Having dual citizenship can help protect your freedom, expand your investment horizons, and even save your life. In an era when governments are imposing more and more draconian regulations on their citizens, a second passport is “citizenship insurance”.
Having a second passport can dramatically increase your personal and economic freedom. Having dual citizenship – or even multiple citizenships – is an important step in internationalizing your life so that no one government owns you.
Gain independence from your Government.
No one should be forced to be a slave to one government merely because of their birth in that country. Throughout history, governments have used citizenship as a tool of economic enslavement, rather than a cherished gift. Not only can a second passport help enhance your freedom, but it can help you leave a better life for your children and their children, by giving them citizenship in the best countries possible. Among other reasons, some Americans consider obtaining a second citizenship to prepare for future expatriation, as the United States is the only country on earth to impose worldwide taxation based not on residence, but on citizenship.
Today, Americans are being excluded from lucrative investments and even the ability to open foreign bank accounts just for carrying a US passport. Most people carry only one citizenship and one passport, leaving them vulnerable to capital controls or restrictions of their movements.
By acquiring a second passport, you can achieve the peace of mind that you always have another place to turn to. It gives you an escape hatch in times of economic or political chaos. Imagine: your country’s currency collapses thanks to bad decisions by your government. Inflation runs rampant. Looters and rioters take to the street, forcing an ongoing state of emergency to be declared. Soon, martial law prevails and the government lowers the boom. If your country is in a period of chaos, you may not be able to travel. Who will give you refuge?
With a second passport, you will have more options. While some might suggest that having more than one passport makes you a slave to more than one place, a second passport actually allows you to engage in what I call “government arbitrage” – pitting governments against each other to compete over you. One of the greatest examples of this is in Nazi Germany when Jews had their passports stamped with large “J”s to make them easily identifiable by officials. Game over. Some Jews were able to get second passports through offshore connections, but most were left with few options.
Recently, citizens of Arab Spring countries attempted to escape the chaos around them, but were turned away from most safe havens because of where they were coming from. When things heat up at home, many other countries won’t want to help you. As with anything else, it is better to be prepared than to seek preparation once it’s too late.
The history of passports – and why it’s getting harder to get one.
It used to be that a passport was a tool of convenience. Your ruler gave you a set of papers to show to another ruler in asking for your safe passage. Now, passports are just another form of government identification. If your government takes your away, you might as well just lock yourself in your house. So you might as well have at least two of them. The United States government is even making it harder to get their passport if you’re a citizen.
Owe a small balance to the IRS, for example, and they may put the kibosh on your passport – or not even issue one to you at all. The proposals that have floated around Capitol Hill to effectively limit freedom of movement among US citizens are mind-boggling. In fact, a US passport can even be a strike against you in a tough situation. Not only could having only one passport limit your travel options in an emergency, but citizens of the United States, United Kingdom, and select other countries are more likely to be a target in attack.
Even in times of peace, have fun getting into Iran with a US passport, and forget about doing business there. Countries around the world know this. Places like Switzerland and Singapore have made it harder to get a second passport from them because the worldwide demand for second passports is increasing. Wealthy Chinese, Russians, and Middle Easterners realize the value of diversifying beyond their own countries, and many Americans overseas are learning the hard lesson of just how much a government can limit your options. A Swiss businessman could literally outpace an American business just in being able to do business in more places around the world, and with fewer restrictions.
What is the best second passport?
Which second passport is “best” is a hard question to answer. The reality is that in today’s era of greedy governments gone wild, almost any “backup” citizenship can potentially save your life. When considering your passport options, consider:
The quality of the travel document. Of course, passports vary widely in their usability around the world. Get a Chinese passport and you may open plenty of doors for investment in Asia, but you’ll enjoy visa-free travel to very few countries. The best passports in terms of visa-free travel come from Europe. Finland, Norway, the United Kingdom, and most European Union countries enjoy visa-free travel to the United States and many other countries – and, of course, all of Europe. Coveted passports can be hard to obtain unless you are born in such a country or have ancestors from there.
Financial opportunities. While a United States passport allows you to travel to many countries without a visa, it is increasingly closing doors for investment overseas. Each month, more offshore banks decide to shut out Americans in order to avoid compliance with laws like FATCA. Additionally, American investors are precluded from many international investments because the US SEC has made it clear that they will pursue investment funds that allow US citizens to participate. Make sure your second passport offers you financial flexibility to spend and invest your money as you please.
· Civic obligations. Some countries, such as Singapore and Israel, require military service of their citizens.
· Tax obligations. Ideally, you should be able to be a citizen of a country but not live there and not have to pay taxes or even file a tax return there. The United States is essentially the only country that taxes it citizens based on their worldwide income. Even if you never lived in The Land of the Free, you may be required to pay taxes if you obtained American citizenship at birth. While no other major countries have established such citizenship-based taxation yet, it is possible that large yet bankrupt countries may seek to do the same in the future. On the other hand, Paraguay is unlikely to decide to impose such laws on its citizens, nor does it likely have the resources to do so.
Respect for the issuing country. While an American passport is good for a lot of things, it may not be your first choice to have if you are stranded in a situation where Americans are a target. The same goes for Israeli passport holders. Liechtenstein, on the other hand, is likely to raise anyone’s ire. The goal is to find the best blend of respect (or indifference) for the issuing country.
· Ability to hold multiple citizenships. A Singapore passport is an excellent travel document and its holders enjoy excellent tax laws. However, Singapore forbids dual citizenship and requires you to renounce any existing citizenship before becoming Singaporean. It also terminates Singaporean citizenship if you obtain another passport thereafter. This can cause problems when trying to achieve true internationalization because it once again limits you to once country. The ideal passport allows you to keep your existing nationality as well as obtain additional citizenships later.