Persons who were rendered stateless by birth or through accidents of history need to acquire citizen status of at least one country, in order to have the freedom of travel and other rights that citizens can enjoy. They may not be able to acquire citizenship by naturalization in their country of residence33 and thus may need to immigrate elsewhere or acquire citizenship-by-investment. If you have no citizenship, the situation can be extremely difficult.
Citizens of countries with high direct taxes may acquire alternative residence and citizenship as part of a strategy to reduce their tax liability. Citizenship may play a role in the determination of one’s tax domicile, even though, of course, the main factor remains the place of residence and usually citizenship has only a very limited role to play.
Finally, anyone who wishes to have the possibility to retire in a safe country at any time in the future can secure this permanently by acquiring citizenship of that country.
2.3How to obtain a second citizenship
The principal grounds for acquiring citizenship are birth within a certain territory, by descent, marriage to a citizen, and grant of citizenship or naturalization.
The conditions under which the privilege of citizenship by naturalization is granted vary from country to country, but essential factors are usually family relationships or certain periods of residence, besides character, language and other requirements.34
Birth within a territory
Nowadays relatively few countries grant citizenship to anyone who is born within their territory. The US is the most important of those countries. The principle that citizenship is passed on by birth within a certain territory is called ius soli (law of the soil). In most countries which apply the ius soli principle, however, this is limited to second-generation immigrants and requires the parents to be legally resident for some time in order for the children born in the country to become citizens at birth.
If you know where you were born you can find out relatively easily whether you may have the right to another passport – or, in case of the US, whether you may actually be a US citizen (and possibly never filed tax returns and therefore need to consult urgently with a US tax lawyer).
You can plan your children’s citizenship portfolio to a certain extent. If your children are born in a country that grants them citizenship either right away, or will make the acquisition easier later on, the right steps need to be taken prior to their birth. Some countries faced significant birth tourism35 and adjusted their laws to make it more difficult to just fly in and give birth. Countries which did not adjust their laws, like the US and some Caribbean nations, are trying to be restrictive in granting visas to pregnant women.
Ancestry
Many people may not be aware that they are entitled to an alternative citizenship by virtue of their ancestry. The principle that citizenship is passed on by descent is called ius sanguinis (law of the blood). Americans (and Argentineans, Australians, Canadians etc.) in most cases have traceable ancestry in Europe. If the ancestry is not too far back, it may be possible for them to re-acquire the citizenship of their ancestors. For example, many US citizens are entitled to Irish, Polish or Italian citizenship due to the mass immigration from these countries to the US in the early twentieth century. An Irish-born grandparent, or also a grandparent from Poland or Lithuania, may be the basis for a successful claim to Irish, Polish or Lithuanian citizenship and – as a result – to an EU passport. In Croatia, having proof of Croatian ancestry, no matter how far removed, is sufficient justification to reclaim citizenship.
Even though many countries have tightened their nationality laws, it is constructive to investigate the option, especially if one of your closer ancestors was born in another country. Dual or multiple citizenships offer numerous benefits beyond the possibility of taking up residence in the country of citizenship (and in case of citizenship of an EU country, to have the right of establishment throughout the EU).
Naturalization
For a person who cannot rely on the ancestral option there are residence and immigration options available to skilled people, investors and wealthy individuals in numerous countries:36 Australia, the Bahamas, Canada, Hong Kong, Monaco, Singapore, Switzerland, and the UK are just a few examples of countries which offer residence to wealthy individuals and investors.
This book deals with the most attractive countries where residence permits are available to investors and wealthy individuals. Thus, the emphasis is not just on general quality of life, business and employment opportunities (in which case, for example, Australia or New Zealand would be among the immigration countries of choice), but specifically on factors concerning wealthy individuals, such as personal tax, privacy and personal security. The countries have also been selected with a view of citizenship planning and the possibility of acquiring an attractive alternative citizenship with relative ease. All these countries are welcoming foreign persons who are willing to invest.
Citizenship-by-Investment
There are currently only seven countries which offer citizenship programs that provide a direct route to citizenship based on investment and which have passed Henley & Partners’ country due diligence.37 These are Antigua and Barbuda, Austria, Cyprus, Dominica, Grenada, Malta and St. Kitts and Nevis. Of these, Antigua and Barbuda enacted the relevant legislation in early 2013 and is now operating a program that is very similar to that of St. Kitts and Nevis. In 2014, Malta introduced a state-of-the-art program, which is the only such program that has the approval of the EU Commission. It held a public tender process for a public services concession to establish a citizenship-by-investment program, which is called the Malta International Investor Program. It is the most attractive citizenship-by-investment program in the world today, featuring the highest standards of due diligence, an efficient application process, and a reasonable contribution requirement. Cyprus has an opaque, and unclear, as well as very expensive, program that is still evolving; while Dominica, having a long-standing but poorly regulated program, and Grenada, which also recently enacted legislation to re-establish its badly run program that had closed in 2001, both have a bad reputation and are therefore of limited interest. Thus, Malta, St. Kitts and Nevis and Antigua and Barbuda are the three most relevant citizenship-by-investment options today. Citizenship-by-investment offers the opportunity to legally acquire a new citizenship quickly and easily, without any disruptions to one’s life.38
Apart from these seven countries, there are several others which have similar provisions in their laws to allow the granting of citizenship to substantial investors.39 However, there is no established and clear practice in these countries; or the structures and processes involved are not transparent; or the conditions not clear and the decisions mostly arbitrary.40 Also, in many countries there are suspicions that an element of corruption may be involved in the citizenship acquisitions. Therefore, if the intention is to acquire citizenship based on investment extreme care has to be exercised. In fact, in most cases it is not advisable unless a real, substantial investment is contemplated in the particular target country.
Some countries also have provisions to grant non-citizens passports41 or honorary citizenships42 which are legal but largely useless as no full citizenship status is acquired and thus the documents are often not recognized by other countries. Furthermore, as no citizen status is acquired, there is no protection and the documents can be revoked at any time just like residence permits, therefore not giving the kind of security that is desirable when acquiring an alternative citizenship.
Caveat emptor
With