The Rise of Global Citizenship: Why a “Plan B” Is No Longer Optional

Despite constant shifts in geopolitics, economics, and the environment, our world is becoming increasingly interconnected. As such, being a global citizenship concept is no longer a luxury, but instead a necessity. After all, in times of uncertainty, having a “Plan B” has become crucial for financial and personal security. Among high-net-worth individuals (HNWIs), who seek alternatives actively, this trend is particularly pronounced.

Dominic Volek, Group Head of Private Clients at Henley & Partners, which specializes in residence and citizenship by investment, points out this shift. With over 55 offices worldwide and over 25,000 clients assisted, Henley & Partners offers invaluable insight into this growing phenomenon. 

In this post, Dominic describes the benefits of diversifying one’s portfolio with additional residency and citizenship. Among the benefits of this approach are enhanced travel freedom, new investment opportunities, improved educational prospects for children, and a more fulfilling and versatile lifestyle. In addition, global citizenship provides a secure future for future generations.

A Shift in Perspective

In first-world countries, most people have felt secure and stable within their borders for decades. Global crises, such as the COVID-19 pandemic and financial market volatility, have, however, prompted even developed nations to reconsider their dependence on one country. In the past, this mindset was common only in developing countries.

The Pandemic’s Impact on Mobility

In the wake of the COVID-19 pandemic, freedoms were starkly reminded of how quickly they may be eroded. Despite their considerable financial independence, even wealthy individuals found themselves restricted in their movement. Following this experience, many sought options that would enable them to move more freely and feel more secure during times of crisis in the future.

Optionality: The Wealthy’s Secret Weapon

The ultra-wealthy places a high value on optionality in their financial strategy. By investing across asset classes and countries, they diversify their investments. 

In the same way, diversifying their residency and citizenship options provides a crucial hedge against unforeseen events. Known as domicile diversification, Dominic explains that this strategy protects individuals and their families from political or economic instability in their home countries. 

The Mechanics of Investment Migration

Investing in a country’s economy can lead to citizenship or residency through a program that offers individuals a path to citizenship and/or residency. As far as cost, requirements, and benefits are concerned, these programs vary greatly.

Get a fast track to citizenship through investment programs.

By investing in citizenship by investment, individuals can unlock settlement rights, travel benefits, and a range of opportunities.

• Settlement rights across the EU. There are programs in Malta and Austria that offer extensive travel privileges and settlement rights, as well as access to all 27 EU member states and Switzerland.
• The appeal of Caribbean programs. A number of Caribbean nations, including Antigua and Barbuda, offer visa-free travel to many countries, including Europe and the UK.

Residence by investment programs.

Often referred to as “golden visas,” residency by investment (RBI) programs provide residency with citizenship possibilities after meeting specific criteria.

• Portugal’s Golden Visa. Among its advantages are the minimal physical presence requirement and the option to invest in real estate or venture capital funds.
• Diversification and security. An RBI program serves as a form of “insurance” against economic and political instability. As a result of global crises, options such as Australia and New Zealand appear safe.

During the COVID-19 pandemic, CBI programs proved invaluable. Individuals with secondary passports can circumvent travel restrictions that ground others. It is important to note, however, that the investment migration industry is heavily unregulated, which presents a risk to potential applicants. For this reason, you must seek advice from reputable providers.

Residence vs. Citizenship: Which One’s Best for You?

• Understanding the basics. Citizenship grants them protection from the state, a passport, and freedom to travel. You can reside in a country temporarily or permanently, but you do not automatically become a citizen.
• Travel benefits and misconceptions. Although residency can offer significant travel benefits, it is important to understand that residency does not automatically translate into tax residency.
• Challenges of U.S. citizenship. U.S. citizens are taxed regardless of where they live, so tax relief options are limited.
• Dual citizenship and global trends. The majority of countries that offer citizenship by investment allow dual or multiple citizenship.

Benefits for Future Generations

A compelling aspect of these programs is their generational impact. With citizenship, children and grandchildren will have more opportunities for education, travel, and lifestyle.

In particular, New Zealand stands out for its truly permanent residence program, which allows families to become residents without ever having to return home. As a result of its flexibility, it is particularly popular with wealthy American and Asian families.

The Future of Global Citizenship

As global uncertainty persists, investment migration programs are expected to become more popular. It is important to note, however, that these programs may not remain available indefinitely. Some citizenship-by-investment programs have been criticized by the European Union, which has pushed for stricter regulations. This makes it crucial for interested individuals to act sooner rather than later.

Conclusion

If you want to travel freely, plan for tax consequences, or plan for a contingency situation, understanding residence and citizenship is essential to making informed decisions about your future.

Key Takeaways

• What it means to be a global citizen. Essentially, global citizenship is about flexibility and freedom. Without being bound to one jurisdiction, it means the ability to move, live, and work across borders.
• Global citizenship is a necessity. As the world becomes more interconnected and volatile, global citizenship becomes a vital strategy, not just a luxury.
• Diversification is key. In a similar way to diversifying investments, high-net-worth individuals are obtaining additional citizenships and residency permits.
• Impact of global crises. As the COVID-19 pandemic demonstrated, relying solely on the security and freedoms of a single country has its limitations.
• Investment migration programs. By exchanging financial contributions for citizenship or residency, these programs provide benefits such as travel freedom, education access, and business opportunities.
• Optionality for the wealthy. A diverse domicile offers protection against political and economic instability in the ultra-wealthy’s home country.
• Benefits for future generations. As a result of these programs, citizens and residents can pass their citizenship and residency down through the generations, providing long-term security and opportunities to future generations.
• Importance of expert guidance. There is a great deal of complexity involved in the investment migration industry. In order to navigate the process effectively, it is essential to seek advice from reputable providers.

Featured Image Credit: Pixabay; Tima Miroshnichenko: Thank You!