Why are Americans Considering Alternative Citizenships?
by Judi Galst
Henley & Partners
HenleyGlobal.com
“Many Americans seek sanctuary.”
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Retirement or long-stay options
The vast majority of our US citizen clients don’t intend to leave the USA permanently nor do they intend to spend more than six months in another country (to avoid becoming a tax resident). However, some are thinking about spending significant time in Europe once they retire or while managing their investments, which can be done from anywhere in the world.
While the US passport currently allows you to enter Europe without a visa, you are restricted in terms of how long you can spend there. Many don’t realize that the US passport only allows you to stay in Europe 90 out of every 180 days. As a result, clients often explore routes that will allow them to stay in Europe longer.
For these clients, the program options will vary depending upon their goals. If they know that they want to spend more time in a specific country, we might look at a residence that would allow them to live 12 months a year in that country while still limiting them to 90 out of 180 days in the rest of Europe’s Schengen Area.
This is easily accomplished in the case of the residence programs offered by Greece, Italy, or Spain. However, if they want to have the freedom to spend extensive time in multiple countries in Europe, we would discuss programs that result in citizenship such as those offered by Austria or Portugal, which would allow them to live anywhere in the European Union as well as in Switzerland for as little or as long as they want.
It’s important to keep in mind that each program has a different processing time, and many take considerable time to process and approve applications. Accordingly, it’s never too early to understand your options if you are thinking about how you want to spend your retirement years.
Asset diversification with residence or citizenship on the side
The path to obtaining an alternative residence or citizenship involves making some form of financial investment in the country where you seek this benefit. Your investment will vary depending upon the design of the program. It could be the purchase of real estate or an investment in private equity, venture capital, stocks, or even a bank deposit.
As many high-net-worth clients are already seeking to diversify their assets, gaining the benefit of an alternative residence or citizenship can sometimes be considered a bonus for pursuing the financial diversification strategy they are implementing. It is not uncommon for a wealth manager or family office to call me and say, for example, “I have a client with a few homes in the USA who wants to buy something outside of the states. Are there any countries where, if she buys real estate, she will be able to get a residence?” (meaning the ability to live in that country up to 12 months a year). The answer is yes — in countries such as Costa Rica, Greece, Panama, Spain, and others. Or perhaps their client wants to hold investments in other currencies. Austria, Italy, New Zealand, Portugal, and Spain all have programs that grant residence or citizenship to those making specific financial investments in the country’s financial system.
Protecting generational wealth and opportunity
While most of our American clients do not relocate, I have assisted parents with school-age children who want to give them the opportunity to be global citizens. They are considering moving to Europe for a few years and allowing their children to attend school in another country while immersing themselves in a different culture. Depending on the age of the children and the number of years they live in Europe, many of these children are then able to attend college in Europe at a significantly lower tuition cost than in the USA.
Other clients I work with are global investors or own businesses in the USA and want to expand into other countries in Europe. Having a residence or citizenship on the continent gives them greater financial freedoms for ease of conducting business and international banking and investment as well as entrepreneurial opportunities.
I’ve also advised investors who were very focused on securing mobility options not just for their children, but also future generations. “I am not sure what the world will look like in 50 years,” said a recent client. “I want to be sure that my children and grandchildren have options about where they want to reside and have the freedom and flexibility to have global educational and cultural opportunities.” Many such clients are drawn to Malta’s Citizenship by Naturalization for Exceptional Services by Direct Investment, which allows for the granting of citizenship by a certificate of naturalization to foreign individuals and their families who contribute to the country’s economic development, and this can be passed down to future generations.
Many of us still feel that the USA is a land of opportunity and the best country in the world in which to live. In fact, we have clients living in other parts of the world who we support in their objective of coming to America through the US EB-5 Immigrant Investor Program. That being said, in today’s tenuous age of uncertainty, many high-net-worth Americans are exploring alternative residence and citizenship as a tool to help them mitigate risk, create opportunities, and preserve their wealth and legacy.
