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Taxation as a fundamental variable for Global Citizens to consider

A growing number of High net worth individuals and world citizens have been investing in new passports and residency programs worldwide. The trend suggests that demand for these products are rising at a fast pace. In an ever globalized world having at least a second passport or a residency programs do make perfect sense, both in business as in security and turmoil. Global wars, financial uncertainties and incidents worldwide justify this.

However, a lot of individuals do not take into advantage taxation as a variable for their citizenship planning. Nevertheless this might have damaging results on their pockets.

Automatic exchange of Information (CRS)

The frightening global system of automatic tax information exchange created an ambient which forces the businessmen to change their residency. The clear reason is that there are high tax countries where the taxation of the income and wealth is extremely elevated, meanwhile in some low tax countries one does not have to pay tax after the income from abroad or there is no taxation after income at all.

The different jurisdictions are using various methods for taxation. In some cases, the solution is the taxation based on citizenship. This means that citizens of certain countries have an obligation to pay tax independently of the jurisdiction of their residence. If the citizen’s origin country has double taxation agreements, then the problem can be solved, but if no DTAs exist between the two countries, then the taxpayer will pay contribution in two states. Not all countries are using this type of taxation system, but still this is one of the important reasons of obtaining a new citizenship or investing money to get a new residency in a low tax country.

How citizenship and residency programs can help you?

If a client has accumulated wealth in a corporate structure and wants to use it as private equity, the best solution is to obtain a residency for 1-2 years or buy a citizenship. During this time he/she will get the income, which will be tax exempt and the problem is legally solved.

It is very imperative that with which passport and residency (not only) address has the taxpayer been registered with the tax office, or opened his/her bank account. The banks and lawyers, who have obligations to identify their clients (KYC-Know Your Client), will register the client using the provided documents. So, they will send the information to the country which they can identify. In case of the Automatic Tax Information Exchange it is crucial where they send the information.

What is the case if a country banns dual citizenship for its citizens?

Very interesting sequel that Russia decided to punish its citizens with a non-declared second citizenship. Now it looks like a typical unenforceable law, because the other states will probably not give any information about their citizens to Russian authorities. Take a look a t some examples: It happened earlier in Europe, when Hungary started to issue citizenships for Hungarian minorities in the surrounding countries. Slovakia passed a law that Slovakian citizens will lose their citizenship if they obtain any second citizenship. On the other hand Malta is obliged by the EU to disclose the names of the applicants of their citizenship program. Meanwhile the Caribbean countries with business citizenship programmes are still very discrete and do not disclose the identity of their new citizens only in case of a serious crime.

Are the citizenship and residency solutions as discreet as the offshore industry?

There are other discreet solutions. For example the Hungarian residency scheme is not managed by the Hungarian state, official Residency Bond Agents are offering these bonds and it is harder to leak out any data. This means that the identity of the new residents is not public and there has to be an adequate reason to hand out this information.

If you wish to know more about citizenship and residency programs globally and how they can impact you, please contact our director, Alexandros Philippides at  for a complimentary consultation. 

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