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Second Citizenship

Europe Emirates
27 March, 2019

Why you need a second passport

According to The Wealth Report 2018 research, more than 34% of high net worth individuals with the capital exceeding USD30,000,000 have already obtained a second citizenship, while 29% are in the process of obtaining it or considering to have dual citizenship.

The motivation to get a second citizenship is often caused by the desire to travel visa-free to the Schengen countries, the United Kingdom, the USA, Canada and other countries. The reason can also hide behind an opportunity to minimize tax burden, to create a safe haven outside the homeland, and to protect capital.

Change of citizenship and, consequently, change of tax residence, is greatly connected with countries joining the Common Reporting Standard (CRS). Apart from that, bitcoin investors all over the world strive to freely manage their cryptocurrencies, as not all countries have developed special laws to regulate taxes and cryptocurrency. For example, in Russia, if a foreign account is used, one risks getting fined for illegal currency transactions (up to 100%).

Relevant citizenship programs by investment

The investor can choose one of the following options: to obtain either an EU country citizenship or a Caribbean country passport.

In the EU territory, a second passport is offered by Cyprus, Malta, Bulgaria and Austria. Montenegro has been rescheduling the official launch of the country's economic citizenship program for two years now. In 2017, the Government of Moldova adopted the citizenship by investment law, but the program is still inactive. An attempt to launch the program in Georgia was not successful as well.

Five Caribbean countries officially offer to purchase their citizenship by investment: Saint Kitts and Nevis, Dominica, Antigua and Barbuda, Grenada and Saint Lucia. You can also get the passport of Vanuatu, the country in the Pacific.

EU passport vs. Caribbean citizenship: What is the difference?

An EU passport allows investors to stay in any Schengen and EU country (as for now, it also applies to the UK territory) throughout the whole year. Moreover, you can travel visa-free to 150+ countries, including Canada, South Korea and Australia. Residents of Malta and Austria can enter the US territory without obtaining visas first.

A Caribbean passport gives access to visa-free travel to the Schengen and EU areas (staying up to 90 days within a 180-day period) and to the United Kingdom (up to 180 days per year). With a passport of one of Caribbean CBI countries, you are not allowed to live in Europe permanently but you are able to cross the EU and Schengen borders any time and stay there within a set period of time. Grenada's citizens can additionally stay in China for 30 days within a 180-day period. Apart from that, investors with Grenada citizenship can apply for the US E-2 visa which is not available to Russians, Chinese, South Africans, Brazilians, and many other nationalities. This type of visa is issued for 5 years, and it can be extended unlimited number times. A Caribbean passport holder can get a long-term visa to the USA and Canada.

Economic citizenship and tax residence

Change of tax residence is one of the major reasons for getting a second citizenship, especially after the CRS approval. Tax residence change conditions:

Cyprus. You must live in the country for at least 60 days per year. Passive income tax rate (interest, dividends) in Cyprus is 0%. The profits of tax resident companies are taxed at the rate of 12.5%

Malta. You must live at least 183 days on the island. There is also no passive income tax in Malta. The minimum investment amount to become Malta's citizen is EUR800,000. Unlike in Cyprus, where the investment is returnable, in Malta you will need to contribute of EUR650,000 into the state fund.

Bulgaria. You must live at least 183 days per year in the country. Corporate income tax rate here is 10% and dividend tax is 5%. The minimum investment amount for getting Bulgaria's passport is EUR511,292 (returnable investment). The term of document processing in this case corresponds to 5 years. However, you can accelerate the process and get citizenship in a 2-year period. Under the accelerated procedure, the cost will be twice as much.

Caribbean countries. You cannot become a tax resident here and the proof your centre of vital interests is located exactly in the Caribbean will be a utility bill, a local phone number, a driver's license, etc. In some cases, one will need to have either own business or to be employed by a local company.

Antigua and Barbuda. Antigua has recently provided the opportunity to receive a permanent resident certificate. In order to do this, you must reside 30 days a year on the island, prove receiving the income of at least USD100,000 per year and pay the annual tax in the amount of USD20,000. Other Caribbean countries do not provide this opportunity.

Which offer is the most generous?

It is more beneficial for an individual investor to choose the passport of Dominica (USD110,000). For the family of 4, it is better to select the citizenship of either Antigua and Barbuda or Saint Kitts and Nevis (USD145,000 and USD212,000, respectively). This type of investment is non-returnable. The most expensive passport is the one of Cyprus, worth over EUR2,000,000 of investment in real estate (can be sold in a 3-year period). But one still has to keep owning property worth EUR500,000.

The fastest of all is the process of getting Vanuatu's citizenship - it takes a month. The most time-consuming procedure that takes from 12 to 14 months is obtaining Malta's citizenship.

When can an investor fail to obtain a passport?

People having a criminal record, tarnished personal or business reputation and Politically Exposed Persons cannot apply for Malta's citizenship. Requirements are less strict in Cyprus and in the Caribbean, but a background check is compulsory for each and every case.


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Europe Emirates

Europe Emirates Group, is an International Firm offering a full range of legal and financial services at local and international levels. www.uae-eu.com

 

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