From beachy Antigua and Barbuda to snowy Bulgaria, a handful of nations around the world are selling passports to anyone who can pay, according to a new Bloomberg Business report. Often, there is little to no requirement that you ever actually step foot in the country.
It’s your money that has to travel. The phenomenon, euphemistically dubbed “citizenship by investment,” gives anyone able to pony up enough cash a range of benefits, including official passports and visa-free access to dozens of countries, as well as some ethically dubious ones like “limited disclosure of financial information” and preferential tax rates.
A citizenship in St. Kitts, for example, costs $250,000 and buys you visa-free travel to countries like Mozambique and Venezuela, which require travel visas for American citizens. Moreover, income and capital gains taxes on the island are a big fat 0%, making it an attractive outpost for those looking to avoid U.S. taxes.
“This is a fantastic property to have a home, to have an address when the taxman comes asking why I claim that I’m a resident of St. Kitts and Nevis,” Thomas Liepman, director of the Christophe Harbour resort in St. Kitts, told conference attendees to whom he was pitching time-share condos, according to a Bloomberg reporter who was also in the audience. (It turns out prospective St. Kitts citizens can skip the $250,000 fee by investing $400,000 in real estate.)
Of course, pretending to live where you don’t for tax purposes is neither ethical nor legal, even if all those New Yorkers with Florida license plates have been doing it for years.
The foreign earned income exclusion does let you reduce your taxable income by up to $100,800 made overseas, allowing for some legal tax savings. But, says White Plains, N.Y., CPA Paul Herman, “the IRS is very clear that no matter where in the world you earn income, it’s subject to U.S. taxes—assuming you want to stay an American citizen.”