Asset Protection BLOG - Mark Nestmann

Australia is Cracking Down on Expats, Too!

It's nice to know that you're not alone.  And courtesy of Australia, U.S. citizens living abroad no longer need to feel they're the only ones being discriminated against by their government. 

The United States is the only major country that imposes tax on its citizens regardless of where they live.  Even if you've never lived in the United States, or left decades ago, if you're a U.S. citizen, you're liable to pay the same income, capital gains, gift and estate taxes as someone who's lived here all their life.   (There's one major exception—the Foreign Earned Income Exclusion—but this program is far from perfect, and every year bills are introduced in Congress to end it.)

Now, Australia has made it more difficult for its citizens living there or anyone else "tax resident" in Australia to become a "foreign resident" for Australian tax purposes.  On June 23, the Australian Senate enacted legislation that imposes Australian income tax on most Australians working abroad for periods under two years.

Australian exapts can reduce this assessment if a tax treaty permits offset of any foreign taxes paid against Australian tax, or if they can otherwise prove they already paid tax on the same income in another country.  They may also be able to reduce it if they can demonstrate a "permanent abode" in another country.  But that may not be easy to do for an assignment of only two years, particularly if they leave family members behind and make regular visits to Australia. 

To add insult to injury, Australia also imposes an "exit tax" on the unrealized gains of any long-term resident who becomes permanently non-resident for tax purposes.  The only way to avoid paying the exit tax is to elect to treat all assets you own when you leave Australia, anywhere in the world, as remaining in the Australian tax net. 

I suspect many other high-tax countries will join in war on expats in the near future.  Germany already taxes former long-term residents living in low-tax countries who retain substantial contacts in Germany.  Canada imposes an exit tax on the unrealized capital gains of long-term residents when they leave.  And of course, the United States now has its own exit tax, courtesy of the "conservative" President George W. Bush.

None of these ideas are that new.  Nearly a decade ago, a committee appointed by the United Nations published a report that proposed that governments permanently tax the income of emigrants.  In other words, if an Australian businessman moved to Dubai permanently, Australia would have the right to tax his income for the rest of his life.  The U.N. report also helpfully proposed an "International Tax Organization" that would essentially function as a global tax collector.  Its job would be to continue collecting taxes from pesky emigrants seeking to avoid them by living in a low-tax or no-tax jurisdiction.

I suspect that as time progresses, U.S. citizens won't be alone in needing to give up their citizenship to avoid the global tax net.  Whether or not high-tax governments will create an International Tax Organization to pursue them remains to be seen.

The Nestmann Group, Ltd. can assist individuals seeking alternative citizenship and tax-advantaged residence. For more information, click here.

Copyright © 2009 by Mark Nestmann

Negotiate Your Own Tax Treaty in Switzerland

Two days ago, I met with a Swiss tax attorney in Zurich to discuss one of Switzerland’s little-known tax advantages: lump-sum taxation for wealthy foreigners.

If you commit to pay one of Switzerland’s cantons (states) a guaranteed sum each year in tax payments, you’re under no obligation to pay any other Swiss income taxes.  The sum you must pay annually varies from canton to canton, and not all cantons offer such lump-sum tax deals (forfait in French or Pauschale in German).  For instance, voters in Zurich recently ended that canton's lump sum tax regime. 

To qualify for a lump-sum tax arrangement, you must first apply and receive a residence permit.  You must also not work in Switzerland, and cannot have worked in the country for the preceding 10 years.

Of the approximately 4,000 foreigners living in Switzerland under a lump-sum tax arrangement, most live in the cantons of Vaud, Valais, Geneva, Bern, and Graudunden.  The lowest-cost arrangements are in more remote, less urbanized cantons, with lump-sum tax deals available for as little as a guaranteed payment of approximately US$70,000 annually. 

Even if you don’t qualify for a lump-sum tax deal, if you’re financially independent and don’t need to work in Switzerland, you may qualify for Swiss residence.  You’ll need to pay tax on your worldwide income according to Swiss rules, but the total rate doesn’t usually exceed 40% and in most cases is much lower. 

