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

The Best Time To Establish Foreign Residency Or Acquire A Second Citizenship And Passport

22 Sep
second citizenship and passport

Why Establish A Second Residency Or Acquire A Second Passport? Because You Can

I met with a friend recently who is working on his Plan C.

My friend (I’ll call him Joe) already has a second residency that is leading to a second citizenship. Now he has established residency in a third country to take advantage of the short timeframe that country requires for one to be married to a citizen before he can be naturalized.

In the course of our conversation, Joe explained why he’s taking this step, and his answer is the same one I’d give—namely, he’s getting this third residency because he can.

My friend isn’t a paranoid or a conspiracy-theory type. He’s a regular guy taking advantage of options available to him… while they remain available to him. It’s a very smart strategy, because, when it comes to residency and citizenship, the rules are always changing. Options today may be gone tomorrow.

Taking advantage of opportunities as they present themselves is critical to your success as you work to plant your international flags. Do you need a second residency option if you’re planning on staying where you currently live for the next 10 years? Not necessarily, but establishing that residency as and when you have the chance may be the difference between having it when you need it and not being able to get it at all.

The same holds true for bank accounts, real estate investments, and citizenship through ancestry.

Another friend (I’ll call her Mary) has two children for whom she recently obtained formal citizenship and passports from their father’s home country, Britain. The children already had EU passports from Italy (her home country), so Mary had always wondered whether she really needed to take the time and make the effort to get her kids second EU passports… until she started traveling with them more often.

Traveling Offshore

When traveling with her children on their Italian passports, Mary has to carry their birth certificates as well as the death certificate for her late husband to prove she’s really their mother and able to take them across international borders without their father’s permission.

Now the kids can travel on their British passports with their mom without this hassle. Italy requires the paperwork; the U.K. doesn’t. When it comes to international travel, less hassle is always a big plus.

Mary’s children were born in France and have lived in that country the requisite time to be eligible for French citizenship and passports, but Mary has decided that two EU passports are enough for now. If the children continue to live in France (which is the intention), they can always apply for citizenship later, she figures.

I reminded her, first, that rules and requirements for obtaining residency and citizenship anywhere change all the time… and, second, that France’s citizenship rules for a child who was born in the country but who doesn’t have French parents require that the child (or, I guess, his parents) make decisions by certain ages or lose some options if the child ever moves from the country.

Timing is everything. Establishing residency in a country today (even one you are not currently living in and maybe have no definite plans ever to live in) can allow you to become naturalized at some future date and obtain a passport for that country.

Some countries want to see you physically in the country more than others to be eligible for naturalization, but several, including Panama, Belize, and Colombia, have fairly light physical presence requirements. These countries in particular also offer easy and relatively low-cost residency options.

Whatever your plan or current situation, more options is always preferable to fewer. If you’re in a position to take advantage of any particular residency or citizenship option… do.

Lief Simon

MAILBAG

“Lief, can I take my motor home to Belize and are there campgrounds for extended stays?”

D.M.

I’m sure you could take your motor home to Belize. The question is, should you?

There are no organized motor-home campgrounds. Further, the roads in Belize would be hard on a motor home… and gas prices in Belize are high (50% to 100% more than in the States).

“Lief, I am 51-years-old, and I work for a top-ranked cargo airline in the USA. I make over US$300,000 per year. I want to attend your Belize conference but am looking for some tax advantages of living abroad while commuting to work in the USA. Cannot find any answers online.

“Is there a way I can reduce my taxes paid in the USA without declaring an expat status. I have children almost in college!

“Also, when I get ready to retire, will my pension be taxed because it originates from a U.S. company? Not sure if I am ready yet for the conference retirement-wise but want to start putting my assets in place if possible for my future. I fly all international flights and am very accustomed to being abroad.

“I am potentially interested in potentially starting a business in Belize in the next five years.”

K.H.

Unfortunately, there is no way I can see, based on the circumstances you’ve described, for you to reduce your taxes without making a full-time international move (to Belize or wherever) and obtaining legal residency. Even then, any work done within the United States would be taxable in the United States. If you’re flying U.S. routes, even establishing residency in another country wouldn’t really help you.

And, yes, your pension would still be taxed in the United States, again unless you move to another country (in this case, one that has a double-taxation treaty with the United States that allows that country to tax the pension income). If you were to move to Belize, I believe the United States would continue to tax your pension.

One comment

  1. Hello Lief. My wife and I are really wanting to check out Panama. I currently own and operate a retail golf shop. I am also a teaching professional. Is this something you think I could continue in Panama? We are trying to plan a trip there in the Spring. Any suggestions. We definitely want the Pacific side and possibly where you are starting your new project in Los Talbos? We are small town lovers, don’t care for the big city. Thanks in advance, Steve

Comments are closed.