First and foremost, a Happy New Year to all our readers. May 2011 be full of wealth, health and peace for you and your family. Before I get on to the topic of new citizenship and residency opportunities (specifically in Latvia, Hungary and Montenegro) I would like to say a few very important words.

We have been extremely busy helping clients here at Q Wealth and we haven’t had time to update this blog as much as we would like to, but rest assured we will keep posting updates here throughout this year and beyond. The 2011 edition of our Practical Offshore Banking Guide is in the final stages of preparation and will be released shortly. It contains many updates. And if you like what we read, the best way to move things forward is to subscribe, read our material and – most importantly of all – make yourself known to us!

One issue we constantly come up against here is the situation in the USA. We often get e-mails from readers complaining that our articles have a bias towards the USA and there is not enough information applicable, for example, to Europeans. The fact is, the tax rules in the ‘land of the free’ are more draconian than anywhere else in the world. I doubt even Obama would argue with us on that one, though I suppose he might put a positive spin on it by claiming the IRS are the most efficient tax authority in the world…

The fact is, a growing minority of Americans – the ones who can see beyond the propaganda – are very scared. One e-mail that arrived an hour or so ago from a long-term reader is typical of the comments we receive every day: “The World, and the USA in particular, is starting to get really crazy…”  Many of our readers are hard-working and honest American citizens just looking to protect what they’ve achieved so far, and go on working productively, peacefully and unmolested.

We are also seeing a lot of interest in Q Wealth from places like Ireland and Spain, countries where entrepreneurs have built up substantial portfolios over the years only to see them evaporate. The other side of the coin is that we are seeing a lot of interest from Germany… Germany has been doing surprisingly well lately, but Germans are rightly concerned about being the biggest bailer-outer country.

I would say to our European fans that any advice we give to Americans basically applies to you to… but you have one big advantage. While Americans have to acquire a second citizenship then renounce their first – a lengthy, expensive and emotionally charged process – all you Europeans have to do is move to another country… you can do it tomorrow if you want. As I said in my last article, you might be surprised, but life is often better offshore!

Even given more flexible tax systems in Europe, the days of hiding money offshore are well and truly over. Corporate structures like LLCs, trusts and foundations can still provide strong legal asset protection if used properly (read those last 3 words again!) but ultimately, the way things are going, it will be almost inevitable at some point that if you don’t think taxation in the country you live in is fair, you will have to vote with your feet – by getting up and going. For this reason, we’ll be focusing more and more on residence and citizenship programs in 2011.

The 1st of January this year saw an interesting new fast track to European Union citizenship. Hungary’s new naturalization law is designed to make it much easier for anyone with a few drops of Hungarian blood to acquire citizenship in this EU country. Hungary, having fought on the losing side in the first world war, lost a lot of its territory in a division that remains highly controversial to this day, leaving at least half a million ethnic Hungarians in bordering countries like Slovakia and Ukraine, who have not been counted as Hungarian citizens for generations. The political motivation behind this new law was to help these ethnic Hungarians reclaim their ‘national identity’ (Hungarians being nothing if not proud, even as this same government has just blatantly seized private pension funds to help stave off national bankruptcy)

What does this mean for you? People from these countries emigrated by the boatload to places like the USA, Canada and Australia. Previously, a direct line of descent from a Hungarian citizen was required in order to reclaim the citizenship right. This just got a lot easier. Let’s say your Great Uncle Arpad was born in Ukraine but was an ethnic Hungarian (who spoke Hungarian language for example) then you might well qualify for this expedited Hungarian naturalization procedure. You can read the Hungarian government’s statement on the matter, in English, here.

As this procedure is only a few days old, we have to see how it works out in practice. For example, how toughly will the requirement to speak Hungarian be enforced? But if you think you have a little Hungarian in you, you might want to look into this opportunity sooner rather than later. We’ll be following up on it more depth in a forthcoming issue of The Q Wealth Report. Q Wealth members are welcome to contact the office for referrals to our contacts in Hungary.

Another program that has been receiving publicity lately is Latvia’s residence program. This has generated quite some controversy. Whilst not leading to citizenship (but not ruling it out either) this grants instant residency in the Republic of Latvia to anyone investing a few hundred thousand euros in a bank deposit, or buying a property there. Riga, a regional trade hub well known for its art nouveau architecture, may not be everyone’s cup of tea (cold and wet in winter) … though the seaside resort of Jurmula is quite trendy and is within easy reach of Riga airport, one that is surprisingly well connected for such a small country.

