- 1 What is the Golden Visa Program
- 2 Citizenship or Residency?
- 3 Cost of the Golden Visa Program
- 4 How Quickly do you Need Approval?
- 5 Will You Reside in the Country?
- 6 Where will your Income be Sourced?
- 7 Life Factors: Education, Medical, and More
- 8 Golding & Golding: About Our International Tax Law Firm
What is the Golden Visa Program
When a U.S. Person wants an opportunity to become a citizen or a resident of a foreign country without having to go through the complicated and long-winded process of becoming a student, tourist, or employee –– they may have the opportunity to bypass these steps by obtaining a ‘Golden Visa’ in a foreign country. A golden visa is an opportunity to acquire citizenship or residence in a foreign country simply by investing in that specific country’s economy. Generally, taxpayers must acquire assets that are located in a foreign country such as bonds, securities, or real estate. Various countries have different golden visa programs and whether or not one particular program is right for the Taxpayer will depend on many different factors. Especially for U.S. Citizens, the golden visa program becomes a key planning technique at the time of formal expatriation. Let’s look at some of the more important different types of factors to consider when determining whether one country’s golden visa program is the right fit.
Citizenship or Residency?
Citizenship vs residency, what’s the difference?
The most important preliminary factor to consider is whether the taxpayer is seeking foreign citizenship or residency. When a person seeks foreign citizenship, it is generally because they are considering formally expatriating from the United States and require second citizenship. The United States will not approve an expatriation application unless the taxpayer can show that they have citizenship in a foreign country — this is to prevent the taxpayer from becoming stateless. Likewise, while some taxpayers may be able to easily acquire foreign citizenship through lineage, other taxpayers do not have that opportunity and therefore may want to acquire citizenship simply by investing in a foreign country.
Conversely, if the taxpayer is not seeking to give up their US citizenship but rather seeks an opportunity to travel to different locations that may not be available or as easily accessible with a US passport, they may consider obtaining residency in a foreign country by purchasing a golden visa. Some of the more common programs are the Jersey, Malta, and Portugal programs (although Portugal has been recently modified and may be coming to an end). Taxpayers must be aware that simply obtaining a golden visa for residency purposes in a foreign country will not (immediately) provide foreign citizenship and is not sufficient for a US person to expatriate unless they have citizenship in another country as well.
Cost of the Golden Visa Program
The costs of the Golden Visa Program can vary extensively. For example, to qualify for Saint Kitts and Nevis passport in the Caribbean (and under the recently limited-time investment alternative) the fee is ~$170,000 (excluding other application fees, etc.). To compare costs, countries such as Australia, Singapore, and Canada may require several million dollars in investments in order to potentially qualify for the program.
How Quickly do you Need Approval?
For some programs, applications can be processed within six months while for other programs it may take a year or longer to obtain approval from the foreign country and move forward with obtaining the golden visa. Therefore, depending on the timeline of the taxpayer and how quickly they need approval may impact whether one country’s program is right for them.
Will You Reside in the Country?
The United States is one of the only countries in the world that utilizes a citizenship-based taxation model (aka worldwide income). Other countries generally only tax individuals on their worldwide income when they are considered permanent residents of that country — which typically means that they reside in the country for at least six months in the year. Some of these countries may levy very significant taxes on a person who is both a citizen and a resident of that country. Therefore, it is important for taxpayers to determine whether they ultimately plan on residing in the country or just have the opportunity for a passport or visa.
Where will your Income be Sourced?
Expanding upon the paragraph above, whether a taxpayer plans on living in a particular country in which they have obtained a golden visa may be impacted by where their income is sourced. For most countries, whether the income is sourced within its borders or outside of its borders will impact the tax rate and whether that category of income may be taxable at all. As an ancillary matter, many of these countries have wealth taxes as well, and so taxpayers who have a significant amount of wealth should determine how the specific country calculates taxes for its residents.
Life Factors: Education, Medical, and More
While the taxpayer should not specifically state under oath that the reason that they want to expatriate is for tax purposes, technically that is generally the reason why a person wants to expatriate. Thus, once a person moves past the tax benefits of giving up their US citizenship or long-term lawful permanent residency, they must consider other factors as well.
- Will the family require medical insurance in the country?
- Is a family member planning on attending school or University?
- Does the location have limitations for non-citizens or non-permanent residents to purchase real estate?
These are all important factors that should be considered before jumping into acquiring a golden visa.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
Contact our firm today for assistance.