Who Needs Backup Residency Or A Second Citizenship?
I’ve been participating in conferences to do with living and retiring overseas for almost 20 years. Last week’s Retire Overseas Conference in Orlando was the first in my experience where obtaining a backup residency or a second citizenship was one of the most frequently asked questions. I’d say that most of the more than 400 participating in the event had some level of interest in the idea, and many were ready to pull the trigger on residency or even second citizenship. I expect this at my offshore events, but, again, this was the first time I’ve encountered this much interest at a lifestyle conference.
It’s a sign of our times.
Some people I spoke with had already invested in obtaining second citizenships and were asking my thoughts on what to do with their second passports. They understood that having two passports was a good idea but weren’t quite sure how to take advantage of the assets now that they’d obtained them.
For most people, the main benefits of a second citizenship are travel-related. You can use your second passport for visa-free travel to countries that would require you to get a visa or pay a fee if traveling on your first passport. For Americans, that list includes Brazil (visa required) and Argentina (fee charged).
Using your non-American passport can also provide security when traveling to countries where Americans might be targets (say in the Middle East) and can mean you get to pass through the (usually much quicker) “Citizens Only” line at immigration.
Another, bigger-picture benefit of a second citizenship is that it means you have another country where you could live (if you wanted) without worrying about obtaining a residency permit. Same goes for working, if that’s something you’re interested in. Hold a passport for any member nation of the EU, and you have no-visa-required residency and employment access to 28 countries. The American at last week’s conference who’d already obtained an Irish passport was happy to hear this.
If you aren’t lucky enough to have been born the right to a second citizenship, then you have two options for obtaining a second passport—through naturalization or by buying one. The kind of passports you pay for don’t come cheap. Economic citizenship programs, as they’re called, cost US$500,000 or more when you take into account both the investment amount required and the government fees. Naturalization is less expensive but takes time, usually five years or longer.
As we discussed at last week’s event in Orlando, the Dominican Republic offers one of the easiest residency permit processes of any country as well as a short residency requirement for naturalization. Technically, you need to be a legal resident of the DR for only three years before you can apply for citizenship… and that can be fast tracked.
While a DR passport isn’t a great document for traveling, the short timeline for naturalization is attracting many Americans looking for backup plans. My DR attorney attended last week’s conference and wrote today to tell me that she had an extraordinary amount of interest.
Historically, Panama has been a popular choice for backup residency and/or citizenship. With its attractive pensionado visa program, Panama has attracted many retirees. However, the pensionado visa in Panama does not lead to citizenship… despite what your Panamanian attorney may be telling you. (At last week’s event, one attendee who was three years into residency in Panama insisted that he had only two more years to go before he could apply for Panamanian citizenship. “My attorney has confirmed this several times,” he told me. I don’t know who the attorney is, but he is either confused or flat out misleading this guy.)
If you want a Panamanian passport, you must be a permanent resident of Panama for five years before you can apply. Again, this must be through some residency program other than pensionado. The good news is that the Friendly Nations visa offers permanent residency immediately on approval of your application (other residency options in Panama require some period of temporary residency before you obtain permanent status).
The downside to being naturalized in Panama is that the country requires you to give up all previous citizenships when you are naturalized. Currently, they don’t require proof that you have renounced your previous citizenships (as Singapore and Nicaragua do), but that could change at any time and is something to keep in mind when making your decision as to which naturalization program to pursue.
That said, holding permanent residency in Panama isn’t a bad back-up plan. You need but visit the country once every two years to maintain your residency status.
Belize is another good choice for backup residency… if you have a pension or other qualifying income. The Belize QRP program provides easy residency; however, like Panama’s pensionado program, it doesn’t lead to citizenship.
Unlike Panama’s low-key physical-presence requirement of once every two years, Belize requires you to spend 30 days a year in the country.
Having to hang out at the beach for a month each year isn’t exactly a burden, and the 30 days don’t have to be consecutive.
We spent more time on residency and citizenship discussions at last week’s Retire Overseas Conference in Orlando than we have during any previous lifestyle/retirement event. However, we’ll be focusing on these important ideas in much greater depth during my Global Asset Protection and Wealth Summit in Panama next month.
Lief Simon
Editor, Offshore Living Letter
Continue Reading: How To Apply For Residency In Colombia
