It is the best of times, it is the worst of times.
We live in uncertainty today. Can you be certain that whatever comfort zone you have will remain the same always? A social movement, political issues, economic issues, natural disaster…
A back up plan is essential in today’s world, and a second passport gives you just that. An option in life. A choice on how and where you choose to live, your standard of living, how much taxes you pay and who will inherit your estates.
A second passport is like an insurance policy.
But before you jump on the boat to get a second passport, you should consider the following to decide on the right country for your second passport:
1. Is dual citizenship allowed?
There are countries that don’t allow dual citizenship. This works both ways, your original country and the new country you are considering. If either one country doesn’t allow dual citizenship, you have 2 choices – to renounce your original citizenship; or to become a permanent resident in your new country but not applying for citizenship. However, you need to be aware that in many countries, permanent residency still requires renewal every 5 – 10 years. You need to find out what are the requirements for the renewal of permanent residency in your chosen country and if you can meet the criteria in the long term.
2. Do you want to move right away or just as a Plan B?
Most countries have a significant minimum numbers of days that you need to reside in the country as one of the immigration requirements. Meaning that you might need to forgo your current job. But what if you are not yet ready for the move immediately? What if you still want to work for a few more years but don’t want to delay getting your second passport because no one knows what will happen tomorrow? In the same way, what if the second passport is really just a back up plan? Nevertheless, can you still immigrate and get that second passport without being physically there?
Fortunately, there are countries that allows you to immigrate, get their temporary residency and eventually their citizenship/ passport with very short stay requirements. Most of these schemes are investment related immigration, meaning you need to invest a certain amount in the country to get the immigration visa. One example is Portugal, which requires only a stay of 14 days every 2 years, and you can apply for citizenship after 5 years.
3. How does the tax system works?
This one is a biggie, and one of the top reasons why people want to seek a second passport. Other than the normal income tax and capital gain tax. You should also find out if it has a worldwide (foreign) income policy (most western countries have that); if there is a tax treaty between that country and your original country/ territory; how will it tax your retirement benefit (if you choose to retire in the second country); any tax exemption and so on.
Portugal is one of the few countries that doesn’t tax your foreign income and it also gives a tax break for the first 10 years (the NHR – non-habitual residence scheme), with tax capped at 20% on income from Portugal, counting from the time you first start to live in Portugal (please be reminded you dont’ need to live in Portugal to get your citizenship/ passport).
4. What is the inheritance law and tax?
This one is often neglected because most people think it’s too far away. But do you know that a lot of countries tax a whopping 40% on your estate? On the other hand, Portugal is one of the few countries that has 0% inheritance tax for direct descendants and spouse. If you want to leave something for your children, it’s time to look into inheritance law and tax.
5. How safe is the country?
You should probably want to check out how safe a country is before you make the decision to move there, or even just to a get second passport. Let’s be honest, many places are unsafe nowadays. From social unrest; chances of terrorist attacks or civil war to homicide, theft as well as discriminations. You can check out the report here on the safest counties in the world. Portugal is on the top 3!!
6. How powerful is the passport that you are getting?
It’s true that people and officials overseas treats you differently if you hold a powerful passport. Not only for the omission of needing a travel visa, but also in times when you get into trouble overseas. Their attitudes change when you show them a powerful passport. Just to let you know, Portuguese passport ranked 4th in Global Passport Power Rank 2020 by passportindex.com and ranked 6th in terms of travel freedom according to the 2020 Henley Passport Index, with visa-free or visa on arrival access to 186 countries and territories.
7. How does the healthcare system work?
Do you get free health care? What level of service quality do you get from public health care? Besides, what are the cost of private health care? In many cases, non-residents don’t get any health care benefit, and it may take some time before the system kicks back in when you move there and declare residential status. So you may want to buy some expat health insurance initially until you get the health care system sorted out for any unforeseen medical issue or accident. Portugal provides free health care to its residents if you live there. Check out the details on Portugal’s healthcare system.
8. How does the education system work?
If you have kids you are probably asking these questions already. Do you get free education? Do they have a good education system. What are the fee for university and how are they ranked? Does the school system allows you to easily transfer from your home country’s system to the new one and vice versa? What about the availability and fee of international school? Do your research, join facebook group, visit school websites and so on.
9. People have preferences on weather, culture, food, community and more, do your research and make your choices carefully
Loving a country on vacation is different then loving a country when you live there. Even if you are just getting the second passport as a back up plan, it’s wise to be assured that you could happily live there, if needed be. Otherwise, your back up plan doesn’t give you a real eligible option. Check out here on what Portugal will give you in terms of quality of life.
Ultimately you need to know the best country to pick a second passport and exactly how to do it. Your goals should be minimizing your taxes and maximizing your options and security. Click here if you want to know more on why Portugal may be your ideal choice.
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