The terms “residency” and “citizenship” refer to a legal status in relation to a particular jurisdiction. Although the terms are often thought to be similar, the legal statuses are obtained differently and grant individuals particular rights and duties, in relation to the state for which they are residents or citizens.
Being a resident means that the person has the legal right to live, work, travel or study in a country. This is normally obtained through residence permits, usually valid for a fixed duration of time and need to be renewed before expiration.
To obtain a residence permit, the applicant would need to fulfil several requirements, together with completing the relevant application. In general, requirements to apply for residency must be maintained throughout the residency, otherwise the applicant will be at risk of it being revoked. Overall, the effects of residency are of a lesser extent than those of citizenship, although dual or multiple residencies may gather various benefits.
Advantages may comprise the improvement of one’s international tax situation, the promotion of one’s protection of financial privacy, as well as additional alternatives to structure one’s matrimonial and inheritance interests. Moreover, individuals may equally seek an alternative and/or additional residence due to political instability, or other negative factors requiring a safer residence.
Citizenship grants individuals the full set of rights, privileges, duties and responsibilities that apply to the citizens of the same country. Standard routes in acquiring citizenship are through birth, descent, marriage or naturalisation. Unlike residency, citizenship is granted for a lifetime and can only be revoked by the state in limited and specific situations.
Further to the benefits one may obtain through residency such as financial privacy and security; matrimonial and inheritance interests; as well as tax planning, obtaining an alternative citizenship offers other benefits. Mainly, one may avoid lengthy procedures to apply for travel visas depending on the visa-free travel arrangements that the country offers its citizenship. Thus, obtaining a second passport represents an advantage in itself. Besides, acquisition of citizenship normally allows for the spouse, children, and sometimes even parents, to be included in the process.
To conclude, both statuses offer distinct benefits and one’s decision to opt for one over another depends personal needs.
Why Obtain a Second Residence?
Similar to second citizenships – as a result of increasing global demand, more and more countries are offering residence by investment programmes.
There are many reasons for this increasing demand, but the main reasons can be summarised into three main categories:
Ease of Travel
Citizens of many countries experience difficulties with international travel. Movement restriction, bureaucratic, costly and long visa application processes, visa refusals and endless queuing make life frustrating, especially for successful business people or young families. Obtaining a second residence permit that allows visa free travel to other countries, can ease the burden and resolve many of these visa free problems in the blink of an eye!
Security and Stability
With an increase in international terrorism, internal and cross-border tensions, religious and ethnic intolerance, an increasing number of people are looking for opportunities to remove themselves and their families from danger zones. Obtaining a second residency is almost like a type of insurance policy to protect individuals from danger, including the consequences of conflict or political persecution.
Protection of Assets and Financial Issues
As for security and stability, conflicts and tensions do not only affect individuals and families, but also to physical goods and assets. A second residence can also provide protection for assets, allowing the beneficiary to place some of their assets in another country thus spreading and diversifying the risk. Tax is also a major consideration for some. In some jurisdictions personal and corporate rates of tax are very high as are other taxes imposed on assets and capital gains.
Naturally some people look to migrate to countries where taxes are lower or non-existent. A second residence can be an excellent solution in these situations. Malta has recently introduced the Residence and Visa Programme which offers beneficiaries an indefinite residence permit. Malta being part of the EU, the residence permit also allows visa-free travel to other EU countries within the Schengen area. To learn more about the programme and how we at Wahaat can help you, click here.
Wahaat can assist you in evaluating both options and offer the necessary tax and legal planning advice, to prepare a tailor-made solution that would best suit your needs. As accredited agents, we can assist you and walk you through the whole process from consultation through to submitting the application and obtaining the required status.
Contact us today to learn more.