In most cases, the seller is also liable to pay the broker’s commission. This generally varies between 2% and 10% of the sale price in different countries and is usually subject to Value Added Tax (where such a tax exists).
The property acquisition taxes which are levied everywhere are as a rule borne by the buyer. However, if they cannot be collected from the buyer, they may in some countries be charged to the seller. This is particularly relevant when the seller remains resident in the same country. With regard to capital gains taxes it is exactly the reverse: they are payable by the seller but the buyer may be jointly liable if the seller doesn’t pay them – and the tax authorities may be entitled to put a lien on the property.
When apartments or houses belonging to an owner’s association (e.g. concerning the shared amenities of a condominium) are sold, the amount of any reserve or renovation fund must be determined, as this can have an effect on the sale price.
A property designed for private use should above all bring subjective pleasure to its users and not only maintain and increase its value in objective terms. Therefore careful clarification of these factors is most important before closing the deal.
1 Organization for Economic Cooperation and Development
2 For an overview of these rules, see Chapter 3
3 With the sole exception of Andermatt, where foreign residents can buy without any restrictions whatsoever; see www.henleyestates.com/andermatt
4 A more detailed overview of this important aspect is given in section 1.9
5 e.g. Swiss Insurance Partners, see www.sip.ch
6 e.g. the Netherlands, with regard to extended inheritance tax for citizens even if they have already left the country and are residing abroad
7 E.g. 10 days in the UK or 30 days in Switzerland
8 E.g. Hong Kong, Panama, Singapore
9 For a good discussion of these issues, see Betten (1998)
10 See Chapter 3
11 Betten (1998)
12 France has also recently introduced such a regime
13 E.g. Australia, Austria, Canada, the Netherlands
14 The author would like to thank Swiss Insurance Partners, Zurich/Dubai/Hong Kong, for their valuable input in compiling this section
15 Société Civile Immobilière
16 The purchaser runs the risk
17 Buyer beware
2
Citizenship Planning
Chapter Summary
Henley & Partners was the first firm to globally specialize in the unique field of Citizenship Planning. Today there are many reasons why you should consider becoming a citizen of more than one country.
There are a variety of different benefits to alternative citizenship. As citizenship may impact on your tax status, it could be a key factor in international tax planning. Alongside this, you may gain more privacy and security across your banking and investment portfolio. Frequent travellers, especially those who often require visas, find a second citizenship invaluable in ensuring flexibility and the ability to travel at short notice. Those who have the need to live a safer country than their own, either now or in the future, can obtain that security through citizenship.
The most common factors in acquiring citizenship are by birth, by descent, by marriage or by grant. The US is an important example of the few countries that still grant citizenship by birth. Many people will be entitled to another passport by descent or by birth, and this may be easy to establish.
If birth, descent or marriage do not offer a solution, there are other options open to wealthy or skilled individuals. Five countries offer citizenship-by-investment, Antigua and Barbuda, Austria, Cyprus, the Commonwealth of Dominica, and St. Kitts and Nevis, and can give you a new passport swiftly and legally, which is of paramount importance, as illegal options are commonplace.
When considering any of these options, you must remember to take guidance on dual citizenship, as roughly only half of the world’s countries allow this.
Finally, and of great importance, is the reputation of the country and its passport. The level of visa-free travel it affords you will be critical in the impact and benefits it has on your life.
The term citizenship planning was created by Henley & Partners. In recent times and especially since the dramatic events of 9/11, questions of citizenship, visa restrictions and freedom of movement have become more and more important for internationally active individuals and families.
Indeed, there are many reasons why you should consider becoming a citizen of more than just one country, and consequently hold more than one passport.18
2.1 Why become a citizen of more than one country
Due to political or economic circumstances, citizens of many countries find it difficult to travel abroad and are confronted with strict visa requirements each time they want to enter a foreign country.19
But also, nationals whose passports usually allow them easy access to most countries can find it impossible to obtain visas due to temporary travel restrictions during trade sanctions and other geopolitical disturbances; or due to their nationality may be overly exposed to terrorist threats and other hostility.20
Moreover, even though the necessary visa may be granted to you, getting a visa is always a very tiresome procedure during which your passport on which you get the visa is not available – and can be a significant factor of delay for your travels. 18% of Chinese visitors to Europe, for instance, make it to the UK, but two-thirds visit France, a member of the Schengen travel zone where visas are easier to get.21
Visa-free travel can also be obtained via a residence permit, not only through a second passport. For example, residence in any of the Schengen countries will offer visa-free travel throughout the Schengen Area of Europe. However, only the acquisition of a second citizenship and a second passport can guarantee the desired long-term visa-free travel, and only citizenship guarantees the long-term security of these privileges.22
If you cannot acquire or renew your passport in your home country, for example due to political instability, civil war, revolution or change of government, having another passport can be very useful, even critical. Even if you simply lose your passport, it may take some time until you can get a replacement.
There is a growing tendency in many countries to follow the lead of the US in taxing even non-resident citizens.23 Citizenship also plays a role in some countries to determine whether you may still be deemed tax resident or domiciled (including Germany, Sweden, the UK and others), and citizenship is one of the tie-breaker rules in most double tax treaties. Alternative citizenship is therefore also becoming increasingly important as an effective tool for international tax planning.
If you wish to have the possibility to retire in a safe haven in the future you can only fully secure this option if you acquire either permanent residence or citizenship of that country. However, even a “permanent” residence permit does not mean full security as it may still be subject to renewal, revocation, or new conditions.24 Becoming