Global Citizens: Why More Businesspeople Are Seeking Dual Passports and Citizenship
Top business executives and other high-net-worth individuals seeking dual passports, but the practice has attracted criticism
August 16, 2022
Some call it global citizenship. Others speak of personal hedging or location fluidity. Whatever the term, it comes down to having the choice at any given moment between two or more “home” nations, often many thousands of miles from each other. In these turbulent times, many top business executives and other high-net-worth individuals (HNWIs) are seeking dual passports and citizenship.
Take Peter Thiel, known for being ahead of the curve: He secured his New Zealand citizenship in 2011. Tom Hanks and wife Rita Wilson became Greek citizens in 2020. New Jersey native Kirsten Dunst acquired German citizenship in 2011, thanks to her German father. Although U.S. citizenship is still powerful, the German passport is widely accepted as the world’s third-strongest after Japan and Singapore, so it’s understandable that she chose to upgrade. “I’m now a real international lady,” she told German newspaper B.Z., “one who can film in Europe without a problem.” Yes, even Hollywood A-listers need work visas to film in Europe—unless they carry an E.U. passport.
But far more common is American HNWIs becoming citizens or residents of Caribbean nations such as Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis and St. Lucia. Traditionally, such Caribbean nations always had pretty relaxed residency requirements. When the recent Covid pandemic caused a drastic fall in tourist income, many lowered their requirements even further. Author Chris K. Jones locked up his Tarrytown, New York, home and paid $2,000 for a Barbados Welcome Stamp, a one-year residential visa that allowed him to finish his book, Headcase, in an apartment overlooking the pink sands and crystal waters of the island’s south coast. “It was the perfect way to get through lockdown,” he says.
Elsewhere, many Americans are taking the Dunst route and tracing ancestry to claim citizenship in E.U. states like Portugal, Denmark, Ireland and Germany—nations whose passports are considered among the world’s most powerful and valuable, according to Forbes magazine. The hereditary route opens the opportunity of citizenship and off-shore banking, once an elite practice, to a growing wave of younger businesspeople. Increasingly, the self-employed and entrepreneurs see secondary citizenship and overseas banking as a form of personal hedging, a way of reducing sovereign risk by keeping assets in multiple currencies. But by far the quickest, most reliable and most popular citizenship or residency strategy is via investment in business or real estate. Not surprisingly, a fast-growing industry has evolved, offering Citizenship and Residency by Investment (CRBI) programs, bespoke packages that finesse a route to secondary citizenship or residency, as well as assistance in planning and setting up offshore accounts in order to minimize tax exposure.
And companies that specialize in advising clients looking to relocate (or at least have that option) report that business is booming. The grandaddy of these firms, and the pioneer of CRBI, is London-based consultancy Henley & Partners. The industry began in 1984 when the Caribbean nation of St. Kitts and Nevis offered citizenship—and thus a remarkably useful passport—to foreigners who “invested substantially” in its economy.
Today, almost 30 countries offer some form of CRBI program (although some governments also require a minimum number of days of physical presence per year). Henley’s latest annual report claims that inquiries jumped 89 percent last year, even after a big spike in 2020 driven by Americans. Similarly, Toronto-based Apex Capital Partners’ vice president, Armand Tannous, has seen a 200-percent rise in CRBI applications from U.S. citizens since early 2020.
Since residency and citizenship via investment costs a lot more than tracking down Grandpa’s birth certificate, CRBI is very much the purview of HNWIs. This acronym has no legal definition, but finance professionals generally define HNWIs as those who hold between $1 million and $5 million purely in liquid assets. That is, money or value held in bank or brokerage accounts—but not locked-in assets such as a primary residence, long-term investments, art collections or durable goods. According to Henley & Partners, there are currently just over 15 million HNWIs in the world, with more than one third of them based in the USA. These are the people driving the CRBI boom, and servicing this new class of self-styled global citizens has spawned an industry estimated to be worth $25 billion a year.
But this craze for location fluidity is not just about doing business overseas, says Christopher Willis, managing director at London-based CRBI consultancy Latitude. “During the E.U.’s travel ban in summer 2020, many Americans found themselves locked down,” says Willis, “but those with an E.U. passport still had visa-free access to over 150 countries, and that highlighted the benefits of secondary citizenship.”
For HNWIs, says Willis, secondary citizenship is “future-proofing”—a kind of hedging or insurance policy. “Smart money is always planning for worst-case scenarios and people want a plan B, which is why applications have soared in the last 18 months. And while for most of us a $200,000 investment is a significant sum, for HNWIs it’s simply a way of diversifying their portfolio. So rather than buy a condo in South Beach, for example, they can invest in a Caribbean property and get residency or citizenship, too.”