Unfortunately, U.S. citizens can’t benefit from the Swiss tax regime.  That’s because unlike virtually every other country in the world, the United States taxes the worldwide income of its citizens, no matter where they reside.  The only way an American can take advantage of lower income taxes elsewhere is to first obtain a passport from another country, and subsequently to give up U.S. citizenship. 

This process of “expatriation” is a radical step.  It’s only suitable for U.S. citizens who are willing to permanently disconnect from the United States and live somewhere else—although it’s now possible for a former U.S. citizen to visit the United States for an average of up to 120 days annually without becoming subject to U.S. taxes on their worldwide income. 

The Nestmann Group can assist with every aspect of this process—from obtaining a second passport to the selection of an alternative residence through the act of expatriation.  Please don’t hesitate to contact us at info@nestmann.com if you think you might be a candidate for expatriation.

Copyright © 2009 by Mark Nestmann

Russia, Romania Begin Using Passports as a Weapon

No, these countries haven't developed new passports containing a hidden death ray gun.  But changes in Russia's citizenship laws—and amendments that Romania is now considering—are every bit as potent.  Even gentle Canada is getting in on the act, although in its case, there's no evidence of hostile intent.

Starting in 2000, Russia has granted citizenship to nearly 3 million ethnic Russians living outside its borders, especially in Georgia, Moldova, Estonia and Ukraine.  All of these nations were former satellite states of the Soviet Union.  And the Kremlin's action is a provocative instrument of foreign policy.

For instance, Russia justified its military invasion of Georgia last year by saying it was protecting Russian citizens living abroad.  But this occurred only after the Kremlin handed out hundreds of thousands of passports in the breakaway regions of South Ossetia and Abkhazia.  And with 200,000 Russian citizens now living in Estonia, and another 200,000 or so in the Crimea—the jewel of Ukraine—Russia may have created a justification to intervene in these areas as well.

It's a little like Canada telling U.S. citizens that they're now Canadian, and then justifying an invasion of the United States to protect them.

Oh, wait…Canada has now done this, although (other than in South Park) there are no plans to invade the United States.  Thanks to a new law, Canada has granted citizenship to hundreds of thousands of former citizens and their descendants.  Most of these individuals live in the United States. 

Unlike Russia, Canada's motive appears peaceful.  The amendments to Canada's Citizenship Act restore Canadian nationality to those forced to renounce it when they became citizens of other countries.  It also grants Canadian citizenship to their children.

The same can't be said for political hijinks now playing out in Romania, one of the newest members of the European Union.  Last week, the Romanian government introduced a bill that would grant citizenship to anyone living in Moldova with a Romanian grandparent or great-grandparent.  Previously, only Moldovans with Romanian grandparents could apply.  In addition, Moldovans who qualify under these criteria would no longer need to learn Romanian to obtain a passport. 

Romania took this action after Moldova imposed visa requirements on Romanian passport-holders visiting Moldova.  Should Romania enacts its new citizenship legislation, Moldova may enact its own law banning dual citizenship.  If that happens, more than one million Romanian citizens living in Moldova would have to leave Moldova unless they renounce their Romanian nationality. 

What a mess!  However, these developments create new opportunities for those affected by them to obtain a "better" passport (in terms of travel options available) than they now possess.  For instance, the Canadian passport is one of the world's best travel documents, with visa-free access to more than 150 countries.  The Romanian passport is also an excellent travel document, as it now provides visa-free access to the entire European Union.  (You must, however, first obtain a valid national ID card from Romania).  The downside, of course, is if you live in Moldova and don't want to leave.

And Russia?  Well, Russian passport holders can travel visa-free to only about 80 countries.  But Russia has military and diplomatic clout—something that can't be said for Georgia, Moldova, Estonia and Ukraine. 

One thing is for sure.  Jockeying for military and political advantage through passport diplomacy is bound to continue.  And while the geopolitical impact may be uncertain, the opportunity these developments provide for those newly eligible to receive a passport may be incalculable. 

If you're not eligible for a second passport by way of your ancestry, marriage, or prolonged residence in another country, The Nestmann Group, Ltd. can assist you in obtaining alternative citizenship and tax-advantaged residence. Please contact us for more information at info@nestmann.com.

