizenship and a passport at an accelerated pace. Different Golden Visa programs offer different opportunities, and it is important for the expatriate to evaluate the different programs before moving forward with expatriation.
About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure and expatriation.
Contact our firm today for assistance.