Global Residence and Citizenship Handbook. Christian H. Kälin

there are many reasons why all over the world more and more wealthy individuals consider becoming a citizen of more than just one country, and consequently holding more than one passport.²²

      2.1Why become a citizen of more than one country

      Due to political or economic circumstances, citizens of many countries find it difficult to travel abroad and are confronted with strict visa requirements each time they want to enter a foreign country.²³

      Furthermore, nationals whose passports usually allow them easy access to most countries can find it impossible to obtain visas due to temporary travel restrictions during trade sanctions and other geopolitical disturbances; or due to their nationality may be overly exposed to terrorist threats and other hostility.²⁴

      Moreover, even though the necessary visa may be granted to you, getting a visa is always a very tiresome procedure. During this time, the passport on which you are getting the visa is not available – and this can be a significant factor of delay for your travels. 18% of Chinese visitors to Europe, for instance, make it to the UK, but two-thirds visit France, a member of the Schengen travel zone where visas are easier to get.²⁵

      Visa-free travel can also be obtained via a residence permit, not only through a second passport. For example, residence in any of the Schengen countries will offer visa-free travel throughout the Schengen area of Europe. However, only the acquisition of a second citizenship and a second passport can guarantee the desired long-term visa-free travel, and only citizenship guarantees the long-term security of these privileges.²⁶

      If you cannot acquire or renew your passport in your home country, for example due to political instability, civil war, revolution or change of government, having another passport can be very useful, even critical. Even if you simply lose your passport, it may take some time until you can get a replacement.

      There is a growing tendency in many countries to follow the US in taxing even non-resident citizens.²⁷ In fact, I believe that this will be an increasingly important issue in the future. As individual states are struggling to keep their tax base, both corporate and individual taxation systems will have to undergo substantial changes. For income taxation and other taxes on individuals, citizenship may become an increasingly important, if not decisive, factor. I anticipate that some countries will introduce similar legislation to that which the US currently has and will tax its citizens regardless of their place of residence. At the very least I can imagine that this would apply, for example, to all EU citizens resident within the EU. Therefore, having alternative citizenship options will become even more important for wealthy individuals who may want to plan around such new taxation rules. Being a citizen of more than one country, and ideally in more than one continent, will be the norm for the global entrepreneur and investor in the future.

      Meanwhile, citizenship also plays a role in some countries to determine whether you may still be deemed tax resident or domiciled (including Germany, Sweden, the UK and others), and citizenship is one of the tie-breaker rules in most double tax treaties. Alternative citizenship is therefore becoming increasingly important as an effective tool for international tax planning.

      If you wish to have the possibility to retire in a safe haven in the future you can only fully secure this option if you acquire either permanent residence or citizenship of that country. However, even a ‘permanent’ residence permit does not mean full security, as it may still be subject to renewal, revocation, or new conditions. Becoming a citizen is the only way to secure a life-long status and guarantees a secure and truly permanent alternative place to go to. This is also what the Hong Kong elite was aware of on the eve of the return of the colony from British to Chinese rule, as about 600,000 of Hong Kongers – about 10% of the population – held second passports as an insurance against mainland-Chinese rule. More than half the members of the transition preparatory committee carried foreign passports.²⁸

      Generally, as a citizen of two or more different states, you are in a privileged position compared to having just one citizenship, you have more planning options and more personal freedom. If you want to acquire real estate of a certain size in Italy for example, you can only do so if the country of your citizenship in return allows Italian citizens to buy property without restrictions. If that is not the case, you cannot buy in Italy, unless, of course, you are also a citizen of another country which may not have such restrictions in place.

      Most importantly, citizenship and a passport, particularly from a small, peaceful country, can save your life when travelling in times of political unrest, civil war, terrorism, and other difficult situations. Many international businesspeople and important people who are active worldwide actually consider an alternative passport to be the best life insurance money can buy.

      In an unsettled, ever-changing world, acquiring a second citizenship is a wise decision and an investment for the future. When you acquire citizenship, your spouse and children, and sometimes parents,²⁹ may be included. Citizenship is for life and can be passed on to future generations.³⁰ Depending on the other country or countries of which you are a citizen, there is often no need to give up your present citizenship while you enjoy the benefits of a second citizenship and passport, as states increasingly allow multiple nationalities.³¹

      2.2Who is interested in a second citizenship?

      People from all over the world and from a wide range of backgrounds are interested in multiple citizenships and consequently hold more than one passport.

      Many of the wealthiest individuals and most internationally successful people hold more than one passport. In recent years, an increasing number of internationally forward-thinking entrepreneurs and investors have specifically acquired one or more additional citizenship(s) to diversify their personal exposure and options. They realize that not only their investment portfolio, but also their residence and citizenship portfolio needs to be diversified to reduce risk and increase international flexibility.

      More than ever, wealthy citizens are becoming a target for kidnappings, terrorism, and in some countries politically motivated violence. Wealthy people are at risk in insecure countries where organized crime, in particular kidnapping, is widespread, as in many South American countries; but also where they may be part of an ethnic minority group and may face hostility within their own country or in regions with significant political upheaval, such as the Middle East in recent years, or where the future of their home country is uncertain.

      Even if the home country is stable and personal security is not an issue, citizens of countries where the political and economic situation does not allow widespread visa-free travel for its passport holders are a further group where an alternative travel document offers great merits.

      Persons who travel frequently to countries requiring visas also need an alternative citizenship and passport. They may need to travel at short notice while they are waiting for such visas to be issued on their current passports, and often passports have to be sent to the relevant embassies or consulates and remain there, sometimes for several weeks, before being sent back. This also includes the risk of one’s passport being lost in the process and therefore having an alternative is critical if you wish to remain flexible with regard to international travel.

      Citizens of countries with an uncertain future acquire alternative citizenship and passports to ensure that they will continue to be able to travel or have the option to relocate after possible political changes. Unfortunately, many countries fall into this category; citizens of these countries cannot be sure about the political future of their home. Alternative options need to be secured in good time.

      Persons who value privacy when travelling, doing business or for banking and investment are interested in protecting their interests and their personal data by using a different citizenship depending on where they operate and what they do. In times of widespread data abuse, identity theft and cyber-crime, it is increasingly important to be able to protect one’s personal profile. Having more than one citizenship and passport can help achieve this.

      Citizens who