Nejron Photo/Shutterstock Multiple passports are seen as a status symbol among the world's elite.
- Rich people are buying second (or third) passports via Citizenship Investment Programs (CIPs), which allow them to invest in a country in exchange for citizenship.
- Depending on the country, a CIP can cost anywhere from $100,000 to more than $2 million.
- Having multiple passports offers advantages, but is largely seen as a status symbol among rich people - one expert calls it "the black American Express syndrome."
While some people take pride in their stamp collection, some high-net-worth individuals bask in the glory of a different type of collection: passports.
Through Citizenship by Investment Programs (CIPs), wealthy individuals are investing in a country in exchange for citizenship. Once they have citizenship, they then have the basic rights of any other citizen of that country - like owning a passport, Nuri Katz, president of international financial firm Apex Capital Partners, told Business Insider.
Common types of investments include real estate, an enterprise project, or significant donations to a country's fund - and they don't come cheap. While the six-figure cost of a CIP can vary, it's usually around $200,000, Business Insider previously reported.
But those who are racking up citizenships and passports aren't the "ultra rich," Katz said. Most have a net worth of $1 million to $10 million, he said.
To them, a second passport buys much more than a travel document - it also buys them status.
Passports offer status, freedom, and for some, a good investment
"It's a status symbol - it shows friends you can afford it," Katz said. "I call it the black American Express syndrome."
Becoming a global citizen has become a status symbol for the world's elite, Armand Arton, president of Arton Capital, a global financial advisory firm that specializes in investor programs for residence and citizenship, told Business Insider.
But there are physical advantages to owning more than one passport beyond external perception. According to Arton, investors primarily seek increased global mobility, better security and education, diversified business opportunities and tax planning strategies, and an overall improved quality of life.
"People who are investing in citizenships are people who come from countries with limited visa-free travel abilities, such as someone from Pakistan, India, or China," Katz said. "It provides a certain freedom that some citizens of some countries don't have; it's a freedom of movement."
Matt Cardy/Getty Images Having multiple passports allows for greater global mobility.
But, that doesn't mean that wealthy Americans don't find their own advantages in these programs. While they represent a smaller share, Arton says, Americans are enticed by beneficial tax conditions the host country might offer, which they can take advantage of if they renounce their American citizenship.
"Americans are giving up their citizenship and taking on other citizenships for all sorts of personal reasons, including wanting to live abroad, retire abroad, and not wanting to have to deal with the American government if they are not living there," Katz said. "Also surprisingly, citizens of Grenada, for example, have visa-free travel to China and Americans still do need a visa to travel there."
The costs and advantages vary from country to country
Obtaining a CIP isn't an easy process - it's not just a matter of investing; it also involves going through a vetting system. "You need to go through a due diligence process, including showing sources of your sums and biography - they go deep into your life to make sure you're an upstanding person," Katz said.
Each country also has different investing requirements and costs. For example, investing in a citizenship in St. Lucia requires a donation of at least $100,000 to the St. Lucia National Economic Fund (depending on the number of dependents), an investment of at least $300,000 in an approved real estate development, or an investment of $3.5 million in an approved enterprise project, Katz previously told Business Insider.
Meanwhile, to obtain a citizenship in Canada, investors must state their intention to settle in Quebec and sign an agreement to invest $800,000, Katz said. They must have a legally-obtained net worth of at least $1.6 million CAD, reside in the country for three years within a four-year timeframe, and have at least three years of experience in planning, finance, human resources, or general management.
Cost and the return on investment can make some countries more appealing than others.
Karol Koszowski/Shutterstock A Citizenship by Investment Program in Cyprus costs more than $2 million.
"Some countries offer no income or inheritance tax, so for those looking to purchase for financial purposes [that's advantageous]," Katz said. "The CIP program in Dominica is the most financially advantageous of its kind which also attracts potential buyers. In general, the Caribbean programs are less expensive than those in places like Cyprus or Malta."
In fact, Cyprus has the most expensive CIP, with citizenship starting at €2 million ($2.34 million), according to Arton Captial.
Arton explains that more countries are in need for foreign direct investments, and are thus leveraging citizenship as a means to raise funds. More choice often drives price down and lowers entry level to a wider range of investors.
"The Caribbean islands of Antigua & Barbuda, St. Kitts & Nevis, and Saint Lucia are very much in demand due their relatively low cost to benefit ratio," Katz said. "Meanwhile, Europe, Cyprus, and Portugal win the trust of most investors due to the significant exposure to real estate investments, whereby they can potentially make interesting return on their investment along with their newly acquired residency or citizenship."