It’s not often that major developments occur in Southern Europe in the month of August. Montenegro’s announcement of its new instant second passport by investment program this past week is an exception.

Perhaps the Montenegrin government hoped to avoid the inevitable backlash from certain nationalist and socialist politicians in the European Union, while attracting the attention of wealthy Americans, Russians and Chinese at whom the program is aimed.

Montenegro has just become only the third state in the world to offer an economic citizenship program, along with the Caribbean island nations of St Kitts and Nevis and the Commonwealth of Dominica. Austria has a similar program with a few more strings attached, while Paraguay, Uruguay and the Dominican Republic are known for their relatively liberal grants of second citizenship after a period of residence. (More information on citizenship by naturalization programs.)

Montenegro is the youngest country in modern Europe, having voted for independence and achieved international recognition in 2006. However its history dates back to Byzantine times. (See Wikipedia entry on Montenegro)

Since independence, Montenegro has boomed, fuelled by a surge of foreign offshore investment… to date mainly from wealthy Russians who have felt comfortable with its Slavic culture, stunning coastline, visa-free travel to the European Union, and confidential offshore banking regime that has been substantially cleaned up following some scandals in the 1990s.

By launching an official economic citizenship program, however, the government of Montenegro hopes to attract investors from further afield, by co-operating with international law firms, trust companies and offshore service providers. We don’t doubt they are taking aim at the huge Chinese market, as well as the increasing flow of Americans who – spurred on by policies like Obamacare and the HIRE Act – are looing to renounce US citizenship for tax, privacy and asset protection reasons.

The new Montenegro economic citizenship program will require an investment of at least EUR 500,000, some of which goes direct to the Montenegrin Treasury and the rest of which must be used to generate business and employment in Montenegro.

Although the announcement is new, insiders have been suspecting for some time that Montenegro passports were available to prominent wealthy investors. One of the most infamous to date is former Thai prime minister Thaksin Shinawatra, who now travels on a Montenegro passport. Mr Shinawatra was convicted in absentia in his homeland on corruption charges, but denies all the charges against him and has announced plans to invest in Montenegro, possibly in some of the luxury hotels along the coast where he has reportedly been staying.

Details of this new second passport program are not yet entirely clear, except that it will be substantially more expensive than established competitors such as the St Kitts and Nevis program that also offers its passport holders visa-free travel to the European Union.

Rest assured however that we at Q Wealth will be monitoring the situation closely and we are already in contact with the government of Montenegro with regard to an interview and citizenship FAQ for the autumn Q Wealth Report. If you are not yet on our free e-mail list, sign up now to receive updates.

Peter Macfarlane comments on Offshore Companies, Banking and Investing for Q Wealth Report

Even though not much has appeared in the press since the election of the new British government, it’s clear from the word on the street that offshore service providers in the BVI and TCI are feeling the heat…

Some years ago, especially under Margaret Thatcher,  policy in London was to encourage the development of offshore financial centres in British territories around the world. It suited Whitehall perfectly: a diverse group of islands with not much going for them, except small tourist industries and dying sugar and banana businesses, could – with the advent of fibre optics and the like – suddenly become tropical trading desks and would no longer need to be propped up with subsidies.

Some islands, like Anguilla, have become minor offshore players that never really took off. Others, most notably the BVI (British Virgin Islands), the Cayman Islands and the TCI (Turks and Caicos Islands) have done really well for themselves, carving out respective niches in the offshore investing business. Cayman is famous for offshore banking and captive insurance, while BVI is possibly the world’s most important offshore corporate registry with a reputation for quality. Over 600,000 IBCs or International Business Corporations are incorporated in the British Virgin Islands, with most of the demand for such services these days coming from Asia.

Unfortunately, all is not rosy and the professional service providers in the BVI and elsewhere are clearly worried. Very worried. Offshore finance has become a thorn in the side of the British government and today, it is something they would love to close down. It can’t be done overnight, as revenues from the offshore finance business provide the largest single contribution to BVI government revenues. But every move London makes in this direction is another nail in the coffin for jurisdictions like the BVI and TCI.

Last year, then UK Prime Minister Gordon Brown explicitly warned several British overseas territories that they would face tough economic sanctions if they did not make further commitments to increase tax transparency and dilute banking secrecy. Faced with little choice, they jumped to attention immediately. The new British government is no less hostile to the British offshore havens, and the writing is on the wall.

