The Benefits of getting a Second Passport
By Luis Asmar, CEO of Compass Financial Advisors.
I’m a strong believer in diversification and having options. It’s why I recommend that my clients explore second residency and citizenship options in the Dominican Republic.
Compared to other residency and citizen-by-investment programs in other countries, the DR has one of easiest and most economical programs out there. An investment of $200,000 is required for residency.
You can use the investment to fund the set up a corporate entity to start a new business or to purchase a rental property. The other options that you have is to invest in a government bond or certificate of deposit in a local bank that, in some cases, will pay you up to 7%.
Once you have residency in the DR for three years, then you can become a citizen. In other words, after three years you could have a Dominican passport. Here’s just three benefits that you’ll have with a second passport…
Benefit #1 – Tax Strategy
Just like companies that are headquartered outside of their home countries, such as tech giant, Apple, domiciled in Ireland, as a tax strategy, individuals can take advantage of similar benefits.
The Dominican Republic, for example, taxes on a jurisdictional basis meaning that, as a resident, you’re only taxed on income earned in the Dominican Republic. Let’s say, as an IT consultant, you earned $100,000 from clients in the United States, the Dominican Republic does not tax you on that income.
Like individuals, DR companies are only taxed on corporate income generated in the country. Even more, for U.S. citizens with Dominican residency, it’s possible to owe no taxes to either the United States or the DR due to the foreign earned income exclusion which allows you to write off up to $107,600 of your income.
So, using the previous example, if you’re an IT consultant residing in the Dominican Republic who earned $100,000 for services to clients in the U.S., the DR would not tax you on that income. Plus, you’re able to write off the entire amount on your U.S. tax return using the foreign earned income exclusion.
Benefit #2 – Back-up Plan
Having a second passport gives you peace of mind in the event your home country, for whatever reason, decides to revoke your passport. It’s not that far-fetched. Look at Edward Snowden, CIA whistleblower. The United States government revoked his passport and therefore he couldn’t travel.
He’s essentially, at this point, country-less. It is also important to note that with a second citizenship or passport you’ll be able to pursue residency or citizenship in another country with that documentation in hand.
Benefit #3 – Option To Renounce
With a second passport, you’ll have the option to renounce the citizenship of your home country. The most common reason a person renounces their citizenship is, of course, for tax purposes.
For example, Edward Saverin, co-founder of Facebook, gave up his U.S. citizenship to avoid taxes on his profits from Facebook’s IPO. Saverin is now a citizen of Singapore. Earl Tupper, founder of Tupperware, to avoid taxes after he sold his company, renounced is U.S. citizenship in favor of Costa Rica. Jet Li, martial artist and action movie star, decided to give up his U.S. citizenship because he felt like Singapore had a better educational system for his daughters.
Further, because Singapore does not allow dual citizenship, he had to relinquish his Chinese citizenship as well.
That said, the Dominican Republic does allow for dual citizenship. To learn more about residency and citizenship in the Dominican Republic, get in touch with Compass Financial Advisors via email at info@compassfagroup.com
