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The Concepts of Citizenship, Residency and Golden Visa

This article looks at the difference between the concepts of Citizenship, Passport, Residency and Golden Visa. When looking into investment programmes to become a citizen and obtain a second passport, or apply for resident in a country, keep in mind that these terms all mean different things, so it is important to understand the differences…

The language of citizenship and immigration contains a lot of confusing terms. Phrases like ‘second passport’, ‘citizenship by investment’, ‘economic citizenship’, ‘residency’, ‘golden visa’ are often thrown around in the same sentence which can lead us naturally to believe they are all one and the same thing.

When looking into investment programmes to become a citizen or a resident of a country, keep in mind that these terms all mean different things, so it is important to understand the differences.

Citizenship & Passport

According to the Oxford dictionary, ‘Citizenship’ means ‘The position or status of being a citizen of a particular country’, and a ‘Citizen’ is ‘A legally recognized subject or national of a state or commonwealth, either native or naturalized’.

Therefore, applying for citizenship means that you will become a citizen of your chosen country. Being a citizen generally means that you are entitled to own a passport (although not necessarily obligated). Contrary to a misconceived idea, you cannot have a passport of a country without being a citizen of that country (there are some exceptions, Panama for example).

Dual citizenship – also called multiple citizenship – is the term given to the citizenship status of a person who holds more than one citizenship. Typically, it applies to people who have parents of different nationalities and inherit their citizenships or people who immigrate to a new country and become naturalised, or more recently, people who become naturalised in a country that grants citizenship to people making a substantial investment in that country.

There is no limit on how many citizenships (and passports) one can have but very few people hold more than three passports. Some countries may require a renunciation of other foreign citizenships in order to gain citizenship (for example Singapore). Obviously, if a country has this requirement, you won’t ever be able to become a citizen of that country while still being a citizen of any other country.

Remember

  • By becoming a citizen of your chosen country, you become entitled to (almost) all of the legal rights under that country’s laws. The degree can vary as some countries might not allow you hold Public Office.
  • You are also naturally obliged to abide by their laws. For example in certain countries voting is mandatory for citizens regardless of where they reside.
  • Be aware some countries can call upon their citizens to fulfil duties, which may or may not be relevant to your citizenship status. This can include military service or jury duty, so make sure you are aware of the demands each country can ask of their citizens.
  • You will never need a visa to enter a country of which you are a citizen.
  • Some countries may tax their citizens on their worldwide assets regardless of which country they reside in (for example the US and the Philippines).
  • Some of the key benefits of dual citizenship are being able to live, work and own property freely in two countries, travel without visa in more countries, and pass on your citizenships to your children.

Residency

When you become a Resident of a country, you are permitted to live in that country within the terms of your visa. As a resident (and not a citizen), you are not entitled to a passport because you are not a citizen of that country.

Residency is usually not permanent (unlike Citizenship which always is), at least the first residency is granted, and so in most cases your Residency visa – your approval to work and reside in a country – will need reviewing and/or renewing at various stages. However, residency can also be permanent, a status often referred to as PR (permanent resident) or ILR (indefinite leave to remain). Some countries give PR status following a substantial investment, others give it after a number of years being a resident.

Most countries offer the possibility to become a resident. Requirements vary widely from one country to another. Some require special skills or a work permit (like the US), some ask you to follow an investment programme (like Mauritius), others will require evidence of foreign pension (like Panama).

In some countries, residency can lead, if you choose, to applying for Citizenship after a certain period of living in that country.

Remember

  • Because you are a Resident, not a Citizen, you are not entitled to vote or hold Public Office, such as standing for election.
  • Depending on the laws of the country you reside in, you may have to pay tax in that country.
  • The tax you pay (and to whom) will depend most of the time on which country you live in and where your centre of interest is located. However, taxation vary widely depending on the country and your personal circumstances and you should always seek advise from a tax specialist.
  • In the EU, generally the country where you reside most will be the one where you are taxed.
  • The country to which you pay tax is obliged to give you the same benefits as other resident tax payers.
  • Because you are not a citizen of the country, you will not be entitled to consular protection.

Golden Visa

A ‘Golden Visa’ is not an official type of visa, but it generally refers to a residency permit issued by a number of European countries to non-EU citizens who follow a specific investment programme. Most of these programmes are based on an investment in real estate. They are called ‘Gold’ because they are meant to attract wealthy investors. These ‘Golden Visas’ allow you to live and travel freely in any of the Schengen countries. They also allow you to work in the country that has issued the golden visa, but not in the other countries of the EU.

Countries like the UK offer different types of residency permits – like the Tier 1 Investor Visa or the Entrepreneur Visa – but they are not called golden visas because they are based on setting up permanent residence in the country or/and working in that country.

Remember

  • When people talk about a ‘Golden Visa’, they often simply mean a residency by investment visa in a EU country.
  • EU countries offering a golden visa programme include Portugal, Spain, Cyprus, Malta and Greece.
  • A golden visa gives you residency status, NOT citizenship and no right to work in any EU country other than the one issuing the visa.
  • Other countries outside Europe offer similar programmes (Mauritius, Bahamas, Anguilla) but they are generally not called golden visa.

Conclusion

Before deciding on a citizenship of residency by investment programme, make sure you understand the differences between Citizenship and Residency and that you understand which option is best for your requirements.

Citizenship is permanent and entitles you to a passport. Residency is temporary and unlike Citizenship gives you limited rights to what you can do in the country.

To be a resident in a country, you will often need a residency visa (there are exceptions). Different countries have different names for this visa and in some European countries it is called a “Golden Visa”. Many other countries offer similar types of visa but with a different name.

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