According to a leading law firm, wealthy American families are increasingly applying for second citizenships and national residency to protect themselves from financial risk.
The wealthy are building these “passport portfolios” — combinations of second, and even third or fourth, citizenships — in case they need to flee their home country. Henley & Partners, a law firm that specializes in high net worth citizenships, said Americans outnumber all other nationalities when it comes to seeking alternative residency or additional citizenship.
“America is still a great country, it’s still a wonderful passport,” said Dominic Wolk, group head of private clients at Henley & Partners. “But if I’m wealthy, I’d like to avoid levels of volatility and uncertainty. The idea of diversification is well understood by wealthy people in the investments they make. Diversify that aspect of my life as well.” capability of.”
Recent high-profile examples of second citizenships include billionaire tech investor Peter Thiel, who added citizenship in New Zealand, and former Google CEO Eric Schmidt, who applied for citizenship in Cyprus.
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Of course, rich people aren’t flocking and renouncing their US citizenship. Although a relatively small number of Americans renounce their citizenship each year to declare a new country of origin, primarily due to tax filing requirements, the so-called “exit tax” required to relinquish citizenship makes it financially Makes it prohibitive for most. Wealthy only to renounce and declare new citizenship.
Instead, many wealthy Americans are shopping for additional visas or citizenship programs to supplement their U.S. passports.
According to Henley, the top destinations for additional passports among Americans are Portugal, Malta, Greece and Italy. Portugal’s “golden visa” program is particularly popular because it offers a path to residency and citizenship — along with visa-free travel in Europe — for an investment of 500,000 euros (about $541,000) in a fund or private equity. Malta offers a golden visa for 300,000 euros to invest in real estate, which Wolk said has become “especially popular with Americans.”
“With Malta you become a European citizen, with full settlement rights throughout Europe,” he said. “So you can live in Germany, your children can study in France and you have the right to live, work and study all over Europe.”
There are three main reasons for the rise in US passport portfolios, or “domicile diversification”. An alternative passport makes it easier for Americans to travel to parts of the world that are less friendly to the United States.
“For US, British and Israeli citizens suddenly unsure of their welcome abroad, supplementary passports provide significant flexibility,” according to a Henley report. “With increasing global instability, holding citizenship in another country, particularly one perceived as more neutral or politically benign, now provides a valuable backup or alternative option.”
Another reason is business travel, which can be safer and less conspicuous in many countries with a non-US passport. According to the report, which states that interested parties say, US business leaders “could become victims of chaos, hostage-taking, or random terrorism in rogue states or high-risk countries”. -Fund managers who meet global clients to mining company executives who visit operation sites.
Using a secondary passport can also facilitate cross-border financial transfers or transactions within the new country.
Finally, some wealthy Americans simply want backup residency for potential retirement, to be closer to their families who live abroad or for lifestyle reasons in the new era of remote work. For others, American politics is the trigger.
“We all live in uncertain times, not just in America, but in all nations around the world,” Volk said. “Who knows what’s going to happen next. It’s not just about having Plan B, but Plan C and D in place.”
Globally, millionaire migration is expected to reach a new high in 2024, as wars, government crackdowns on wealth, and political uncertainty drive wealthier residents to other countries. An estimated 128,000 millionaires are predicted to move to a new country this year, up from 120,000 in 2023 and 51,000 in 2013, according to Henley.
With a net influx of 2,200 millionaires in 2023 and a projected influx of 3,500 in 2024, the U.S. remains the top destination for global billionaires, according to Henley.
China remains the largest source of millionaire out-migration, losing 13,500 millionaires last year.
“The wealth creation opportunities in the U.S. are second to none globally,” Volk said.
Credit : www.cnbc.com