I have advised clients for years to avoid doing offshore business in British territories but people are sometimes tempted by the good publicity and marketing, and the assurances from company formation providers there that “everything will be OK.” Recently, however, I’ve had a stream of clients with BVI Business Companies looking to redomicile. Even though not much has appeared in the press since the election of the new British government, it’s clear from the word on the street that offshore service providers are feeling the heat.

Where then, can you go?

You may not have to go far. A lot of people don’t understand the difference between British territories and Members of the British Commonwealth.

British territories are ‘owned’ by the UK. While territories operate with a substantial degree of independence, they are not democratic but are ruled by governors sent from London to represent the Queen.

Members of the Commonwealth, however, are independent sovereign nations who do not have to obey diktats from London. This group include offshore centres like the Bahamas, Antigua, St Vincent, Dominica and my personal favourite for a number of reasons: Nevis. (It’s no coincidence that two of these countries offer economic citizenship programs, that the British territories cannot because people who live on those islands hold British passports)

Looking a little further afield, Panama is another of my favourites. I like to tell people, somewhat tongue-in-cheek, that Panama is a ‘real country’. What I mean by that is you can live there without getting island fever. Panama, with its canal, is a real hub of international trade, of such strategic importance that the US are not about to mess with it. While everyone knows that a BVI company is only at best a brass plate that is not even permitted to do any local business in its place of incorporation, Panama is a real thriving business centre, travel and trade hub where you can easily fly in set up a serious office. Panama also has hundreds of stable banks, whereas little Caribbean islands typically have two or three that are worth speaking of.

So my advice: if you’re looking to incorporate offshore, avoid jurisdictions that are British territories.

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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!

“I’m a young, single US Citizen who is very concerned with the way things are going. I hope the government works things out fine. But in the meantime, prudence dictates that I have an exit strategy in place.”

That question came in recently for a reader asking about second passports and economic citizenship programs. The client was willing to do the following things:

1. Marry a Local Citizen (with an enforceable pre-nup).
2. Purchase a small property at Fair Market Value and pay property taxes.
3. Start a small business and pay local taxes.
4. Spend time to learn the local language.
5. Live in my new country for about 4-6 months per year for 3 years.

However, he also had a clear list of things he wanted to avoid:

1. I’m not willing to spend much more than 4-6 months per year.
2. I’m not willing to wait much more than 3 years.
3. I don’t think a Dominican Republic passport, St Kitts and Nevis Passport or Dominica passport is taken seriously so I want to avoid those countries.
4. I want to Avoid Canada because their taxes are too high.
5. I want to avoid renouncing my USA passport (but I might if needed)

The client’s research has already had him zeroing in on South America. Both Uruguay and Paraguay are attractive options, though they both have their clear advantages and disadvantages.

Although I don’t necessarily agree that Dominica and St Kitts and Nevis passports are not taken seriously, people in the know will certainly be aware that you’ve bought them. They are respectable programs, but still, I can understand this chap’s sentiments. If you can take the time to acquire a second passport by residence, including learning some of the local lingo, the advantages are huge. Both Uruguay and Paraguay have great visa-free travel. Feeling comfortable with your travel document is very important, so, in this case, I would definitely recommend the client goes with something from the zone he has been looking into.

“I’ve never been to Uruguay but I did the most research on Uruguay and it seems like a good country to gain citizenship. I must marry a local to get my citizenship in 3 years.  I’m told a great advantage of Uruguay is that you only need to be in  the country 3 months per year for 3 years if married and 5 years if single. I don’t know if this is true?”

Not exactly. A great thing about Uruguay is that although the normal waiting time for a passport for a single person is five years, anyone who is part of a “family unit” living in Uruguay can apply for naturalization and passport after three years. This does not necessarily mean you have to marry a local. It just means that if you have family in the country, it shows a greater committment, and therefore the waiting time is reduced to three years.

Marrying a citizen of any country is fine as long as the married couple live in Uruguay. Gay marriages are acceptable too. A family unit could also consist of brothers, a father and son, an uncle and nephew etc. The point is just that you should have a significant other in Uruguay.

The time you have to spend there is not set in stone but I guess 4-6 months is about the minimum. The connection you have with the country is more important than the number of days you physically spend there. Buying real estate, for example, demonstrates a connection, as does having a local corporation, paying taxes and social security etc. These are the kind of things you can expect the Uruguayan government to check up on when it comes to applying for citizenship.

