Welcome to Offshore Living Letter, Your #1 Resource for Offshore Diversification

The Difference Between Resident, Expat, And Expatriation

24 Apr

What’s Wrong With Being An "Expat"?

At a meeting in London recently, I was among dozens of expats from all around the world. Many took offense to being described that way…to being called “expats.” They found the term derogatory; however, not for the reason people typically object to the word.

Some among the group in London who’d chosen to live in countries other than the ones where they’d been born weren’t worried about people thinking they were no longer loyal to their homelands. They objected to the description because, they argued, they have embraced local life in the new places where they’re living. They’ve become part of the local social and economic scenes and want that transition recognized.

I’d never encountered this position before.

What Is An Expat?

In the strictest sense, speaking historically, “expat” is short for “expatriation”—the act of renouncing your allegiance to your native land.

However, over the decades, with big and growing numbers of people residing outside their home countries, the term “expat” has taken on a broader, gentler meaning, to refer simply to people living abroad. Just as the term “gringo” has become a generic term for all foreigners spending time in any Latin American country. “Gringo” isn’t pejorative…and neither is “expat.” It’s short-hand.

But people do object, and some even worry that the description calls their patriotism into question.

My response to all of them is, if not “expat,” then what?

The folks I met in London, living in Europe among the locals, having, they say, adapted to local life, aren’t, as much as they might want to argue otherwise, locals. They are foreigners. A Londoner living in Kentucky for decades, adapting to local ways, making local friends, adopting local customs, would still be an outsider. In fact, that’s probably how the local Kentuckians might describe him.

And that, “outsider,” seems more pejorative to me. I’d rather be called an “expat.” Expat is simply an efficient term. It’s simpler to say “I’m an expat” than it is to say “I’m an American currently living in Panama” or “I’m a Brit currently living in France.” And I can’t think of any other way to explain the situation.

The more legitimate confusion comes from a misunderstanding of the difference, in today’s vernacular, between “expat” and “expatriation.” An expat is someone residing in another country. Expatriation is when someone formally renounces allegiance to his (or her) home country and actually gives up his or her citizenship. It’s an extreme choice and a dramatic step—something very different from simply moving to another country.

What Does Resident Mean?

For the record and to clarify, you don’t have to give up your citizenship to live in another country, and moving to another country, as a retiree, etc., has nothing to do with expatriation. Expatriation isn’t about where you live. It’s about where you’re a citizen and whose passport you carry.

Note also that you can’t give up one citizenship unless you have another. No country is going to let you voluntarily become stateless. In other words, you can’t give up your U.S. citizenship by accident. You’d have first to qualify for and obtain another citizenship…and then you’d have to formally renounce your U.S. citizenship.

One more time: None of that has anything to do with simply deciding you’d like to live in another country. You could live in another country as a passport-carrying U.S. citizen for the rest of your life if you wanted to.

Think of it this way: Residence is geographic, while citizenship (generally speaking) is hereditary. You inherit your citizenship from your parents. Most countries these days don’t give automatic citizenship to anyone born on their soil (jus soli). Typically today, if you’re born in a country other than that of your parents, you must meet certain residency requirements before you can claim citizenship.

France, for example, will give you citizenship if you were born in France to non-French citizens at the request of your parents if you are resident at the age of 13, at your request if you are resident at age 16, or at the age of 18 if you were resident in France for five years between ages 11 and 18. While that’s a bit complicated, most countries have similar rules.

To become resident of a country, you simply have to apply for a residency permit. Qualifying for residency can be as simple as proving you have enough money to provide for yourself. Or it can be as complicated as investing a large sum of money in a business or a piece of property in the country. Either way, residency doesn’t give you citizenship and being resident in another country doesn’t mean you give up your citizenship of birth.

You can gain citizenship through naturalization in many countries after an extended period of residency. Most countries that allow for this require five years of residency, but some require as few as three, depending on the circumstances (usually to do with being married to a citizen). Others require as many as 20 years of residency before you can apply for citizenship.

Once you’ve gained a second citizenship, you can then give up your original citizenship (assuming you were born with only one), at which time you would be an expatriate in the literal sense of the dictionary definition.

Meanwhile, living in another country makes you an expat. Sorry if that offends you. But I don’t see any reason to try to come up with a more politically correct term. Being an “expat” doesn’t necessarily say anything about your loyalties to your birth country…just your sense of adventure.

Lief Simon

Mailbag

“Lief, I have purchased land in Pedasi, Panama, and will be looking for a mortgage loan to start building. I have found information on two banks online. My question is this: Do the documents required for the loan have to be apostilled and translated?

“One bank, Caja de Ahoros, did mention it. Banco National did not mention anything in their online requirements. The translation is not a problem, but I would want to get documents apostilled while I am visiting here in Florida if necessary.

“I would appreciate any help you can provide or names of banks that you consider easier to deal with. I have been reading your newsletter for three years and got interested in Pedasi from your articles. I love it there. Thanks.

“I do have the Panamanian retirement visa.”

S.J.

I don’t remember having to get any documents apostilled when I applied for a mortgage in Panama, but I wasn’t working with either of those banks.

No banks in Panama are easy to deal with right now. Some specific bankers can be easier to work with than others, but banking policies are very much in flux these days.

I do know that Scotiabank offers (or at least has offered in the past) construction loans.