The Secret To Your Success In 2012 And Beyond
Here’s my best advice for this New Year: Whatever flags you’re planning to plant offshore, plant them sooner rather than later.
Last week, a client wrote to tell me he was in St. Kitts trying to decide which of their two economic citizenship options to apply for. He had made this trip, between Christmas and New Year’s, because the St. Kitts government had decided to increase the costs of its economic citizenship program as of Jan. 1, 2012. The powers that be on this island nation gave very little notice about the planned increase, having made the decision in September or October.
The offshore world is an ever-moving target. Governments change the rules of the game regularly. Residency and citizenship options, requirements, benefits, restrictions, etc., change often. Panama made wholesale changes in 2008 that had people clamoring to get in before the new rules took effect.
Fortunately, Panama grandfathered everyone who had already obtained legal residency. Costa Rica has changed their residency rules over the years without grandfathering current legal residents. (No more hate mail from Costa Ricans, please. Your country doesn’t want more foreign residents…just tourists. It’s time you faced this fact.)
Ireland had a constitutional referendum in 2004 to change the allowance for automatic citizenship-at-birth if you were born on the island. It was the last EU country offering such automatic rights of the soil. The impetus for change, as is generally the case with something like this, was abuse of the system. Pregnant women from Africa (mostly Nigerian, as I remember…we were living in Ireland at the time and watched this play out in real time) were coming to Ireland under refugee status.
Once they were on Irish soil, and had had their babies, they switched their status from “refugee” to “parent of an Irish born child,” which allowed them to stay in the country indefinitely to support the child. It also allowed them to then bring the father of the child into the country, too.
In response, rather than changing the rules associated with refugee status, Ireland changed the rules related to citizenship by birth.
I’d guess that St. Kitts has increased the investment minimum for economic citizenship because business is booming. So many people are buying St. Kitts citizenship that they decided they were leaving money on the table. Russians are big clients for this offer, because the St. Kitts passport allows visa-free travel to many more countries than does a Russian passport.
Not only residency and citizenship rules, but tax rules, too, change often. The U.S. is in the midst of making big changes as a result of the HIRE Act. The new FATCA rules related to individuals and corporations will take effect after Dec. 31, 2012; the new rules related to foreign banks and banking are currently scheduled to go into effect Jan. 1, 2014.
Costa Rica has proposed changes related to how it imposes income taxes. Meantime, they’ve already increased their gas tax. Panama went from having no capital gains taxes to imposing one at the rate of 10%. Uruguay changed how they tax resident citizens in 2011 (taking separate action to exclude non-citizen residents).
One very recent tax change I find interesting took effect just this week, Jan. 1, 2012. It is a new tax on soda products in France that is expected to bring in 120 million euro in revenue this year.
So what is a global citizen to do? First, take action. Don’t allow the ever-changing landscape to paralyze you. Do something. Start now.
Second, remain flexible. You can’t possibly predict or prepare for all possible eventualities in any one country, much less on a global scale. No one can. So keep your mind open and create options for yourself. You want to be able to bob and weave.
Happy New Year.