For the jet-setting entrepreneur for whom international travel is an essential part of the job, dealing with changing markets, exchange rates, time zones and visa requirements can certainly add to the difficulty of efficiently running a transcontinental business.
Dual citizenship offers some potential solutions to such hurdles but also can also come with some additional issues. So, what is dual citizenship? And what are the advantages and disadvantages to the entrepreneur?
What is Dual Citizenship?
Dual citizenship, or dual nationality, is where a person is a citizen of two countries at the same time.
This can be by virtue of being born in a country to foreign parents, where the child adopts citizenship of both their birth country and their parents home nation, or when someone marries a foreign national under certain circumstances.
Dual citizenship can also be offered by a country in return for investment, usually in the form of government bonds or real estate, making it a possibility for entrepreneurs looking to take advantage of the benefits that come with a second nationality.
Dual citizenship comes with a host of potentially significant advantages:
- Easier travel to key locations: Probably the primary reason to take on two passports, holding a second passport allows you the travel freedoms associated with that document, making international travel and visa requirements significantly easier. An American citizen, for example, would find an EU passport extremely advantageous for visa-free travel around all key European destinations.
- Tax benefits: Acquiring dual citizenship in a country where tax rates are significantly lower than those of your first nation means you can potentially lower your tax liabilities. Of course, tax benefits, like travel freedoms, depend on where you receive your second nationality.
- Banking and investment opportunities: Dual citizenship opens up potentially lucrative investment opportunities of your second nation (and usually others) that would otherwise be unavailable to foreign nationals.
- Great reach and relocation opportunities: With easier travel and new access to previously unavailable markets, dual nationality extends business reach to millions more potential customers as well as unlocking a wider operational platform. Furthermore, if your home country is suffering any political or economic unrest that is having an effect on the business, you can look shift your focus to the more stable markets your second passport provides access to.
There are, however, some disadvantages to also consider:
- Dual obligations: A dual citizen must understand and adhere to the laws of both countries, and the same goes for business operations in different nations. This creates potential operational concerns, as business practices allowed in one nation may not be permitted in another.
- Double taxation: The flipside to the possible tax benefits stated above, some countries, such as the United States, will imposes taxes on their citizens for earnings abroad as well as earnings within their borders, resulting in double taxation. Whilst there are income tax treaties in effect to try and nullify double tax where possible, taxation around dual citizenship is a complex issue that could benefit from professional advice. RSM offer a range of expert consultation services around this.
- Administrative issues: Unless you were lucky enough to be born with dual citizenship, achieving it can often be a costly and lengthy process. Application and administrative fees extend into the thousands and earning citizenship can often take three to five years.
Whether dual citizenship is the right option for you as a businessman really comes down to the nature of your work and the reach of your business.
If you’re looking for improvements to your global operation, the travel and accessibility benefits of dual citizenship are definitely worth exploring, although you may be waiting a while to enjoy those perks.