Copyright © 2009 by Mark Nestmann

Second Thoughts on "Camouflage Passports"

When terrorists began targeting individuals carrying U.S., British, or Israeli passports in the 1970s, entrepreneurs responded by offering international travelers "camouflage passports."  These are passports issued in the name of a non-existent country that look like a real country’s passport.

I've always been a nervous about camouflage passports because of the potential legal implications.  Even if you don't try to cross an international border with your camouflage passport—an act that could land you in prison—what if a customs official finds it during a routine search of your belongings?  Your explanation that you're carrying it "just in case" may or may not be accepted.  In some countries, you may be subject to arrest for the mere possession of a camouflage passport. 

However, despite my misgivings, I never explicitly recommended that travelers not carry a camouflage passport. Until now.  Thinking the matter through a little further, I don't think it's a good idea to use camouflage passports at all.

Here's why:

First, if you find yourself in a terrorist situation and present your passport from non-existent countries such as British Honduras (now Belize) or Burma (now Myanmar) what are you supposed to do with your "real" passport?  If the terrorists find it and conclude you tried to disguise your identity, you may be targeted for reprisals.

Second, even if the terrorists accept your camouflage passport, they may ask you questions about that country.  What's the capital of British Honduras?  Where in Burma did you grow up?  Can you carry on even a simple conversation in Burmese? 

Third, assuming you've never used the camouflage passport to cross an international border, it will bear no passport stamps.  That would be highly suspicious to anyone to whom you present the document.  And while it's sometimes possible to purchase a camouflage passport with real country stamps in it, you're much more likely to be arrested if customs official find it, because it will now appear you've used it fraudulently.

If you want a passport from a neutral country to present in a terrorist situation—or at international borders—you're much better off using a legitimate second passport.  You may qualify for a second passport based on your ancestry, marital status, religion, or a period of prolonged residence in another country.  If you don't qualify on any of these grounds, a handful of countries offer "instant" citizenship in return for an economic contribution. The Commonwealth of Dominica, the Federation of St. Kitts & Nevis, and Austria are the only countries with an official, legally mandated, citizenship-through-investment program.

The least expensive option is to obtain economic citizenship from Dominica. Under this country's program, you may acquire citizenship and passport in return for a cash contribution.  Total costs including all fees for a single applicant come to about US$103,000.  Add US$25,000 if you need a passport for your spouse and up to two children under 18.  Dominican passport holders can travel without a visa, or obtain a visa upon entry, to nearly 90 countries and territories.

In the Federation of St. Kitts & Nevis, there are two ways to obtain economic citizenship.  The most practical strategy is to make a direct contribution.   Total costs including all fees for a single applicant under this option come to about US$220,000, or US$270,000 for an applicant with up to three dependents. St. Kitts & Nevis passport holders will be able to travel without a visa, or obtain a visa upon entry, to nearly 130 countries.

Finally, you may be able to obtain Austrian citizenship and passport after making a substantial investment in that country.  Unlike the programs in Dominica and St. Kitts & Nevis, in Austria, you must make your investment first and then apply for citizenship. You don't get your money back if you're not approved.  Generally, you must invest several million dollars to have a reasonable chance at qualifying, and pay legal fees of US$30,000 or more.  Austrian passport holders can travel to more than 120 countries visa-free and live and work in any of the 27 members of the European Union.

In all three of these economic citizenship programs, applicants must pass a strict vetting process that includes a comprehensive criminal background check.

The Nestmann Group, Ltd. can assist individuals seeking alternative citizenship and tax-advantaged residence. Please contact us for more information at info@nestmann.com.

Copyright © 2009 by Mark Nestmann

Nevis/St. Kitts Passport Holders Now Can Travel Visa-Free to 23 European Countries

In a world where visa restrictions are increasing, not decreasing, I never expected it to happen.  But beginning later this month, citizens of the Federation of St. Kitts & Nevis will no longer need visas to travel to 23 European countries.  With the addition of the Schengen area, St. Kitts & Nevis passport holders will be able to travel without a visa, or obtain a visa upon entry, to nearly 130 countries.

These countries, all members of the "Schengen Area," are Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain and Sweden.  All a St. Kitts/Nevis citizen needs to do to enter these countries for up to three months is to hold a valid St. Kitts/Nevis passport.  (It's already possible for a St. Kitts/Nevis passport-holder to visit Ireland, Switzerland, and the United Kingdom visa-free.)

