Evolution in the Economic Citizenship and Economic Residency Space
1. A cycle of lock-downs and re-openings may become the new norm
2. Countries allow their citizens to return but sometimes long term residents have been denied re-entry
3. Therefore a Plan B for residency and / or citizenship is now a must for international entrepreneurs
4. Typically the narrative around second citizenship / residency may have revolved around tax planning
5. The narrative will evolve to include health care systems, disaster preparedness, social stability, IT infrastructure (especially fast WiFi).
6. Those who can afford it, will continue to curate a portfolio of citizenship / residencies as they seek to avoid unrest, protect families and preserve wealth?
7. International travel will be forever changed. Expect to surrender more personal data and perhaps some type of "Immunity" or "health" passport
8. Should we be unable to access our onshore / #offshore assets due to travel restrictions, we need to ensure that we have power of attorney, logistics and IT structures in place to manage and access our assets
At this point, I
consider three places my home. North
Miami, London and Singapore. Recently
someone told me that Europe is about culture, America is about efficiency and
Asia is about growth. An interesting
perspective but I do enjoy spending time in, and doing business in these worlds. Singapore is a low tax jurisdiction so it is my permanent base but I
count my days in the U.K. and the U.S. to limit my tax exposure there as these
are (relatively) high tax jurisdictions.
I’m surprised that
more people do not know about economic migration options. If you run a successful business or have
accumulated some wealth, very few countries do not have options for welcoming
you. We deal most commonly with the U.S.,
the U.K. and countries in South East Asia such as the Philippines, Malaysia,
Singapore and Indonesia but we work with established Migration consultants that
offer the entire world. Please note that
this is an area of professional practice infested with unscrupulous snake oil
salesmen that act unethically and illegally.
So, ensure that your chosen team is indeed an established team,
officially recognised and experienced.
Preference for quality jurisdictions for secondary residencies or citizenship. Not just tax mitigation.
On the internet, the narrative around economic citizenship and economic residency tends to favor tax savings, tax havens etc. Perhaps this is because many of the YouTube channels and blogs tend to be dominated by service providers that serve middle income clientele. In this section, I would prefer to focus on high net worth individuals (HNWI).
About 108,000 millionaires migrated countries in 2018, compared to 95,000 in 2017, according to a study by New World Wealth (NWW). The global market research group ranked the flow of millionaires into 12 countries by dividing the number of new millionaires by the total number of high-net-worth individuals already living in the country.
The top 4 destinations for HNWI are Australia, the US, Canada, and Switzerland. It makes the point that taxation is not as powerful a factor as many assume given that these countries have relatively high taxes. This is because HNWI can afford to retain tax teams to mitigate tax issues anyway. So to a large extent, it is not as important as other factors such as education opportunities for kids, safety and social life.
I remember seeing the New York Times, in February 2017. There was an article that said “The wealthy today don’t have a country.” It was a quote from Reaz H. Jafri, a New York-based partner at Withers Worldwide, a law firm that helps wealthy clients move and relocate around the world. “They don’t view their success as being related or dependent on a single country, but on their own business strategies. It’s amazing to me how many of the very wealthy are going totally mobile.”
This accords with reality as I understand it. But how does the pandemic impact this space?
Firstly I would anticipate an uptick in individuals securing second residencies and citizenship. When flights get grounded and lock-downs happen and it is not possible to access one's primary residence, it is helpful to have a second or third residence. I'm not just talking about residency documents but actual homes with clothing and all amenities. Remember in many cities, hotels were closed and visitors asked to leave.
Secondly, some jurisdictions responded less favorably than others in the pandemic. The weakness in health care systems was more evident in some jurisdictions than others. Furthermore, despite the availability of flights, some jurisdictions did not allow their own residents to return home. For example, in Malaysia or Singapore, being a long term resident was not enough to be allowed back in the country during the lock down as citizens were prioritized. Thus alienating long term residents from their family, their businesses and their homes. HNWIs may wish to review their residency portfolios in light of such policies.
Thirdly, in speaking to citizenship experts while writing this book, I was told about rural areas within advanced economies. The US media has highlighted how Manhattan's elite practically evacuated the city and retreated to their country homes. For English speakers in cities with an international perspective, quiet parts of Europe and New Zealand have been particularly attractive. In a lock-down having a nice green estate around the home allows one to maintain social distancing without the cabin fever that comes with being in a confined space.
Reduced freedoms including freedom of movement. Immunity passports
Given the desire of authorities to better track movement of both residents and visitors, one would expect that measures will be put in place. New systems to track who is infected and who isn’t, and where they’ve been, have been created or extended in China, South Korea and Singapore. And a range of other surveillance systems – some utilizing GPS location data, some gathering medical data – have been debated or piloted in Israel, Germany, the U.K., Italy and elsewhere...including the US.
Whether the prospect on the table is “immunity passports” or cellphone-based tracking apps, the aim is to protect public health. But experts say it’s also important to avoid a slippery-slope scenario where data collected to minimize the spread of disease is stored indefinitely, available without limits to law enforcement or susceptible to hackers.
Perhaps various jurisdictions will adopt different systems? Perhaps a uniform system will be adopted that involves a hybrid between a passport, bio-metric driven trusted traveler systems, and health data?