Residency or Citizenship?
The terms “residency” and “citizenship” refer to 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 specific rights and duties, concerning 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 typically obtained through residence permits, usually valid for a fixed duration of time and needs 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. However, dual or multiple residencies may gather various benefits.
Advantages may include 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.
Furthermore, one may obtain many benefits through residency, such as:
- Financial privacy and security;
- Matrimonial and inheritance interests; as well as
- Tax planning.
- Mainly, one may avoid lengthy procedures to apply for travel visas depending on the visa-free travel arrangements that the country offers its citizenship.
To conclude, both statuses offer distinct benefits, and one’s decision to opt for one over another depends on 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:
#1 Ease of Travel
Citizens of many countries experience difficulties with international travel. Movement restriction, bureaucratic, costly and lengthy 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!
#2 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 protect for assets, allowing the beneficiary to place some of their assets in another country, thus spreading and diversifying the risk.
Tax is also a significant 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 introduced the Malta Permanent Residency Program 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.
#3 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.
In an ever-changing world, the decision to structure and manage wealth through a Family office can be complex.
Whether you are or working for, a private individual or a family office, we provide unified advice on a full range of services including taxation, investment structuring, corporate and regulatory.
Our scope is to help high-net-worth clients design and put in place a unified, holistic and workable structure to hold their assets and manage them in conjunction with other professional advisors. Whether your goal is to improve tax efficiency, dedicate efforts to philanthropy, increase asset protection or achieve the orderly transfer of wealth for the next generation, we will guide you through the process of realising these goals.
Through Endevio and Integritas strategic partners' international presence, we have vast experience in developing and providing holistic services that are suited for each client.
Endevio & Integritas are notable Malta-based firms that deliver excellence in the international market. The firms are known for their quality in dealing with the full range of corporate services and advising high-net-worth clients on their private affairs.
Send us an email on email@example.com to know more about your relocation options.