Rich Americans increasingly seeking a second passport
Benefits range from potential for lower taxes to less hassle travelling
Eric Schmidt acquired all the typical trappings of a mega-rich U.S. citizen: a superyacht, a Gulfstream jet, a Manhattan penthouse.
One of his newest assets is far less conventional: a second passport.
Alphabet Inc.’s former chief executive officer applied to become a citizen of Cyprus, according to an announcement last month in a Cypriot newspaper that was first reported by the website Recode. Schmidt, 65, joins a growing club of individuals participating in government programs enabling foreigners to acquire passports.
In previous years, U.S. citizens rarely sought to buy so-called golden passports. The business mainly thrived targeting people from countries with fewer travel freedoms than the U.S., such as China, Nigeria or Pakistan.
But that’s changing. People close to the industry say they’ve been inundated with inquiries from citizens of the world’s richest country.
“We haven’t seen the likes of this before,” said Paddy Blewer, a London-based director at citizenship and residency-advisory firm Henley & Partners, referring to queries from U.S. individuals. “The dam actually burst — and we didn’t realize it — at the end of last year, and it’s just continued getting stronger.”
A spokeswoman for Cyprus’s government declined to comment. Representatives for Schmidt — who is worth $19 billion (U.S.) according to the Bloomberg Billionaires Index — didn’t respond to requests for comment.
The benefits of owning a second passport, which range from potentially lower taxes, to more investing freedoms and less hassle travelling, can be had for as little as $100,000. The socalled citizenship-by-investment programs haven’t historically been as popular with Americans since one of their main draws — the favourable tax regimes of adopted countries — has been of little benefit to citizens of the U.S., one of the few nations to tax its people regardless of where they live.
The current heightened interest among U.S. citizens predates the coronavirus pandemic, but the crisis has helped turbocharge demand as they plan for how to maintain some freedom of movement with lockdown measures increasing amid a swelling second wave of COVID-19 cases.
“Americans are thinking: ‘I want to have that ability to move as quickly as possible and not be stuck,’ ” said Nestor Alfred, chief executive officer of St. Lucia’s citizenship-by-investment unit.
The U.S. elections have also stoked interest. While Joe Biden has rejected the wealth tax pushed by some of his Democratic primary rivals, his proposals could disrupt the ways that many Americans minimize — or altogether avoid — taxes on their investment gains. Some have also looked to get an additional passport due to fears of social unrest, according to citizenship advisory firm Apex Capital Partners, which said inquiries from clients — typically about five a year — have increased 650 per cent since this month’s vote.
“We’re seeing this interest from Americans who are all
saying the same things that Chinese, or Middle Eastern or Russian clients are saying,” Apex founder Nuri Katz said in an interview. “They’re saying, ‘We’re not leaving the U.S. right now, but we’re concerned and we want to have something else, just in case.’ ”
More than half-a-dozen nations have set up passport-forsale programs, and they’ve proved lucrative. Malta raised almost $1 billion through June 2019 after launching its program last decade, with applicants typically from other parts of Europe, the Middle East and Asia. The Caribbean territory of Dominica, meantime, has raised more than $350 million in the past five years.
The industry has generated plenty of consternation for ef
fectively turning citizenship — usually obtained from birthplace or heritage — into something that can be purchased.
It’s unclear whether interest among Americans in reducing exposure to their home country will endure when the pandemic and post-election uncertainty have abated.
After an election, “we always have an uptick in emotion,” said Sherwin Simmons, principal at tax advisory firm Asgard Worldwide, adding he’s recently fielded increased inquiries from wealthy clients about renouncing U.S. citizenship.
He reminds clients that politicians “have talking points. Once they’re elected, let’s wait and see before we make an immediate or emotional reaction.”