Before World War I, you did not need a passport to travel internationally if you could afford it. Things have changed a lot since that time, with governments issuing passports to control whether citizens can travel internationally or not. A lot of people feel this is restricting and many of them are looking for a second passport. For rich Americans, there are specific reasons why they are looking for a second passport.
There is no doubt that the U.S. government and financial regulators have a lot of reach. Because they do not want to deal with U.S. entities, many foreign financial institutions do not want to deal with anyone who presents a U.S. passport to them. A second passport gives you the financial freedom to open an account and invest with these foreign financial institutions. If you are a rich American looking to be welcomed by these institutions, you need to present your second passport.
To Hedge Against Local Volatility
Rich people do not like their financial security rattled. They are always looking ahead to determine whether their wealth, and thus their financial standing, will be affected by local volatility. Because of the pandemic, many rich Americans have realized that there are long-term consequences and threats to their wealth and local financial volatility is one such threat.
To hedge against this volatility, many of them are investing and enrolling in citizenship and residence by investment programs. The reason why these programs are so appealing is that these investments would be restricted by their local citizenships. However, if they can get the citizenship of a new country or at least gain residency, they would not be subject to these restrictions.
Programs like the Malta residency by investment program allow non-EU residents, including Americans, to invest in real estate in an important country in the European Union, become permanent residents, and enjoy everything the law-abiding country has to offer.
Internationalization and Diversification of Investments
When you have a second passport, you can internationalize and diversify your investments greatly. Diversification is a key to wealth building and is something rich people take very seriously. A second passport allows you to open accounts in different countries, conduct business, hold gold or other assets, and even live the life of a resident.
Foreign banks report that they turn away investors with U.S. passports who are looking to diversify their investments internationally. They say that they can make this process easier – these investors only need to hold a second passport.
A lot of rich people who want to play in the global sandbox do not appreciate that there are some countries they cannot travel to without having to apply for a passport. This is especially an issue for those who are looking to invest quickly before opportunities fade.
A second visa is an obvious solution because it allows you to travel to more countries visa-free than you could before. An example that is commonly cited is the Paraguay passport. Obtaining a passport from this country is relatively easy. Once you get the second passport, you can travel visa-free to about 123 countries.
Freedom of Travel
Freedom of travel is another reason why rich Americans want a second passport. These people are used to going wherever they want and living the life they want. The pandemic has tied them down and many of them are not happy about it. A second passport allows them to move to the countries whose passports they hold with little to no restriction.
Being a resident of a country through investment means you likely have real estate holdings there and thus have a second home to go to wherever you wish. This gives you a unique option if you would like to work and live in a different country. Additionally, having such a second home gives you better control of your business, investments, and interests since you are closer to them.
Many of the people who seek Caribbean passports say that one of the reasons why they want to move there is because of the U.S. tax reporting system. The annual system can be quite stressful for a lot of people, and they rightly might want to avoid that. Second, the U.S. has a very restrictive tax regime that requires people to pay taxes in the country they call their permanent residency.
This domicile tax requirement is one of the reasons why a lot of rich people renounce their U.S. citizenship when they move abroad. Since they live and work in these new countries without any ties to the United States, they are not tied to its tax regime. Countries like Bulgaria, Czech Republic and Malta have lower personal income and business tax rates than most states in USA.
Finances, investments, and freedom are just a few of the main reasons why rich Americans are looking for second passports. The good news is that there is no shortage of countries offering these passports, as long as the person applying can meet the set requirements.