Citizenship-by-Investment programs (CIPs) allows the super-rich a new nationality and an alternative or second passport, often seen as an indicator of economic or social status.
CIPs enable wealthy individuals to invest in a country in exchange for citizenship. Common forms of direct investment include an enterprise project, real estate development, or significant contribution to a country’s fund — and by the way, they do not come cheap.
According to a new report by Bloomberg, the ultra-rich are spending a whopping $23 million for citizenship in another country.
For some, purchasing a secondary passport is just another way to flaunt wealth. However, for others, a second passport is a “security” measure, said Christian Kalin, chairman of Henley & Partners, which provides citizenship advice for CIP programs.
Kalin said, clients, want peace of mind in case a social disturbance or other upheavals in their native countries occur. In other words, if an economic or social collapse occurred in the United States, the super-rich would have the ability to jump on their Gulfstream or 74 foot Sunseeker yacht and bug-out to their second country.
While a majority of countries, the U.S. included, allow foreigners the chance to apply for citizenship after a thorough vetting process, only a small number of nations allow foreigners to acquire citizenship outright.
In fact, Bloomberg says about ten countries offer prospective residents the ability to buy citizenship. This includes Austria, which commands an astonishing $23 million for citizenship; Malta, which requires $1 million; and Caribbean islands like Saint Lucia, Dominica, and Antigua and Barbuda, which charge the affordable $100,000 apiece.
Bloomberg notes that the IMF classifies eight of the countries mentioned above as offshore financial centers, though Kalin said economic stability — not tax avoidance is what drives clients to obtain a second passport. However, Kalin indicated, “If you have a yacht and two airplanes, the next thing to get is a Maltese passport. “It’s the latest status symbol. We’ve had clients who simply like to collect a few.”
To the super-rich, a second passport buys much more than a travel document – it also buys them status, however, because CIP programs are expensive, the bottom 90 percent of Americans will never get the ability to achieve this type of elite status.