This development greatly increases the value of a St. Kitts/Nevis passport.  And while I'm expecting a significant increase in the price in coming months, you can still purchase "economic citizenship" in St. Kitts/Nevis for a fee beginning at US$200,000, plus a minimum of US$15,000 in legal fees. 

There are two ways to obtain economic citizenship from the Federation of St. Kitts & Nevis. The most practical strategy is to make a direct contribution.   Total costs including all fees for a single applicant under this option come to about US$215,000, or US$265,000 for an applicant with up to three dependents. Alternatively, you can purchase qualifying property worth a minimum of US$350,000. However, fees and taxes under this option are much higher than if you make a direct contribution. 

The Nestmann Group, Ltd. can assist individuals seeking economic citizenship in the Federation of St. Kitts & Nevis.  We also can assist with applications for economic citizenship in the Commonwealth of Dominica, a lower-cost alternative to St. Kitts & Nevis.  Please contact us for more information at info@nestmann.com.

Copyright © 2009 by Mark Nestmann

Get Ready for Exchange Controls! [Part III]

In my last two blog entries, I described what exchange controls are, how they operate, and why they may be coming to your country. 

Unfortunately for the governments that impose them, exchange controls simply don't work.  The longer they're in place, the more ways clever people find to get around them.  To begin with, exchange controls create a huge black market and an accompanying criminal class.  This phenomenon is well known in countries with stiff criminal penalties against mind-altering drugs. 

Exchange controls also inevitably disrupt legitimate businesses.  For instance, Venezuelan exchange controls, re-imposed in 2003, bankrupted thousands of small and middle-sized businesses because they could no longer obtain foreign currency. 

Moreover, while Venezuela's foreign currency reserve position stabilized after it imposed exchange controls, remittances of foreign currency fell dramatically.  This led to a steep decline in the standard of living for most residents.  Many of Venezuela's most successful citizens emigrated to other countries, particularly those lucky enough to qualify for another passport, or wealthy enough to purchase one. 

Despite the many shortcomings of exchange controls, the historical record is clear.  In times of economic crisis, protectionist sentiments grow.  Those advocating protectionist measures label anyone with offshore investments or other financial interests as traitors.  Foreign exchange controls are a way of dealing with these purportedly disloyal citizens.

Human ingenuity being what it is, exchange controls are successfully—and often illegally—bypassed almost as soon as they're imposed.  For instance, in Venezuela, individuals and businesses use the following strategies to deal with them:

• Purchase Venezuelan stocks traded in the United States using bolivars (the national currency) acquired at the official government rate.  The buyer then sells these shares for U.S. dollars at the market exchange rate. 
• Open a brokerage account with a Venezuelan stockbroker and deposit bolivars there.  Purchase dollar-denominated Venezuelan government bonds in local currency.  They buyer then exchanges them for U.S. Treasury bills in New York and deposits the proceeds in a U.S. account. 
• Exchange bolivars for dollars in the foreign exchange black market.  In downtown Caracas, thousands of black market currency traders are available to facilitate such exchanges. 
• Mis-categorize imported goods to qualify for exchange control preferences or exemptions.  Venezuelan exchange controls include a permit system by which the central bank controls who can purchase foreign currency to pay for imports.  The government gives top priority in foreign currency allocation to imports of capital goods, food, and medicine.  Importers may provide false customs declarations listing these items when in fact they are importing other, non-exempt goods.
• Maintain bank or securities accounts outside Venezuela.  These accounts are funded through the proceeds of the stock or bond transactions previously described and are effectively out-of-reach of the Venezuelan authorities.
• Bribe officials at the exchange control board (CADIVI) to approve preferences or exemptions.  Theoretically, an importer should be willing to pay a bribe up to the amount that would be the difference between the official exchange rate and the black market exchange rate. Such corruption has been thoroughly documented by the Venezuelan press. 

In the United States, President Obama hasn't proposed exchange controls, at least not yet.  The dollar continues to appreciate against other currencies, so there's no immediate pressure to do so.  However, Obama has advocated that offshore "tax havens" be shut down.  And as I mentioned in Part I, the Treasury is already studying a dramatic expansion of reporting requirements for international transactions—a necessary prerequisite to exchange controls.  When investors begin fleeing the dollar, and its value collapses, exchange controls may quickly follow.

