In 2023 JH Marlin served more Americans than any previous year in our firm’s existence. One thing is clear:
The concept of a second citizenship is growing in popularity among high-net-worth individuals (HNWIs) in the United States.
But don’t Americans already have a strong passport? What exactly does a second passport offer high-net-worth individuals from the Land of Liberty?
- Global mobility
- Financial diversification and tax minimization options
- More safety and security
- Improved lifestyle
- Expanded business opportunities
And these are also the reasons why more Americans, particularly those with significant wealth and assets, should consider investing in a second passport.
We explain more below.
1. Enhanced Global Mobility
One of the most immediate benefits of a second passport is the ease of international travel.
Americans, either born or naturalized, have visa-free, visa-on arrival, and electronic travel authorization (eTA) access to 173 countries around the world, according to passport indices.
But while many people think the American passport is one of the strongest on Earth, 23 – yes, 23 – countries have more access to the world than U.S. citizens do.
So to bolster their travel freedom around the world, many American high-net-worth individuals add another passport to their investors’ portfolio and get in return far more travel freedom than they have with the lone U.S. passport.
High-net-worth individuals live in a world seemingly hellbent on demonizing wealth and those who possess it. 2024 can be a frightening time for high-profile Americans.
So many Americans can treasure this additional benefit of second citizenship: A passport portfolio also allows them to choose their nationality when entering a country and provides an extra layer of anonymity and privacy in international travel.
And this is just the first of five primary reasons we served more Americans than we ever have in 2023.
2. Financial and Tax Reduction Opportunities
“Diversification and globalization are the keys to the future.”
— Fujio Mitarai, Chairman and CEO, Canon
Investment diversification is a key strategy for any investor’s wealth portfolio.
A second passport opens doors to new investment opportunities in their new country’s markets and to banking and financial services inaccessible to non-citizens.
Additionally, to attract foreign investors and entrepreneurs, many countries offer favorable tax regimes, such as territorial tax systems which don’t levy taxes on any income earned outside of their country’s borders.
By investing in a second citizenship, Americans can take advantage of investment laws legally and benefit from lower tax rates.
However, until they renounce their citizenship, Americans must still pay the Internal Revenue Service their citizenship-based tax – no matter where they reside in the world.
Roger Ver, aka “Bitcoin Jesus,” is one of the earliest proponents and investors in Bitcoin and other cryptocurrencies. And he thinks, “everyone in the world should have a second passport”.
With the help of JH Marlin, Ver diversified his financial assets by first becoming a citizen of income tax-free St. Kitts & Nevis then renouncing his American citizenship. While he claims tax reduction wasn’t the sole reason for his renunciation, Ver no longer needs to file long complicated tax returns with the IRS.
Another case study and reason for a second citizenship is cryptocurrency adoption. Justin Sun, the founder of Tron (a company that introduced a coin called TRX just days before the Chinese government banned initial coin offerings), invested in and received citizenship in Grenada.
He claims the Caribbean, with its close proximity to the United States and crypto-friendly regulatory environment, will become a beacon for financial businesses in the coming decades.
As part of his flag theory advocacy, Sun also invested in and received citizenship from the European Union member nation Malta.
3. Personal and Political Security
The 2020s have been marked by geopolitical turbulence, growing hostility toward the wealthy, and general social unrest all across the world.
The United States is not immune.
The animosity toward the rich and wealthy in American society is pervasive. And you don’t have to look far to find it.
We’re living through some of the most difficult recent times to be a high-profile high-net-worth individual in the United States.
For that reason, more American investors, entrepreneurs, and their families recognize that a second passport acts as an escape route and Plan B.
Famous American and Singapore-based investor Jim Rogers has said…
“Being trapped to one passport, you could suffer very badly. You should certainly have a plan B. And a plan B is to have a second place to live, preferably a second passport.”
He has gone on to compare a second citizenship to an insurance policy. Investors hope never to use it, of course, but it’s wise to have one “just in case.”
The ability to relocate quickly in response to unfavorable changes in their home country is invaluable.
Do you dream of jetsetting around the world with your loved ones? A second citizenship allows American HNWIs to do so.
A better lifestyle is a strong motivator for a second passport.
Sovereign Caribbean nations like St. Kitts & Nevis and Antigua & Barbuda offer tax-free living, incredible year-round weather, a rich culture, and a high standard of living – which costs significantly more in the United States.
Imagine the possibility of spending winters (or the whole year!) in a sunny Caribbean island or summers in the picturesque islands of the Mediterranean – within reach of some of the best food, shopping, and culture in the world.
For many high-net-worth individuals coming from the United States, this optionality represents a tremendous upgrade.
5. Business Networking and Access to Global Markets
As entrepreneurs and investors know, the value of your network correlates with your net worth.
A second passport is an opportunity for HNWIs to expand and improve their rolodex. To take advantage of major tax optimization opportunities and lifestyle improvements, the global elite are flocking to citizenship-by-investment programs around the world.
Worldly connections lead to business collaborations and investment options in previously unfamiliar markets. In other words, more personal and professional opportunities.
Also, a second citizenship can mean access to more affordable talent pools than the American labor market. For founders and investors, this is an important benefit.
Business is increasingly global, especially with the advent of remote work.
Have you ever used the popular, secure messaging app Telegram?
Founder Pavel Durov applied for and obtained United Arab Emirates residency in 2017 (when he moved Telegram headquarters from Germany to Dubai’s “free zone”) and citizenship in 2021, a notoriously difficult objective in the Middle Eastern country.
As a tax resident and citizen of the United Arab Emirates, Durov has said the lack of personal income tax has afforded him “better ways to use [his] money to benefit society”, maintaining Telegram’s mission statement to protect user privacy.
Durov has four citizenships to his name, according to a Forbes report. Would he have had as much business success today without this global access?
For American high-net-worth individuals, the decision to acquire a second passport is a big deal.
But as we debunked in this article, it is far more than a travel convenience – it’s a strategic move toward enhanced global mobility, financial diversification, personal safety, an improved lifestyle, and business expansion.
If you or someone you know is interested in investing in a second citizenship outside the United States, we can help. JH Marlin has helped the most ultra-high-net-worth individuals in the world obtain a second citizenship in the Caribbean, Europe, or Pacific.
Contact us here.