Wealthy Americans are rushing to secure second passports, as a growing club of individuals have begun participating in government programs abroad which allow foreigners to acquire them, according to Bloomberg.
Eric Schmidt acquired all the typical trappings of a mega-rich U.S. citizen: a superyacht, a Gulfstream jet, a Manhattan penthouse.
One of his newest assets is far less conventional: a second passport.
Alphabet Inc.’s former chief executive officer applied to become a citizen of Cyprus, according to an announcement last month in a Cypriot newspaper that was first reported by the website Recode. –Bloomberg
According to the report, Americans rarely sought to buy so-called ‘golden passports’ in prior years, with such programs historically appealing to people from countries with far fewer travel freedoms than the United States – such as China, Pakistan and Nigeria.
“We haven’t seen the likes of this before,” said Paddy Blewer, a London-based citizenship and residency advisory director at Henley & Partners. “The dam actually burst — and we didn’t realize it — at the end of last year, and it’s just continued getting stronger.“
A second passport can be had for as ‘little’ as $100,000 – and include potential benefits such as lower taxes, greater investment freedom, and hassle-free travel.
The so-called citizenship-by-investment programs haven’t historically been as popular with Americans since one of their main draws — the favorable tax regimes of adopted countries — has been of little benefit to citizens of the U.S., one of the few nations to tax its people regardless of where they live.
The current heightened interest among U.S. citizens predates the coronavirus pandemic, but the crisis has helped turbo-charge demand as they plan for how to maintain some freedom of movement with lockdown measures increasing amid a swelling second wave of Covid-19 cases. –Bloomberg
“Americans are thinking: ‘I want to have that ability to move as quickly as possible and not be stuck,” said Nestor Alfred, CEO of St. Lucia’s citizenship-by-investment unit.
Another factor stoking interest is the prospect of a President Biden and a flipped Senate in January resulting in massive tax hikes on the wealthy. Others are securing the passports out of fear of social unrest according to Apex Capital Partners, which says its clients have increased 650% since the November 3 election.
“We’re seeing this interest from Americans who are all saying the same things that Chinese, or Middle Eastern or Russian clients are saying,” said Apex founder Nuri Katz. “They’re saying, ‘We’re not leaving the U.S. right now, but we’re concerned and we want to have something else, just in case.’”
Over half-a-dozen countries are now offering a citizenship-by-investment program, after St. Kitts and Nevis was the first country to do so in the early 1980s. Malta, for example, has raised $1 billion through June 2019 following the launch of their program last decade. The Carribean territory of Dominica has raised over $350 million in five years.
That said, the programs have also invited their share of scandal.
Fugitive Malaysian financier Jho Low was among 26 individuals to lose their Cyprus citizenship last year. The speaker of the Cypriot House of Parliament, Demetris Syllouris, resigned last month after offering to help a Chinese businessman with a criminal record get citizenship.
Following the scandal, Cyprus said it would end its current passport-for-investment program on Nov. 1. The European Union, meanwhile, issued legal ultimatums to Malta and Cyprus about their citizenship-by-investment programs, claiming they may have violated the EU law. Representatives for Malta’s government, which announced plans to revise its program before the EU’s action, didn’t respond to requests for comment. –Bloomberg
What’s next, golden immunity passports?