U.S. residents concerned about the prospect for exchange controls in this country need to prepare for them now.  The most basic strategy is to open a foreign bank account or to store precious metals at an offshore safekeeping facility. 

However, any U.S. exchange controls (in common with those in most other countries) may prohibit U.S. residents from maintaining a foreign account or other foreign investments without a "permit" to do so.  Without a permit, the government may force you to repatriate your foreign account in exchange for dollars at the official exchange rate.  This rate may be much less than the market exchange rate. 

A better strategy may be to create an international structure in which you are not the owner of the underlying investments, but only a beneficiary.  An offshore trust and some types of offshore annuity investments provide this sort of protection.  Historically, payments from overseas life insurance and annuity policies have been exempt from foreign exchange controls—although there's no guarantee they would be in the future.  An additional benefit is that these structures provide significant protection against claims in civil litigation.

Are foreign exchange controls coming to the United States?  I certainly hope not.  But if they do, I hope you've made arrangements to prepare for their arrival.

Copyright © 2009 by Mark Nestmann

Expatriate Now While Asset Values are Depressed

For Americans, "expatriation" means giving up U.S. residence, citizenship and passport.  Why would anyone take such a radical step?

First, expatriation is the only way a U.S. citizen or long-term resident can permanently sever the obligation to pay tax on worldwide income.  That makes investing and doing business offshore far easier than if you remain a U.S. taxpayer. Second, once you've expatriated, you're no longer subject to the dictates of U.S. government should it declare an "economic emergency" to deal with the worst economic crisis in 80 years.  That means you'll avoid possible foreign exchange controls, forced repatriation of offshore assets, etc. 

And, speaking of the global collapse in commodities and stocks, the timing has never been more favorable for any U.S. person considering expatriation.  That's because the 2008 law that imposes an "exit tax" on former U.S. citizens (or long-term U.S. residents) affects only unrealized gains that exceed US$600,000.  And, a lot more prospective expatriates have unrealized gains under that amount than, say, one year ago. 

In addition, the long-term capital gains rate—15%—is the lowest it's been in decades.  Combined with today's depressed asset values, the tax cost of liquidating assets to get below the US$600,000 threshold may never be lower.  That's particularly true if the Obama "bailout" results not only in a recovery in asset values, but also in a tax hike for high-net-worth Americans to pay for the plan. 

Before you expatriate, you also must acquire a passport from another country.  You also need to decide where you want to live outside the United States and make preparations to relocate there.  Finally, you must plan to minimize the tax consequences of expatriation. 

If you're considering expatriation, The Nestmann Group, Ltd. can assist you through every phase of the process—from determining whether you're a candidate for it; to obtaining a second passport; to formally giving up your U.S. passport. 

Is expatriation for you?  I've written a report entitled The Billionaire's Loophole that describes the impact of the 2008 exit tax law on prospective expatriates.  You can read more about it here.

I'll be discussing expatriation—and the preparations for doing it—at The Sovereign Society’s upcoming Total Wealth Symposium in Bermuda.  Mark your calendar for April 26-29, 2009.  For more information on this event, click here. Hope to see you there!

Copyright © 2009 by Mark Nestmann

Ruling by Decree: How Will President Obama Use his Authority to Issue "Executive Orders?"

One of the most important, yet least publicized, powers of the U.S. President is the authority to issue legally binding decrees, without the consent of Congress. 

Using an instrument known as an executive order, the president may, at the stroke of a pen:

• Freeze the U.S. property of any person, entity, or government
• Eliminate the right of habeas corpus and bring accused political criminals before military tribunals for trial
• Imprison or detain individuals or an entire class of people without trial
• Impose national banking "holidays" closing all U.S. banks or restrict and ration currency withdrawals and the cashing of checks or drafts.
• Shut down domestic stock and commodity exchanges
• Investigate, regulate, or prohibit the importing, exporting, or holding of currency, securities, or precious metals
• Impose punitive taxes on inbound or outbound foreign investments
• Impose wage and price controls

In the 230-year history of the United States, presidents have used all of these powers.  In just the last eight years, President George W. Bush has unilaterally frozen the assets of suspected terrorists, dramatically expanded surveillance of domestic communications, and detained hundreds of people without accusing them of any crime.