The real point about Latvian residency, however, is not spending time in Latvia. Latvia is in the Schengen Area. Wealthy non-Schengen nationals (Russians and Chinese to give two examples, but also Americans or Australians) will find this a very attractive way of establishing a low cost base in Europe that allows them to move completely freely around the Schengen zone. Germany and Spain are already concerned about the huge influx of new immigrants this could bring… people theoretically resident in Latvia but living as quasi-permanent tourists, even carrying on cross border businesses quite legally, in their countries.

Latvian taxes, while theoretically high, can probably be mitigated by a bit of careful pre-immigration tax planning. So Latvia could turn into an easy and cheap alternative to Monaco, Andorra or San Marino, to rival the roles currently filled by the residence programs of Cyprus and Malta.

Finally for now, an update on Montenegro. Back in August 2010, while all the European top brass was on holiday, the government of Europe’s newest country, Montenegro, announced an economic citizenship program, priced to rival the existing St Kitts and Nevis citizenship. Several options were outlined, involving payment of around EUR 200,000 to the Montenegrin government for an almost instant second passport.

Soon after that announcement I attended a small meeting of offshore professionals in the beautiful Montenegrin resort town of Herceg Novi. I was taken aback by the temperate climate and the outstanding natural beauty of the country. There is serious investment pouring in too: for example the huge Porto Montenegro development, down the road from where we met, is being spearheaded by Barrick Gold’s founder Peter Munk and by other people who know about good investments: do the names Rothschild and Bernard Arnault ring a bell?

Details of the program, however, proved elusive, as the government kept stalling. Finally, in November, they announced that the citizenship program had been ‘frozen’ until further notice, by request of the European Union.

However, my few days on the ground there convinced me that this announcement is only part of the reality. The website of Henley and Partner, for example, claims that “in the interim, citizenship will be decided on a case-by-case basis.” Anyone who shows up with a serious investment – my guess, half a million upwards – would still receive a warm welcome I think. I was impressed with Montenegro’s possibilities… given the choice between living in St Kitts and Nevis, and Montenegro, I would go for Montenegro – a couple of hours from London, Paris, Milan or Barcelona – any day.  I’m pretty sure I’ll be back there. So it’s another one to watch in 2011.

Still, we are beginning this year with a more traditional focus on citizenship and residence programs in South America: we still like Paraguay and Uruguay. Myself and members of the Q Wealth team will be in South America meeting with clients and experts later this month. There’s still time for you to join us. Either in person, or by signing up to Q Wealth Report.

Although the Dominican Republic is not typically regarded as a tax haven, that is actually one of its attractions. Unlike traditional offshore centres, it has not been under pressure from the likes of the OECD, the G20 and the Obama administration. The Dominican Republic has a territorial tax system much like Panama’s, meaning that you can live there and enjoy the beaches tax free, provided your income comes from outside the country. It’s also known as one of the more liberal places for those seeking a second passport or citizenship.

The following is an edited version of an article by Rob Montes appeared in last week’s Q Bytes, our free newsletter. If you are not yet on the distribution list, sign up here: Free Q Bytes Membership to receive more exclusive content like this on a weekly basis.

Three Good Reasons to Consider the Dominican Republic for Second Passports and Offshore Investing

The more I learn about the Dominican Republic, the more I like it and see potential. Learning more was my original purpose in studying its national history. Right now the country has three things about it that would be particularly appealing to our members:

• Tax Haven – Dominican Republic has a territorial tax system, meaning that if you live there, you would only be subject to pay taxes if you had local income. You can earn what you like outside the country and you don’t even have to declare it, yet alone pay any taxes. This applies to both individuals and companies.

• Second Passports – Dominican Republic is one of the most liberal countries when it comes to granting citizenship through naturalization. After two years of residence, you can ask for a passport. As long as you haven’t done anything to upset the President, he will sign a decree making you a citizen. Absences of up to one year at a time don’t affect your residency status. This liberal naturalization law dates back to 1948, and there is much talk of it changing soon. Dual citizenship is allowed.

Note: Please do not confuse the Dominican Republic with the Commonwealth of Dominica. The Commonwealth of Dominica is a small, English-speaking island state with an established economic citizenship (second passport) program catering mainly to the super wealthy. The Dominican citizenship program requires an investment of hundreds of thousands of dollars. With Dominican Republic, however, you could likely obtain your second passport for as little as $10,000 – $15,000 plus the two year wait.

