Many people believe that having more than one citizenship or passport is illegal, or if not illegal, somehow “unpatriotic.” That’s simply untrue. Public ignorance about this is not surprising. The average person only encounters this issue when reading an international espionage thriller, watching a James Bond movie, or reading reports in the media linking use of second passports to the exploits of money launderers, drug runners, arms traffickers or other undesirables. While some few persons may use second passports for nefarious purposes, many thousands of ordinary and well intentioned individuals benefit greatly from having alternative citizenship and passports. Indeed, holding dual nationality can ensure survival in a dangerous and erratic world. What follows is a discussion of some of the major reasons for obtaining a second citizenship and passport.
1. Safe International Travel. A decade ago when Iraq invaded Kuwait and began the Gulf War crisis, many people holding western national passports tried to flee Iraq but were not allowed to leave the country. Instead, they were made hostages and moved to installations that were likely targets in allied bombing campaigns.
Some fortunate westerners avoided this nightmare. They were unmolested because they could present Iraqi border guards alternative passports from non controversial countries, such as Canada, of no strategic consequence or propaganda value to Saddam Hussein.
These escapees were not criminals with suspicious motives. They were ordinary people — expatriate oil field workers, business owners, travelers visiting family members in Iraq who had thought to protect themselves before traveling to this unstable world region. In this dangerous situation their second passport offered a better security than their original passport of birth. Their foresight might, quite literally, have saved their lives.
And should your own home government restrict foreign travel for any reason, your second passport may be the key to your escape.
Having to be “politically correct,”or “PC” as they say, may mean traveling with a national passport that keeps the bearer as far away as possible from international controversy. Your home nation’s passport may provide you little or no safety margin, but another nation’s passport will.
Not all passports are treated equally. Some passports are recognized and respected worldwide. For example, a passport issued by a British Commonwealth nation guarantees immediate acceptance in the United Kingdom, the U.S., Switzerland and over 90 Commonwealth member and associated nations. Some passports are suspect because of scandals concerning illegal sales of passport documents or because of the suspect nature of the issuing government. Some countries are universally condemned and ostracized.
Travel in the Middle East or the Balkans, parts of Russia or Asia using a U.S. passport may make the holder an instant target for terrorist groups. If your government is out of world favor at the moment, your passport could be confiscated, revoked or suspended at will, as happened to citizens of the Republic of South Africa during the apartheid years.
For many reasons some countries impose strict visa requirements each time a foreign national wants to enter their country. It’s their way of keeping out trouble makers and other supposed “undesirables.” Even a national whose passport usually allows easy international access can find a visa denied due to temporary travel restrictions during trade sanctions or political disturbances. And even if you finally do obtain a desired visa, it can take weeks of procedural delays.
Holding second citizenship and a passport issued by a small, peaceful, non-controversial country can save your life when traveling in times of political unrest, civil war and in other delicate situations abroad. All things considered, no one becomes angry at the mention of small nations such as Dominica, Grenada, Belize or St. Vincent. Thus for good reason, countless thousands of veteran international travelers consider an alternative passport as required additional life insurance.
2. Avoid Home Government Coercion. There is another disturbing trend that makes a dual citizenship and a second passport of great value.
In various ways governments increasingly use issuance of a passport to their own citizens as a means of coercion. In the United States, for example, a citizen can be denied a passport simply for being in debt to the Internal Revenue Service or because of other problems with federal government agencies.
The modern world is bound up in a vast network of international treaties, bilateral and multilateral regulations, tax and financial information exchange agreements, banking and currency controls and anti-money laundering laws. While these rules may serve legitimate law enforcement objectives in many cases, they can and are used to keep local citizens and their finances under often unreasonable government controls.
Having a second nationality can mean greater freedom and liberty. It can facilitate an offshore bank account, foreign business activity, open expression of opinions, freer religious practices and other legitimate activity that one’s home nation may not permit.
Since 1986 the U.S. State Department has been informing the IRS of all persons who renew their U.S. passports using a foreign address. Since passport renewals require an applicant’s Social Security number, this is also used by the IRS to see if applicants have filed income tax returns. In 1998 an IRS official speaking in Zurich said a special effort was being made by the agency to track all U.S. citizens who renewed U.S. passports while living in Switzerland, for reason we can easily guess.
There is a growing tendency in important countries to follow the lead of the United States in taxing their non resident citizens. Alternative citizenship is therefore increasingly important as a powerful tool for truly international personal and business tax planning. As a national of two different countries you also can enjoy extra privacy in your offshore banking and investment activities.
An even more immediate threat can arise from your own government. Depending on your nation’s policies, your government may use your passport to restrict your basic human right to travel, rather then to guarantee it. Use of your passport can be made contingent on payment of your taxes, however unreasonable, or on reporting of worldwide income and assets. Issuance of your passport allows your government to control, restrict, monitor and record your travels.
Now you can begin to see why a second passport may be highly useful. Your qualification for a second nation’s passport, one that comes with no restrictive strings attached, can serve as your passport to freedom. It can be your key to a whole new world of free movement, expanded international investment, greater flexibility and adventure. And it can mean safe passage as compared to delay or even worse.
3. Beneficial Tax Planning. No doubt legal tax avoidance is at the top of most government lists of major “problems” they see resulting from their citizens’ enjoying dual nationality.
Only the United States, the Philippines, Eritrea, Finland, Greece, the Netherlands and Sweden impose income and other taxes based solely on citizenship. This means citizens of the named nations have a legal obligation to pay taxes on their worldwide income, regardless of where they actually make their home, or where their source of earned income originates. Thus a citizen of any nation obtaining an official second citizenship can be a critical part of personal tax planning. That’s because second citizenship allows a taxpayer to establish another legal residence outside of their former home country and beyond the reach of its tax system.
Residence remains the basis for personal tax obligations in many major nations. And the degree of taxation has already reached beyond confiscatory levels. At one point in the 19th century the Labour government in the United Kingdom imposed income taxes as high as 98%. During World War II, U.S. income tax rates reached 91% and remained at 70% as recently as the 1970s. The current top U.S. estate tax rate is 55% and can exceed 80% on transfers to grandchildren. Combined federal, state and local income taxes in the U.S. can easily exceed 50%. Many other countries impose oppressive rates of personal income taxation; 60% in The Netherlands, 51% in Italy and 51% in Sweden.
As you shall read below, tax planning and legal tax avoidance are highly important reasons for acquiring an alternative citizenship and with it, a second passport.
Photo credit: LucasTheExperience via VisualHunt.com / CC BY-NC-ND
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