A Second Citizenship Beyond Chilean

There are certain motifs that fascinate expatriates in general. The most common ones I hear are gold and its storage, tax reduction, escaping warfarism or welfarism, relationships with non-American women, offshore banking, lower-cost living (lifestyle upgrade) and second passports. For many of them, this last motif requires a great, if not the greatest, amount of time and capital to acquire.

American expatriates are the most beleaguered. All U.S. passport holders are subject to double taxation if they live and earn money outside of the land of the free. The is a real bummer. They are often shunned by overseas banks that do not want to hassle with FATCA rules. They are potential targets of "terrorism" and kidnapping more frequently than nearly all, if not all, other countries. They are subject to many arcane and Draconian rules and legislation that make their lives more onerous.

Nevertheless, they cannot simply get rid of their American citizenship. First, they must pay a few thousand dollars to get the U.S. government's permission to let them go. Then, if they have over two million dollars in assets worldwide, they must pay an exit tax of thirty percent of all that they own. Finally, lest they become a "stateless person," they have to have already acquired another citizenship.

European and other expatriates do not have the same trouble. They simply need to leave their home country and live elsewhere to avoid the taxation issues. No need to renounce their native nationality, unless it happens to be North Korea, Cuba or an unsavory Muslim, African or Southeast Asian country. (In those cases, the course of action will be similar to that undertaken by Americans.) Bank accounts are not a problem to open and most other countries are not big targets of "terrorism" like the U.S.A. is. They just need to get a second nationality if there are other hindrances at home that bother them or to give them some flexibility for work and travel.

In any case, it always pays to have a second passport in case the country underlying the first one runs into trouble. Economic theory suggests that more opportunities make one wealthier. All the more so when a second passport comes at little additional cost. A second nationality can also provide local benefits such as membership to exclusive, ethnic country clubs (as in Santiago and Viña del Mar), private schools for one's children that feature the language of the home country, business connections and jobs for those that want to work in a multinational firm (e.g., a European company with an office in Santiago), which likes or requires you to have the legal right to work in the home country. Thus, if one could cheaply acquire four or five nationalities it might make sense to do so, although nationalities are subject to diminishing returns at some point.

Chile has a straightforward, five-year path to citizenship that carries little financial cost. It is a well-respected passport and offers visa-free travel to most destinations of the world (even Russia!). Chilean citizens living abroad do not pay taxes at home (in Chile). Chileans bother no one and thus they are not targets. They can open bank accounts without difficulties anywhere in the world where expats tend to go. The biggest hitch for those that seek Chilean citizenship is the requirement to live in Chile for 185 days during their first year of residency.

For most Europeans, and perhaps Canadians, Australians and Kiwis, Chile will be the second passport. For Americans, and perhaps South Africans, Israelis and Canadians (due to Canada’s strong ties to the U.S.A.), Chilean citizenship will replace their original nationality. In that latter case, a second passport is often sought.

The best and easiest means of getting a second passport is through ancestral citizenship requests in Italy, Poland, Ireland, Hungary, Latvia or Lithuania. Those countries, especially the first three (from which so many millions emigrated in the 19th and 20th centuries), make it relatively easy and cheap to regain citizenship by bloodline. One's offspring and spouse will usually obtain the nationality along with him, or at least have the option to do so. Accordingly, those that can, will—and should—go this route. (Note that the idea is to get a backup country, not live in that country necessarily.)

Other folks will have to look on the world market and see how much they must pay to acquire a second passport. I have heard Bulgaria could cost as much as US$625,000, while Malta is much less, as are Dominica and other Caribbean islands and Costa Rica. Residency requirements vary widely with these choices. A final method entails running a second citizenship course that parallels the quest for the Chilean one. After the first year or so (more like 18 months). one only need be in Chile for one day per year to maintain his permanent residency, leaving a person free to spend more time in Paraguay, Ecuador, Brazil, Thailand, New Zealand, Switzerland, Australia, Estonia, Georgia or any number of island nations (Bahamas, Cook Islands, Mauritius, etc.), European enclaves, Singapore or other target country.

In my mind, the ideal situation is to attain Chilean citizenship and, if you happen to have it, ditch American citizenship at the lowest cost possible. If one does not have another citizenship from his home country, he should then try to get at least one more, perhaps from an E.U. country that is well-received and admired. I like country lists and rankings very much, even though I often disagree with the criteria or results in certain cases. Accordingly, Nomad Capitalist puts out a nifty passport ranking, Nomad Passport Index, that provides a starting point for choosing a second passport. Note that the top ten are all European passports, including Italy and Ireland, and the top thirty are dominated by European nations. I suggest you have a look there to see what countries' passports might be of greatest interest to you. One reason that an E.U. country makes sense is because with any E.U. passport you have the right to live in and work or study in any E.U. country. So it is almost like getting twenty-eight countries for the price of one! Even if the country issuing the passport is in worse shape than Chile, there is a chance that one of the others will not be.

You might pick one where learning the third language (after English and Spanish) might provide an interesting hobby. Americans might also choose to avoid countries with strong taxation and regulatory ties to the United States, like Canada, the U.K. and Australia and, in some cases, avoid countries with alliances to promote family court and child services division rulings and punish violators that have "fled" (e.g., Portugal, Norway, Finland, the U.K., Australia, the Czech Republic, Slovakia, Hungary, Ireland, Poland, Holland, Switzerland and, to a lesser extent, France and Spain). As with most things, the optimal choice for any one person depends on tastes and personal circumstances.

The bottom line is that it makes sense to be prepared. We have no idea what will happen in Chile in five, ten or twenty years. It is best to take steps now to have options in the future that are better than what refugees or asylum-seekers carry with them.

Until next time,
John Cobin

Escape America Now