President-elect Obama campaigned on a platform of "change," but there is little assurance that he will be more judicious in his use of executive orders than George W. Bush.  That's because in a crisis—or a perceived crisis—executive orders are a convenient way to demonstrate to the American people that their president is "doing something" to deal with the problem.

In the Bush administration, of course, the "problem" was the Sept. 11, 2001 attacks on the United States.  President-elect Obama still faces the specter of terrorism, of course, but the unraveling economy presents an even greater challenge.  And, especially if Congress doesn't go along with his domestic policy agenda, Obama may be tempted to draw on precedents set by previous presidents to "go it alone" via executive orders. For instance, in 1933, President Franklin D. Roosevelt issued an executive order that temporarily closed all U.S. banks.  He issued another order that mandated the forced sale of all gold and silver held by U.S. persons. 

The best that we can probably hope for is that Obama will use his executive authority to undo the worst abuses of George W. Bush's penchant to rule by decree.  A few suggestions:

• Set a firm deadline for closing the prison camp for unindicted detainees in Guantánamo Bay, Cuba
• Order the U.S. military and all executive agencies to comply with U.S. treaty obligations, such as the Geneva Conventions and the Convention Against Torture.
• Order U.S. intelligence agencies to comply with domestic laws regulating warrantless wiretapping and monitoring of electronic communications.

Still, while hoping for the best, it's important to be prepared for the worst:

• Set up an offshore account if you haven't done so already.  If you already have one, it wouldn't hurt to add to it if you can afford to so. 
• Keep enough cash on hand to pay for at least a month's necessities if U.S. banks close down.  Store it securely at home or other private location, NOT in a safety deposit box.  Also keep some "junk silver" and small denomination gold coins on hand. (But keep the bulk of your precious metals holdings offshore.)
• Establish reserves of necessities, especially food and water.
• Upgrade the physical security of your home.

It's hard to imagine why anyone would want to be president as the United States heads into what may be the worst economic downturn in its history.  President-elect Obama made that choice, and I wish him the best.  But I'm preparing for the worst, and you should, too.

Copyright © 2008 by Mark Nestmann

Your U.S. Passport: A Terrorist Beacon

There’s no longer any doubt that if you use a U.S. passport to travel internationally, you may well become a terrorist target.

The attacks last week in Mumbai, India’s commercial capital, proved that conclusively.  The gunmen who carried out the attacks took dozens of hostages, and specifically singled out anyone with a U.S. or British passport.  At least two Americans died in the attacks.

At Mumbai’s landmark Taj Hotel, two heavily armed men took 15 people hostage, forcing them to the hotel roof.  A British businessman who escaped said the gunmen “were saying they wanted anyone with British or American passports.” 

The scenario at the nearby Oberoi Hotel was almost identical.  A British citizen dining at a restaurant in the hotel reported that armed men forced dozens of people into a stairwell.  “They were talking about British and Americans specifically,” he recounted.  Other nationalities were left alone.  When the gunmen asked one of the victims “Where are you from,” he replied “Italy.”  According to the eyewitness, the kidnappers said, “fine,” and left him alone.

The fact that your passport may be a terrorist beacon is just one more reason you may wish to consider acquiring a second passport.  Under U.S. law, it’s perfectly legal to do so, and in a terrorist situation, having a second passport may literally save your life. 

There are many other benefits as well.  A second passport can also expand your travel options, give you the right to reside in other countries, and allow you to cross international borders if your primary passport is lost or stolen. For Americans, a second passport has another benefit.  It is an essential prerequisite to expatriation; i.e., giving up U.S. citizenship in order to permanently disconnect from U.S. taxing authority.

