Why More Americans Are Getting Second Passports: The Implications of Dual Citizenship

Why More Americans Are Getting Second Passports: The Implications of Dual Citizenship

September 22, 2020

Immigration practitioners are reporting a dramatic uptick in demand from Americans seeking second passports—specifically dual citizenship in another country. Why is this happening?

  • Reasons for obtaining a second citizenship in another country may vary. Citizenship by investment is popular, along with citizenship through inheritance. Some may have a hankering for more easily visiting or living in the “old country” for longer periods, or simply ensuring greater freedom of movement. They may have family ties, or a job opportunity. They may be attracted to a particular culture or lifestyle.
  • Some are finding the United States’ current issues too much to bear, such as increasing polarization and politicization or the failure of the United States to unify in an effort to contain the spread of the COVID-19 pandemic, unlike some other countries. Indeed, a recent YouGov survey found that nearly a third of Americans say they will consider moving to Canada if their candidate loses in the November general election. This wouldn’t be the first time many Americans threatened to do so, of course, and some areas of Canada (and elsewhere in the world) are more open to immigration than others.
  • With the stressors brought on by the COVID-19 pandemic, some are finding that the sense of having more options is becoming more important—especially those who regularly visit family members but are not allowed back in to their ancestral lands on U.S. passports. For example, according to reports from Greece, many people with U.S. passports visit family in that country almost every year, but are now unable to go there without a Greek passport. Such considerations may tip the balance for people in these situations.

Regarding freedom of movement, according to the Passport Index, the U.S. passport has dropped with respect to the number of countries Americans can travel to with it. COVID-19-related restrictions are at least partly a reason for that decrease and those restrictions are likely to go away eventually, assuming the virus subsides or a vaccine or effective treatments are developed. The Passport Index allows comparisons between two or more countries. A quick comparison of the United States versus Italy, for example, shows that those with an American passport can currently travel to 88 countries, whereas an Italian passport allows travel to 123 countries. The top countries are Japan and New Zealand, with a ranking, or “total mobility score,” of 1 and 2, respectively; their passports allow travel to 125 countries. At the bottom are Afghanistan and Iraq, ranked at 69 and 70, with 30 countries allowed for travel on their passports. The United States ranks at #24, having dropped to 88 countries allowed from 171 in 2019.

The U.S. Department of State (DOS) notes that U.S. law does not mention dual nationality or require a person to choose one nationality or another. A U.S. citizen may naturalize in a foreign state without any risk to his or her U.S. citizenship. U.S. nationals, including dual nationals, must use their U.S. passport to enter and leave the United States. Use of the foreign passport to travel to or from a country other than the United States is allowed. DOS warns that dual nationality “may hamper efforts of the U.S. Government to provide consular protection to them when they are abroad, especially when they are in the country of their second nationality.”

Dual citizens of the United States and another country may be required to pay taxes in two countries—the United States and the country where they are living. A U.S. citizen’s global income is taxable by the U.S. government, unlike many other countries, which operate under a residential tax system. There are some potential benefits to dual citizenship on the tax front also, however, such as qualifying for a Foreign Earned Income Exclusion and not being required to let go of bank accounts and property. The only way around the U.S. tax requirement is to renounce U.S. citizenship, which has its own implications outside the scope of this article.

Two of the most popular methods for acquiring citizenship in another country, and thus a second passport, are described briefly below:

Citizenship by Investment—the ‘Golden Visa’

About 25 countries offer residence visas or citizenship to investors and property owners at a certain level. The rules and timeframes vary depending on the country but favor wealthier individuals who can afford the investment, which can range from $100,000 to north of $2 million.

Considerations include not just the cost of the investment and the application process, but also the longer-term implications of aspects like the length of time for the application process, including gathering required documentation and submitting to background checks; the relative cost of living; tax issues and ramifications; health care; and education (quality and cost). Some may be motivated by lower educational costs in another country for citizens of that country, for example.

A sampling of potentially attractive options for obtaining a second passport by investment includes:

  • Caribbean countries, like St. Kitts & Nevis (with a passport that allows travel to more than 100 countries and offering a 23 percent discount on citizenship through the end of 2020; the cost is $150,000 plus a minimum real estate investment of $200,000) and St. Lucia (allowing travel to 146 destinations and a half-price cut through the end of 2020; the cost is $250,000 for an individual or $300,000 for a family of four).
  • Portugal allows several pathways to qualify for its “Golden Visa” program, including through business investment, a Portuguese art and culture donation, or a real estate purchase, along with passing a Portuguese history test.
  • Citizenship in Malta costs about $1.1 million through donations and real estate under its Individual Investor Program. This popular citizenship pathway affords the investor with a Maltese passport the right to live and work in Malta or anywhere in the European Union, along with travel to 183 destinations worldwide.

Citizenship Through Inheritance

Descendants of citizens of certain countries may be able to claim citizenship based on lineage. There are potential disadvantages and obstacles to overcome. Not all countries allow dual citizenship; some require renunciation of U.S. citizenship to acquire theirs, and some allow nationality to be passed down only from parent to child. And again, the prospective dual citizen should carefully research the second country’s applicable laws and rules, costs for applying, the cost of living, taxation, health care, and any other aspects of importance to the individual (and family, if applicable).

To apply for citizenship in another country through family lineage, normally the applicant must submit documentation including birth certificates, U.S. naturalization records, and marriage and divorce records, along with paying a fee, and the process often includes an investigation of the applicant that can be lengthy.

Contact your WR attorney for advice in specific situations.

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By | 2020-09-22T09:51:33-08:00 September 22nd, 2020|Other|Comments Off on Why More Americans Are Getting Second Passports: The Implications of Dual Citizenship

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