• Liveability – Dominican Republic is a good place to live. First of all, it’s affordable. The tax exemption you get in the Bahamas by buying a half-million-dollar property you get almost for free here. The capital, Santo Domingo, is a modern cosmopolitan city with a beautiful colonial heart. The Spanish colonised it, then the Americans were mainly responsible for the development of the city. The country’s second city Santiago, and the beautiful north coast, were only joined by decent roads built by the Americans in the 1920s. Before that, the north was almost a separate country – trading more with the British and Germans. Today there is a substantial Jewish population up there, and parts where French and Italian are frequently spoken. So there’s really something for everybody.

Dominican Republic has not been high on the traditional lists of places to retire to, that are hyped on the internet. This might be a good thing. Real estate is good value, it’s relatively easy to immigrate and obtain citizenship, and the business environment is nearly as favorable as the climate!

We will be in Dominican Republic next month and if any subscribers would like to get together, feel free to e-mail me. We can also recommend a special VIP immigration processing service, so you can get your initial residence by spending as little as one day in the country.

Traveling with a second or even a third passport is becoming far more commonplace and accepted – that’s the conclusion of a recent article in the New York Times called Carrying a Second Passport? It’s not just for spies covering the advantages of travel with multiple passports, second citizenships and naturalization. Many Americans, says the article, don’t even realize that they already hold dual nationality and have the right to carry a second passport. Others, of course, don’t realize that they can completely legally buy a second passport through a so-called “Economic Citizenship” program.

For example, Alessandro Pappalardo, an artist in New York, holds passports from Italy and Argentina. Last year, he added an American one. Previously an airline employee in Argentina, he said, “I used to go a lot to Brazil, and I would always decide what passport to show depending on what line was shorter.”

Another example quoted in the article is Stefan Stefanov, who holds both United States and Bulgarian passports and works in Poland. He decides which passport to use depending on where he is headed for. “Of course, I don’t hide that I am a U.S. citizen,” Mr. Stefanov said. “But I don’t parade it either.”

Although statistics are hard to track down, as the world becomes more international and American citizens frequently feel discrimated against or targeted when traveling overseas, more Americans seem want second passports. “Savvy travelers and business travelers want to make sure they have two passports based on nationality because there are certain advantages,” says Jan Dvorak, president of Travisa, a passport services company in Washington, D.C., quoted in the Times article.

Perhaps the greatest advantage to holding a second passport for the global citizen is the ability to work without restriction in various countries – a particular benefit of passports from countries in the European Union. Also, says Dvorak , carrying a second passport is “a way of hiding where one has been,” when traveling among countries with soured relations – for example between Israel and Arab countries.

So how does one actually go about obtaining a second passport? As a general rule, to obtain a passport you must first become a citizen of the country whose passport you wish to carry. Once that is completed, the process of applying for a second passport is straightforward. Of course, it’s qualifying for the second citizenship that is the difficult part. But there are ways, even if you don’t have Irish, British, Italian or German ancestors. Israel, for example, allows anyone of Jewish heritage to use what is called aliyah, or the ‘Law of Return’.  This grants instant Israeli citizenship to anyone of Jewish ancestry or anyone who converts to Judaism.

Ruth Yoffe is another example quoted in the Times article who also carries a second passport. Ruth is the founder of Reloop Designs, a company that hires handicapped people in Cambodia to weave trendy baskets from recycled plastic. As a citizen of the United States and New Zealand, she travels frequently throughout Southeast Asia. “For obvious safety reasons, I always try and travel and put my visas on my New Zealand passport,” she said. “On a plane, I don’t want to be identified as an American if I have that choice, depending on where I am heading.”

Another advantage is cost savings. Visas are cheaper for New Zealanders. “They assume anyone else from any other country can’t be as rich” as Americans, Ms. Yoffe said. Many countries such as Brazil charge extra fees to Americans to reflect the cost of obtaining a US visa for citizens of that country.

Alex Thomas, the corporate manager of Travel Document Systems, a visa and passport services company in Washington, is quoted as saying that some of his clients are “uneasy traveling with a U.S. passport, and if they have an additional passport, they prefer to use it…. four or five people a month who ask specifically what they need to do to get a passport” for another country… Because of the way things are going in the world,” he said, he expects that number to rise.