If you don’t qualify for a second passport by virtue of your ancestry, religious affiliation, or marital status, a handful of countries offer "instant" citizenship in return for an economic contribution:

• Commonwealth of Dominica.  Under this country's economic citizenship program, you may acquire citizenship and passport in return for a cash contribution of US$75,000. A US$100,000 contribution entitles you, your spouse, and two minor children to citizenship. Legal, due diligence, and processing fees add approximately US$30,000 to the cost. Dominican passport holders can travel without a visa, or obtain a visa upon entry, to nearly 90 countries and territories.
• Federation of St. Kitts & Nevis. You can obtain economic citizenship in this country if you purchase qualifying real estate or make a contribution foundation.  For numerous reasons, the latter option is more practical for most applicants.  The cost for a single applicant under this option is US$200,000, or US$250,000 for an applicant with up to three dependants. Legal, due diligence, and processing fees add a minimum of US$10,000 to the cost. St. Kitts & Nevis passport holders can travel without a visa, or obtain a visa upon entry, to nearly 110 countries.
• Austria. It may be possible to obtain "instant" Austrian citizenship and passport after making a substantial investment in Austria. Only a handful of persons gain citizenship in this manner every year. The Austrian program is fundamentally different from that of Dominica and St. & Nevis, in that you must make your investment first and then apply for citizenship. You don't get your money back if citizenship isn't granted. Generally, you must invest at least US$4 million to have a reasonable chance at qualifying, and pay additional legal fees of US$30,000 or more.

In all three of these economic citizenship programs, applicants must pass a strict vetting process that includes a comprehensive criminal background check.

In recent years, passports from Costa Rica, Nicaragua, the Dominican Republic, Ireland, Lithuania, and other countries have been sold over the Internet. All these offers are either scams or involve illegally purchased or stolen documents. Securing a passport on this basis, through fraudulent misrepresentation, either directly or through an agent, is clearly illegal. Your passport could be revoked at any time and you could be subject to arrest, imprisonment, and deportation.

The Nestmann Group, Ltd. can assist individuals seeking legitimate alternative citizenship and tax-advantaged residence options. Please contact us at info@nestmann.com for more information.

Copyright © 2008 by Mark Nestmann

Austria: Not Just a Financial Haven

Austria is justifiably famous for its banking system—particularly for its bank secrecy law, which has the same legal status as the Austrian Constitution. 

But while Austrians take their financial privacy very seriously, there’s another aspect of Austria that doesn’t get as much attention: residence.

With its world-class opera, museums, and galleries, Austria is truly one of the world’s most civilized countries.  Vienna, its capital, is a cultural treasure.  Indeed, Mercer's, a major human resources consultancy, ranks Vienna as the second most desirable city to live in the world (behind Zurich)—and Vienna is much more affordable.  And within an hour’s drive of Vienna, you can visit three different countries: the Czech Republic, Hungary, and Slovakia.

Austria is also a popular haven for English-speaking expatriates.  While you won’t find the concentrations of U.S. expatriates that you would in places like Costa Rica, Panama, or London, you’ll find a high quality of life and reasonable living costs.  And those costs have come down considerably in the last year, thanks to eroding real estate prices and a weakening euro.

What I appreciated about Austria more than anything else during the two years I lived there is that the cities are built for living.  They're not “urban shells” that fill up during the day, only to empty out at night as workers return to their suburban homes.  And they’re built on a human scale that makes them easy to navigate without a car. 

I left Austria because it was impossible to obtain a residence permit that permitted me to operate a small business without hiring numerous Austrian employees that I didn’t need.  But if you can support yourself without working in Austria, it’s usually possible to obtain a residence permit.  Even without one, you can stay in Austria for 90 days on a U.S. passport without any visa formalities. 

If you’re interested in possibly living in Austria, I highly recommend a visit to the country.  It’s more affordable than it’s been in years.  While you’re there, consider opening an account at an Austrian bank—your dollars will purchase 20% more euros than they would have only a few short months ago. 

If you want to live full-time in Austria, I’ve recently set up an affiliation with a firm that can help you obtain legal residence there.  They can assist with the application forms (in German, naturally), help negotiate the quota system under which most categories of Austrian residence are awarded, and provide introductions to English-speaking real estate agents to find suitable accommodation.  Since they’re affiliated with an international tax consulting company, they can even help file your U.S. tax returns.

For more information on residence in Austria, contact me at info@nestmann.com.  When you’re in Austria, we’ll put you in contact with experts who can assist you in all facets of obtaining Austrian residence.

Copyright © 2008 by Mark Nestmann