Living in Uruguay is easy. More details of expat life in Uruguay, for example, can be found at Ola Uruguay. In the areas where expats typically live, services are of first world standard and there is little corruption.

All this comes at a cost, however. Compared to the rest of Latin America, both real estate and the cost of living in Uruguay is high. In the jet-set hideout of Jose Ignacio, a trendy village half an hour east of Punta del Este, I thought I was in London or Paris when I saw the restaurant bill!

So that’s living and obtaining a second passport in Uruguay, but what about taxes? For more details of Uruguay residence and citizenship, I am currently working on a free report that should be available during the summer to Q Wealth members. The report will take into consideration the new tax situation in Uruguay announced in May 2010, where for the first time Uruguayan residents (both citizens and foreign residents) will be subject for the first time to taxation on their worldwide income. If you would like to get this report as soon as it comes out, and without having to remember to check back here from time-to-time, let us know here: Uruguay Residence and Citizenship.

Now, 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 a wildcard choice: Paraguay. One 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 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.

I’ll be writing more about second citizenship opportunities in Paraguay in the second part of this article, which will be published in a week’s time. In the meantime, we have another article here: Paraguay Second Citizenship

More Americans than ever before are renouncing US citizenship. That’s the conclusion of a recent article in the New York Times. The steady stream of US citizens expatriating is turning into a flood – to the extent that many US consulates now have a waiting list for appointments to renounce citizenship.

Taxation, offshore investment and banking issues are, unsurprisingly, the main reasons given for renunciation by former Americans. The most productive Americans no longer want to be American… because they don’t feel they are being treated fairly or reasonably by their government.

American expatriates are furious at US attempts to tax their worldwide income… but the straw that broke the camel’s back in this case is the fact that due to the HIRE Act and money laundering legislation, both US banks and offshore banks are beginning to treat American passport holders as personas non grata, denying banking services and unilaterally closing bank accounts.

There’s an interesting change of mindset going on too, according to the NYT article. I quote:

“What we have seen is a substantial change in mentality among the overseas community in the past two years,” said Jackie Bugnion, director of American Citizens Abroad, an advocacy group based in Geneva. “Before, no one would dare mention to other Americans that they were even thinking of renouncing their U.S. nationality. Now, it is an openly discussed issue.”

…

“It is a sad outcome,” Ms. Bugnion said, “but I personally feel that we are now seeing only the tip of the iceberg.”

Renouncing American citizenship certainly doesn’t have the stigma attached to it that it might have had in the past. It seems to many like a smart business decision. Of course what the Times didn’t mention is the fact that in order to renounce American citizenship, the person renouncing must first have a second citizenship.

Many Americans are entitled to European Union or other countries’ citizenships based on ancestry – having a parent or even a grandparent born in other countries can open up a door to obtaining a quick and cheap second passport.

Those who are not so lucky may look instead to economic citizenship programs such as those of the twin island federation of St Kitts and Nevis, or the nature-island nation the Commonwealth of Dominica, the only two countries where one can still ‘buy’ citizenship. (Dominica and Dominican Republic are two different countries, often confused) The cost of such programs is usually in the six figure range, but it still makes good business sense to those who might be paying hundreds of thousands or millions a year in taxes. With the St Kitts and Nevis program, at least, one can invest in real estate and hopefully resell the property at some point in the future.

Fortunately, there’s a third route for those who are not millionaires, but still cherish their freedom: obtain a second citizenship through naturalization. This can typically be achieved for under $10,000, though of course it takes time… typically 3 – 7 years, depending on the country chosen and the category they are applying under. Some of the best countries for those wishing to follow this route are Uruguay, Paraguay, Dominican Republic and Ecuador.

More information on second passports and citizenships appears regularly in The Q Wealth Report. If you’re not yet a member, you may choose to subscribe to the full privately-published newsletter, or sign up for the ‘lite’ free offshore asset protection and second citizenship news in Q Bytes.

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.

Getting a second passport can set you free. But if not done right, it can also land you in hot water – as several clients of previous supposedly legitimate economic citizenship programs are finding to their costs. Peter Macfarlane reports.

Second passports are increasingly important as means of achieving freedom and privacy. The paradox of the world becoming at once more globalized and more mobile, yet at the same time more restricted, means that holding just one passport puts you at the mercy of just one government.

