Peter Macfarlane is just back from a Caribbean trip taking in St Kitts and Nevis and Dominica, the only two countries in the world that still offer Economic Citizenship programs. Things have changed a lot down there in the last few years. Here’s what he found out…

More and more people are looking for second passports. And most of those people these days are US citizens looking to renounce their citizenship. There are only two economic citizenship programs left in the world today, both in small Caribbean nations. I wanted to see what was really going on with these programs and to get some on-the-ground intel that you can’t always gather from the internet. So, I booked a flight into Antigua and got some connections on LIAT, the Caribbean airline.

Although (unlike many others) this publication was launched in England, has a worldwide readership and was never originally aimed at Americans, it’s easy to see that the USA accounts for most of our new subscriptions these days. I believe these are people who value our international outlook.

An increasing number of Americans, it is clear, have simply had enough of taxation, attacks on their civil liberties, Obamacare and most recently the dastardly HIRE Act – perhaps the biggest attack ever on those who have worked hard to build up assets and savings. And who can blame them?

I had imagined that the HIRE Act would have some deterrent effect, making Americans more scared to go offshore. In fact, I am seeing people scrambling to set up offshore structures before the deadline next year and place assets in the best offshore banks that are not likely to co-operate in what is a back door currency control system.

Many Americans are looking for second citizenships these days. A decade ago we saw Russians looking for second passports, then came the Chinese… since Obama’s election, the offshore banking countries catering to those seeking economic citizenship (St Kitts and Nevis, and Dominica) are seeing a wave of Americans.

Americans are a patriotic people, but more and more are realizing that their government has been conning them for a long time – trying to confuse patriotism with support for the government. In fact, it’s the American government that is unpatriotic… constantly fighting to undermine the American ideals of freedom, liberty and prosperity. The USA is the only country in the world that expects its citizens to pay taxes even if they don’t live there.

You might already know this, but to expatriate from the USA and renounce American citizenship – thereby breaking free of your US tax obligations provided you don’t intend to live there any longer – you must first have another citizenship. There are basically three ways you can do this:

• Through birth: for example if you are lucky enough to have close family from Europe, you may be able to obtain a European passport
• Through naturalization: this requires a period of residence, sometimes as short as three years (Paraguay and Dominican Republic) but typically five to ten years.
• If you don’t have family connections and you don’t want to wait years, you can basically buy a new citizenship by developing a connection with a foreign country by making a substantial investment: this is what is called Economic Citizenship.

On this recent trip I visited both the Federation of St Kitts (St Christopher) and Nevis; and the Commonwealth of Dominica, both small Caribbean countries that offer you the chance to acquire a new citizenship for you and your family within a few short months, by making an investment. By the way, don’t confuse the Commonwealth of Dominica, a small English speaking island nation, with the much larger Dominican Republic which is hundreds of miles away. (Editor’s note: Dominican Republic citizenship might also be an attractive option, but is outside the scope of this article as it is not an economic citizenship program. You can read more about that here: Joe Gonzalez article on Dominican Republic citizenship)

I had visited both of these nations some years ago, but things have changed – drastically. While you can do a certain amount of research on the internet, there’s no substitute for spending a few days on the ground talking to government officials and well-connected local lawyers who know the score. Most of what you read on the internet is written by foreign promoters of citizenship programs, who will naturally have a certain bias and may never even have visited the islands. In the case of St Kitts, most of the promoters also have a vested interest in selling over-priced real estate.

These two economic citizenship programs are the remnants of what used to be quite a little industry in the region. Countries like Belize, Grenada, Guyana and Suriname have offered economic citizenship programs in the past, but they are long gone. That doesn’t stop unscrupulous promoters from still offering them.

I’ll be writing up a more detailed report on this in a forthcoming issue of Q Wealth Report (available only to members) but I can give you the bottom line now. Dominica is in my view a beautiful country, full of opportunity for tourism development and the like, but that might have to wait for the economic upswing that will be a long time coming. Dominica’s citizenship program is definitely going downhill since I last visited in 2006. I would not be surprised to see it coming to an end soon. While St Kitts and Nevis is doing well, attracting quality, heading further upscale. Here is a little of my reasoning:

• St Kitts and Nevis recently signed an agreement with the European Union allowing visa-free travel for all their passport holders, including economic citizens. This is an important coup that shows major western governments have confidence in the St Kitts program. Dominica does not have this benefit.
• Very importantly in my view, St Kitts and Nevis has refocused its program in recent years away from the idea that it is selling passports. This shows political savvy that seems to be working to their benefit. Naturalization implies a connection with the new country that is not merely financial. That is exactly what they are promoting, by strongly encouraging investors to purchase property in the country. St Kitts and Nevis are both pleasant places to stay, with great golfing and yachting, serious investments by groups like Marriott and Four Seasons, and more and more direct flight connections coming in. And the political savvy has extended to getting the twin island federation not just off the OECD’s blacklist but on to the whitelist… without changing much.
• St Kitts and Nevis enshrined economic citizenship in its constitution back in 1984. It is a well established program. They have maintained the price high and kept out the riff-raff which has negatively impacted other, less well regulated economic citizenship programs. Applications are processed efficiently and according to deadlines.
• Dominica, on the other hand, seems to have lost its direction with regard to economic citizenship, and is caving in to demands from the OECD and wealthier countries. There is greater domestic opposition to economic citizenship, and politicians are arguing over how to spend the money while keeping applications languishing for months without approval. The government seems to be heading more in the direction of accepting aid from Hugo Chavez in Venezuela, which is admittedly probably easier money in the short term and less controversial than selling passports. While I was there, in fact, the Dominican government signed a new Memorandum of Understanding whereby Chavez will give them a new coffee processing plant.

