Wealth Management during a Citizenship by Investment Program

Published at: 10/02/2023 10:12 am

Wealth Management during a Citizenship by Investment Program

Obtaining a second or multiple citizenships causes more complex financial issues, and usually only advantages. More is required than getting a passport, the real work starts when you can finally create the best structure in your new home country. 

Wealthy applicants for citizenship usually need freedom of travel and low or no taxation. These are complex issues because a good passport resolves the freedom of travel, but wealth management and tax compliance between different jurisdictions are always complicated.

What should you know before you obtain a new citizenship?

First, you (and your lawyers and accountants) must study the new country's regulations regarding personal and international tax compliance issues. Knowing that the government is a low or no-tax jurisdiction is not enough. Territorial taxation is a must. It means that only the income sourced in that country is taxable. Foreign-sourced income is tax-free under the territorial systems, but there are significant differences. Sometimes all foreign-sourced income is tax-exempt, but some nations choose the type of qualifying income for the tax exemption. Perhaps salary or commission from another country is tax-exempt, meanwhile, income from capital, crypto, shares or insurance is taxable. Another issue is that only the not remitted income is usually tax-exempt. In this case, you must build an internationally sovereign tax structure where the revenue comes from a country and stays in a second (or more) country. Meanwhile, your tax residency is in a third country, but the solutions are infinite, it depends on your activity and tax situation. 

How can you move your wealth or taxation elsewhere with new citizenship? 

Usually, your tax jurisdiction is the country where you stay more than six months a year, and you are a registered taxpayer there. Interestingly, not your country of citizenship limits your taxation. Only the US and Eritrea use total citizenship-based taxation, their citizens must pay their original home countries' taxes independently from their tax jurisdiction. In the case of other countries, when a taxpayer changes their tax jurisdiction, the tax obligations also move to the new government. But you can become a tax resident of your new country. For example, you obtain citizenship to do business in the EU or the USA and become a tax resident there. 

However, the countries with citizenship by investment programs are usually low or no-tax states from Vanuatu to the Caribbeans or Malta. You can obtain citizenship without visiting the country and become (naturally) a tax resident in your new home. And if you do not stay in another country long to become a tax resident, you can keep your comfortable tax-exempt status.

Wealth management, immigration and all related issues need expertise, at Discus Holding, we have more than 30 years of experience supporting the immigration of investors and all related financial and tax matters. Contact us for a consultation if you need the knowledge to plan your immigration-related financial structure.



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