What the Times article omits to mention, however, perhaps on grounds of political correctness, is the possibility of buying a second passport. So called “Economic Citizenship” programs allow wealthy individuals and families to purchase a second citizenship from a country such as St Kitts and Nevis or Dominica. The only requirement to obtain one of these passports is to make an economic investment in the country.

Although expensive, these high end economic citizenship programs are often worthwhile for wealthy individuals who do not have the time or inclination to wait the two to five years necessary to establish residence in another country and apply for citizenship via naturalization in one of the more liberal countries for obtaining second passports such as Dominican Republic or Paraguay. Additionally, they have the advantage of being completely tax free and not being mired in bureaucracy or military service obligations.

Second passports and citizenships, as an important asset for sovereign individuals, are a frequent topic in The Q Wealth Report. We keep readers up to date on the frequent changes to the rules. If you are interested in obtaining a second citizenship or passport, for privacy, freedom and protection, you need The Q Wealth Report. Sign up today on this site!

Investing in dying industries is not normally a smart thing to do… unless you can get some benefit from a government by doing so. Here’s one of those cases.

In 2005 the WTO and European Union withdrew preferences given to the Eastern Caribbean Sugar Industry, thereby effectively closing it down, since Caribbean sugar could not compete with bigger producers in the Caribbean and further afield.

As a consequence of this, the government of St Kitts and Nevis, a group of islands in the Eastern Caribbean, would like to “diversify the agricultural sector and to stimulate the development of other sectors of the economy.” They set up a Foundation with this aim, The Sugar Industry Diversification Foundation (SIDF), in 2006. And they are offering a very big bonus to you if you are prepared to help them financially with this task – you can obtain a second citizenship and passport for yourself and your family almost immediately.

As regular Q Wealth Report readers know, there are only two countries in the world offering so-called Economic Citizenship programs – that is, the chance to buy a legal second citizenship and passport within a matter of weeks. One is The Commonwealth of Dominica (an English-speaking Caribbean nation, not to be confused with the Dominican Republic) and the other is Saint Kitts and Nevis. The difference between the two citizenship programs is that in the past Dominica required a “non-refundable investment” paid direct to the government, whereas St Kitts required the purchase of real estate, worth at least $350,000, in specific designated projects.

Many people were put off the St Kitts program due to the real estate investment. Let’s face it, some of us a real estate investors and some are not. Whilst it could be a good deal long term, and there was some chance of seeing your money back again one day, coming up with $400,000 for the privilege of owning real estate on a hurricane-prone island can be a hassle, especially if you never plan to live there. For a lot of people, it was more attractive just to pay once up front, get the second passport and forget the hassles.

So the authorities in the St Kitts capital, Basseterre, came up with an alternative. Although the real estate investment option is still valid, instead of buying real estate, you can now choose to make a one time donation to the Sugar Industry Diversification Foundation. This requires substantially less up-front capital, as the contribution required is $200,000.

A little history: the Citizenship Program was established in 1984, which makes this the longest established citizenship-by-investment program. Regulations regarding citizenship-by-investment are contained in Part II, Section 3 (5) of the Citizenship Act, 1984. The actual government policies with regard to the Citizenship-by-Investment program (such as investment requirements etc.) are set by Government through Cabinet Decision.

The principal advantages according to press releases put out by the St Kitts government are:

· Citizenship is valid for life, for the applicant and all eligible family members.

· Dual Citizenship is permitted, without the requirement to notify the applicants home country, and without any need for the applicant to reside in St Kitts and Nevis.

· Passports can be issued to the applicant an all eligible family members, and may be easily renewed via a worldwide network of consulates.

· St Kitts citizens enjoy a wide range of visa-free travel:- Austria, Belgium, Britain, Canada, Denmark, Finland, France, Germany, Iceland, Italy, Greece, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and most British commonwealth countries. When a visa is required, they are also relatively easy to obtain.

· New citizens qualify for full residency status including the right to work in St. Kitts and Nevis

· Perhaps best of all: Tax Free Status on foreign income, capital gains, gift, wealth and inheritance tax

To qualify for Citizenship-by-Investment via the Sugar Industry Diversification Foundation, there are four different categories:

A. Single applicant: US$ 200,000 contribution required

B. Applicant with up to three dependants (i.e. one spouse and two children below the age of 18): US$ 250,000 contribution required

C. Applicant with up to five dependants (i.e. one spouse and four children): US$ 300,000 contribution required

D. Applicant with six and more dependants: US$ 400,000 contribution required.

In each of these categories, the total amount includes all government and due diligence fees. The documentation required for an application is strict but reasonable, and the application procedure is well organized.