So at this time, although the options for economic citizenship in St Kitts and Nevis are definitely much more expensive that those in Dominica in terms of cash you have to put down on the table, I would consider the difference in cash outlay money well spent. Another good thing is that with the St Kitts investment option, you can buy attractive Caribbean real estate which you can enjoy in the meantime and will be free to sell after five years.

We’ll shortly be releasing a more detailed report on St Kitts and Nevis. If you would like to receive it, please go here: Free Nevis Offshore Report

Otherwise be sure to check out my upcoming article in Q Wealth Report, and you can be sure that this will be a hot topic for discussion at our next Q Wealth event in Cork, Ireland this September. See you there!

Last week I started the case study of the young American, looking to have his exit strategy or ‘Plan B’ in place, who was looking for a second passport. He was focusing in on options in South America, preferring that to the economic citizenship programs of St Kitts and Nevis and Dominica in the Caribbean. And we looked at  Uruguay as a residence and citizenship option. If you haven’t yet read, part one, I suggest you do so here.

I finished up last week by touching on the wild-card option, Paraguay. I said that for young-at-heart individuals with a sense of adventure and a slightly higher tolerance for risk (or perhaps an appetite for profit?) there is Paraguay. And I pointed out that somebody might choose Paraguay over Uruguay because:

• you can apply after three years for citizenship, with no need to worry about family units
• no need to buy real estate: $5000 deposit in a local Paraguay bank is enough
• costs in Paraguay are much lower
• it’s a country full of business opportunities
• it’s more anarchic than Uruguay, meaning less control and more freedom… for example, nobody is really going to count how many days you are there. Having residence on paper is enough.

You might feel freer in Paraguay because government is less developed and less intrusive. Paraguay has always been somewhat cut off from the world, a landlocked frontier state in the middle of South America, that was very hard to reach until maybe 20 years ago. It is known, unfortunately, as a place where Nazis went after the second world war… but it’s less well known that many Jews went there too.

Basically Paraguay’s immigration policy, enshrined in its constitution, is that everybody is welcome provided they come to live in peace and obey society’s norms there. There is plenty of room for everybody, with a low population density, and smart individuals with money and business experience are particularly welcomed. Other people who think outside the box, particularly the hard-working Mennonites, have also found safe haven in Paraguay over the years. Paraguay is very much a secular state… the current President is a former Catholic archbishop who was ex-communicated!

This liberal immigration policy continues into the granting of Paraguayan citizenship, as little as two years after taking up residence. Paraguay’s constitution specifically allows dual or multiple citizenship, though the government sometimes insists that those applying for naturaliation renounce their previous citizenship. This is not enforced however and there are legal ways around it.

Paraguay’s passport, issued to citizens, is an excellent travel document. Since Paraguay has a small population and most of its higher class citizens (the ones who have money to travel) are of European extraction, it has visa-free travel agreements with the European Union and many other countries around the world.

Even before you qualify for the Paraguayan passport, you will receive a cedula – the national ID card that is recognized as a travel document in other members of Mercosur such as Argentina, Chile and Brazil. This card is issued automatically to residents.

Obtaining residence is a relatively simple matter. We have access to good, experienced immigration lawyers in Asuncion, the Paraguayan capital, who can help you and have a track record of helping Q Wealth members before you. Referrals are free of charge to Q Wealth members – just contact the office.

Obtaining citizenship, that is necessary to obtain a Paraguayan passport, is a little more complicated. You will need to learn some basic Spanish in order to carry out the necessary civics test – a multiple choice paper with questions about history, geography and the like. You will need to know things like the major rivers, the names of important historical personages, and the system of government. You will also need to demonstrate some connection with the country, but the lawyers can assist you with that.

All in all, Paraguay is not for those who want a comfortable life in an apartment overlooking a beach. For those people, Uruguay is the better option. However if you are looking for a country where land is cheap, and most businesses are virgin and unregulated, look at Paraguay.

One final note: Paraguayan residence is a very attractive base for world travellers, particularly Brits and Europeans, Canadians and Aussies, seeking to travel the world in search of income while leaving behind their home country taxes. The passport is really only important for Americans who are taxed on their worldwide income unless they renounce citizenship, or for those from countries like China or Russia who have problems travelling anywhere on their existing passports.

More information, as always, can be found in Q Wealth Report. The back issues available online in our Members Area include information on Paraguayan residence.