Our American cousins have it particularly bad, because US citizens are the only people who are subject to taxation on their worldwide income no matter where they live. While wealthy Russians and Chinese who wanted easier visa-free travel were in the past the main groups seeking second passports, today American tax exiles seeking to renounce American citizenship and escape the tax burden are the main consumers.

If you’ve read anything about second passports, you will have heard of low level scams offering citizenship from countries as diverse as Guyana, Surinam, Mexico, Monaco and Liechtenstein. These countries have no economic citizenship programs, and if you apply for one of these programs the best that can happen is you will lose your upfront deposit. The worst that can happen is that you will receive a doctored pdf file that is supposedly a ‘copy’ of your new second passport, requesting you to pay the outstanding balance – and if you do not pay up you will then be threatend with blackmail.

This article however is a little warning about potential problems at a much higher level – with supposedly legitimate economic citizenship programs.It is about high level corruption and reneging on deals by sovereign governments and well-connected law offices.

As a reminder, right now there are only two legitimate second citizenship programs in the world that allow you to qualify for a second passport by ‘investment’ (in other words, that allow you to buy a second passport.) Both are run by small Caribbean countries. Those are the Economic Citizenship Programs of St Kitts and Nevis and the Commonwealth of Dominica. In the past, however, there have been various other such second passport programs from countries including Seychelles, Belize and Grenada.

Now I’m not going to name names in this article. But the nature of our position here at Q Wealth, talking to numerous clients and contacts, is that certain confidential information tends to come our way. Recently, we have heard of several apparently unrelated incidents that anyone considering one of these paid-for second citizenship programs should unquestionably bear in mind.

• A large sum of money simply disappeared from the escrow account of a law firm on St Kitts. This was money that clients had paid over as part of property purchases intended to qualify them for the economic citizenship program. The clients appear to be out of pocket.
• We have heard from more than one person who was naturalized completely by-the-books in a particular economic citizenship program that was closed down around nine years ago, that they are having problems renewing their passports. One of our sources reports that: The gentleman in XXXXX said that unfortunately there is a “review of the passport process” for the citizens who obtained citizenship through the naturalization process and therefore he is unable to give any deadline. When pressed, he admitted that there are various applications on hold.
• Then there are some serious and seemingly well founded allegations going through the US court system at the moment against another sovereign government of an island nation, that is known to be bankrupt and has been well-known in the past for second passport sales. The allegation is that they used spurious allegations of money laundering against innocent individuals to seize millions of dollars from offshore bank accounts within their jurisdictions, and they are now failing to follow the due process in their local court systems. Of course these allegations are not proven, but it would certainly take brass balls for a money launderer to show up in court in the USA and sue a foreign government, which is exactly what is happening here.

To repeat, the above is more hearsay than anything else and doesn’t necessarily reflect negatively on the governments that are offering second passport programs today. But it certainly doesn’t give us a warm fuzzy feeling about entrusting delicate matters (your passport could literally be a matter of life and death at some point) to small island governments who are desperately in need of money. And lawyers in these places who are entrusted with running passport schemes are, of course, usually golf, church and drinking buddies of the head honchos.

My advice has always been that economic citizenship programs should only be a last resort. They are high profile and most banks and border guards will immediately recognise that you have ‘bought’ your passport. They are expensive. And they are not particularly private.

A much better solution is to go for citizenship through naturalization in a country that does not sell passports. This way your second passport will be much lower profile, and will work out costing you a fraction of what the ecomomic citizenship programs charge. Several countries known to be relatively liberal in this regard are Uruguay, Paraguay and the Dominican Republic. Even Singapore.

The big downside of course is the time-frame. The quickest you can generally qualify through one of these residence programs is 3-5 years. But if you start now, that time will pass quickly. And in the meantime just having the residence can still bring you substantial tax, freedom and asset protection benefits. I won’t go into these here but you can read about in other articles on this site. Start by reading Joe B. Gonzalez’s excellent article on Second Passports by Residence and Naturalization.

As I said a little while ago, while protecting your assets don’t overlook the fact that you need to protect yourself and your family against circumstances like civil unrest or a lockdown of the borders. Why not make it a New Year’s Resoltion to start work on a second passport at the earliest opportunity?

Remember we offer free personal consultations by e-mail to our paid-up members on matters such as this. If you are not yet a member of Q Wealth, you can join now online.

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!