Wealthy seek foreign citizenship amid tax fears

U.S. citizens with substantial assets are increasingly seeking second passports as wealth taxes gain momentum. While the federal government has not yet approved a national tax on extreme wealth, the threat of such measures is driving a surge in interest for residency abroad. High-net-worth individuals pursue these alternatives even when they have no immediate plans to leave the country. This trend is evident in the rising number of inquiries from Americans to firms that specialize in international relocation.

David Lesperance, a lawyer who advises the ultrawealthy on tax and citizenship issues, compares the current climate to preparing for the risk of wildfires. He notes that a person might spend time and money securing fire insurance and an escape plan, even if they hope never to use it. For many clients, a second passport acts as insurance against potential future tax increases or instability. Lesperance often starts by looking for lineage citizenships, which are based on the nationality or descent of a person’s parents or grandparents. Countries like Greece, Poland, Italy, and Germany offer this type of citizenship, though the rules vary. An American whose grandmother immigrated from Ireland, for example, can apply for Irish citizenship. The benefit of this route is access to the European Union, allowing residence in 27 different countries. Because the process can take years, Lesperance says his clients often pursue faster options while waiting.

Fast-tracked options include “golden passports” or “golden visas,” which grant citizenship or residency in exchange for a financial investment. The requirements vary significantly by destination. While New Zealand’s golden visa requires an investment of about $3 million, several Caribbean nations offer citizenship for investments up to $250,000. The number of these documents issued globally is growing. Dominic Jones, managing director of Greener Pastures New Zealand, noted that over 120,000 investment citizenships or visas are issued annually worldwide. He explained that people want these documents for various reasons, including wealth protection and concerns about political situations at home. New Zealand has seen a surge in American applications following the relaxation of its rules last year.

Many Americans pursuing these foreign legal statuses are not actually leaving the country. Instead, they are managing their investments and focusing on risk management. Advisors say acquiring an additional citizenship is a way to diversify assets and secure a backup option in case the U.S. becomes more costly or less stable. For some clients, the process is a form of risk management where they secure the benefits of a foreign passport without the logistical burden of relocating. The effort is viewed as a prudent hedge against a changing economic climate.