Willis points out that partisan rancor and cultural conflict in the U.S. are also causing Americans to explore alternative residency and even citizenship. “The American political landscape is exceptionally polarized, and the tone is increasingly harsh. That causes an overall sense of uneasiness. When you factor in the instability caused by Brexit, and the Russian invasion of Ukraine, you have a lot of international volatility. Smart money prefers stability and avoids social upheaval—especially the kind that can lock you in one place.”
Mehdi Kadiri, managing partner and head of North America at Henley & Partners, agrees that “the common denominator among U.S. investors seeking alternative residence and citizenship is to hedge against geopolitical risk, an insurance policy against the backdrop of relentless volatility.” Most of his clients are not relocating, he says, but want alternative citizenship to avoid being restricted to a single jurisdiction, “in the event they want or need to settle elsewhere.”
Industry experts also note that traveling on a U.S. passport these days is not always the safest option. “Many of our clients tell us they feel more comfortable with the option of a lower-profile passport,” says Willis, “from a Caribbean or smaller European nation. I’ve also had ethnic-minority clients tell me they’re concerned about racial tension in the U.S., and want their kids to have a second citizenship in case the situation gets worse.”
At the other end of the scale, Nuri Katz, founder and CEO of Apex Capital Partners, says his team has seen “a sharp uptick in CRBI applications from young cryptocurrency millionaires.” Many Americans and U.S. residents made a fortune from crypto investments, he says, but are worried about the specter of increased legislation and regulation, and are now looking at relocating to more crypto-friendly nations, such as St. Kitts and Nevis—which recently passed legislation to make crypto transactions easier and piloted its own digital currency known as DCash, a digital version of the Eastern Caribbean dollar. Crypto moguls are also increasingly focused on El Salvador, which plans to implement a CRBI program and has no capital-gains tax on digital assets like cryptocurrencies.
Still, the gold standard in secondary citizenship remains an E.U. passport. It’s little wonder that Europe’s so-called golden visas are so highly prized, given the advantages they confer. First, those with an E.U. residency visa can live and work in their host country indefinitely—along with their spouses and children—as well as access national education and healthcare systems (the latter point a particular attraction for American retirees). And as E.U. residents, they also enjoy visa-free travel to all 26 European countries within the border-free Schengen zone, including but not limited to Belgium, France, Germany, Italy, Greece, the Netherlands, Portugal, Spain, Sweden and Switzerland.
Even more importantly, E.U. residency is a pathway to an E.U. passport: After a set period (which differs from country to country), golden-visa holders generally become eligible for that nation’s citizenship. An E.U. passport unlocks the continent’s much vaunted freedom of movement—the absolute right to live, work, study, start a business or even retire in any E.U. country without special formalities. And unlike residency, citizenship is valid for life, can be passed on to descendants, and is only very rarely revoked. But while undoubtedly offering poorer nations a way to attract outside investment—Malta’s fiscal budget has gone from deficit to surplus since the launch of its CBI scheme in 2013—critics say these passports-for-purchase programs turn democracies into havens for über-wealthy criminals and facilitate money laundering and tax evasion.
On March 9, the European Parliament voted overwhelmingly to draft E.U.-wide legislation that would phase out CBI programs altogether by 2025, and establish much stricter regulations governing RBI (residency by investment) programs. The proposed legislation would also reassess visa-waiver arrangements with non-E.U. countries offering CBI passports, which could seriously impact the Caribbean sector. Finally, it wants all E.U. members to reassess any successful CRBI applications from Russian citizens over the past few years—and if necessary, revoke them—to ensure that “no Russian individual with financial, business or other links to the Putin regime retains his or her citizenship and residency rights.”
The European Commission has repeatedly warned Malta and Bulgaria to end their golden-passport schemes, both of which have given dozens of wealthy Russian nationals a back-door option to E.U. citizenship. Even Britain, no longer part of the E.U., has just scrapped its own golden visa, once highly popular with Russian nationals, “due to security concerns and abuses.” The U.K. government’s website currently quotes Home Secretary Priti Patel as saying, “I want to ensure the British people have confidence in the system, including stopping corrupt elites who threaten our national security and push dirty money around our cities. Closing this route is just the start of our renewed crackdown on fraud and illicit finance.”
Other E.U. countries are currently revising or drastically reducing golden-visa programs. Many will henceforth require a greatly increased minimum annual stay. Real estate and other passive investment avenues are being closed, and several nations are working toward requiring active business registration and increased job-creation targets.
Meanwhile, one particular E.U. golden visa remains a powerful draw for Americans, who are applying in record numbers, according to every company canvased. “Portugal has become the darling of investment migration for Americans,” says Ilana Van Huyssteen-Meyer, vice president of Migronis, based in Estoril on the Portuguese Riviera. “It offers a diverse range of investment options for residency, and it’s a friendly, safe and affordable country. The tax regime is very attractive, and health care and infrastructure are top-notch. Along with the food and wine, it all adds up to a fantastic lifestyle.”