Note: The above article is adapted from one that originally appeared on the Global Nomads Campfire Blog. If you would like further information, read the Global Nomads Caribbean Offshore Contacts Report “Offshore and Sunny” for recommended citizenship consultants and other Caribbean contacts. Members may also contact the Q Wealth offices in London for referrals and advice.

Along with Australia, France and Spain, New Zealand is in the top four destinations or Brits deciding to expatriate. It’s also attracted many immigrants from Asia over recent years. New Zealand offers stability and neutrality, a beautiful country, a booming economy, and a healthy, stress-free lifestyle that is not found these days in other first world English speaking countries. Or, as W.G. Hill once said, it’s great if you like fishing and no nukes.

The good news is that a major new immigration bill is working its way through parliament designed to make it even easier for you to emigrate to New Zealand. The birth rate in New Zealand is too low to fill the many job vacancies that are arising. Besides, New Zealand loses many citizens every year as they move to the likes of Australia and the United Kingdom seeking their fortunes. The population is aging and the kiwis know that they need new immigrants to fill the gap if growth is to be sustained.

The new immigration bill is designed to make the move to NZ much more smooth and straightforward, by razing a number of bureaucratic hassles from the procedure. Immigrants will not only be given visas, but also the support they need to make a transition to a new life in NZ a success.  This is all exceptionally good news for those hoping to move to New Zealand for a new and better life.  Watch out for the new immigration bill, and visit the New Zealand Immigration Department’s website for continuous updates on how to apply for visas to go and live, work or retire offshore in New Zealand.

Anyone seeking a tax-free residence, possibly leading to a legal second citizenship, should seriously consider The Republic of Paraguay, which has one of the most liberal constitutions in the world. Here are a few reasons:

• Paraguay has no personal income or capital gains tax, and one of the lowest costs of living in the world.
• Official Residence in Paraguay is relatively easy to obtain. Once granted, is valid for life. No renewals necessary.
• Once you have official residence, there is no legal obligation to stay in the country.
• After three years of Official Residence, you may apply for Paraguayan nationality through Naturalization. (Article 148 of the Constitution)
• Dual or multiple nationality is permitted subject to certain limitations. (Article 149 of the Constitution)
• Honorary Citizenship may be granted by Act of Congress (Article 151 of the Constitution)
• Paraguayans enjoy excellent visa free travel opportunities, including most of Europe.

If you are interested in finding out more about residence and citizenship in Paraguay, we can refer you to one of The Q Wealth Experts who can help you. Please contact the London office in the first instance.

Second citizenships from the Caribbean have been in the news recently. This time, however, it’s nothing to do with the economic citizenship programs of Dominica and St Kitts!

Many politicians in Caribbean nations hold multiple citizenships. It’s quite normal for people from small countries, many of whom have gone abroad to work, acquired citizenship there, then come home to play a more active role in island politics.

Recently, however, a minority of extreme nationalist politicians have been making it into an issue, leading to resignations and to other politicians renouncing citizenships publicly. It’s been in the news most recently in Jamaica, but also in St Kitts and Nevis, Grenada, St Lucia, Trinidad and Tobago, and Guyana.

Most voters seem to take a reasonable approach. BBC, for example, quotes a Jamaican businesswoman Thalia Lyn as follows:

“A lot of them go abroad because they want to make money and then come back here and pick up from where they’ve left off.

“And to say to them that if you want to make a contribution to your country it’s not allowed and you would then have to disclaim the country where you might have made your fortune, I don’t think that’s quite right.”

If you’re reading this, you probably don’t need much convincing of the fact that dual or multiple citizenships are beneficial – not just for the individuals involved, but also for the countries in this case who get to benefit from people with more international experience… as they say “travel broadens the mind”. In government, surely an open mind is essential!

You can read more about this issue in the following BBC articles:

Dealing with the diaspora

Dual citizenship: loyalty or convenience

We also recommend this Q Wealth webpage if you haven’t yet seen it:

The Q Wealth Report article on Second Passports