What’s the Difference Between Residency and a Second Passport?

I’m asked just about every day to compare Panama residency with a second passport program from somewhere in the world.  The caller usually has $200,000 to $500,000 to spend or invest and wants to know whether they should go for residency or a second passport. Here’s what you need to know about residency and second passport.

As for residency, I suggest Panama is the best available. If you’re from a “friendly nation,” then you can get residency for about $8,750, or even for free. If you’re not blessed with a good passport, then you need to deposit $300,000 into a Panama bank account and pay about $30,000 in fees.

• For more on how to get your Panama residency for free, see Best Panama Residency by Investment Program

Residency allows you to live in that country. It usually permits you to operate a business there but not be employed by someone else. There are many different visas available in Panama, in addition to the Friendly Nations visa, and some do include a work permit.

Once you’ve had residency in Panama for 5 years, you may apply for citizenship. This doesn’t mean you will get a second passport, it means only that you may apply for one. The decision to grant citizenship lies solely with the president – whomever that may be 5 years from now.

Some presidents, such as Martinelli, gave out Panama passports to anyone who made sizable donation to his campaign. On the other hand, the current president, Juan Carlos Varela, is all about fighting corruption. I don’t think he’s granted even one Panama passport in his 3 years in office.

My point here is that residency means you can live in a particular country. It does not give you a travel document nor any of the benefits of citizenship. If you want to live in Panama and/or maximize the benefits of the Foreign Earned Income Exclusion, then you need residency in Panama. If you want a low cost exit plan, consider residency from Panama.

If you want a passport, then you can wait and hope that a “friendly” president comes to power… and with a “donation” amount you can afford… or you can buy a second passport from a country that offers economic citizenship.

A second passport is a whole different level of global access above residency… and at a completely different price point.

Someone from the US can get residency in Panama for $8,750. Someone from India can get residency for $30,000 + a deposit of $300,000 in a bank in Panama. This $300,000 is not a cost. The money belongs to you and can be taken out any time.

On the other hand, the minimum price for a second passport is $150,000, and can go as high as $8 million. Most second passports are sold for $240,000 or can be acquired with an investment of $550,000 + fees of $40,000.

Economic citizenship gives you all of the rights and privileges of a citizen from whichever country you buy in to. This means the right to live, work, vote, etc. It also gives you a passport from that country.

Second passports are valued based on 1) the number of visa free travel options they include and 2) where they allow you to live and work.

For example, a second passport from St. Lucia gives you visa free travel to 125 countries, which is very good. The cost is about $240,000 for St. Lucia.

For comparison, a second passport from Malta gives you visa free travel to 168 countries, including Canada and the United States, the two countries most difficult to access. A passport from Malta will cost about $1.2 million plus legal and other fees.

A passport from Matla also allows you to live and work anywhere in the Schengen Region of the European Union. Schengen encompases 26 countries including Austria, Germany, France, etc. For a complete list, click here.

So, St. Lucia is a valuable passport because it gives you access to 125 countries, plus an exit plan, the ability to give up your US citizenship and escape the IRS, etc.

A passport from Malta is valuable for all of these reason, plus several more visa free countries and the ability to live anywhere in the European Union.

Fore more, see Top 10 Second Passports, which includes a variety of economic citizenship options at different price points.

Here’s the bottom line on residency and second passports:

If you want to live in a country like Panama, then you need residency there. If you’re an American operating a business abroad, then you need residency to maximize the value of the Foreign Earned Income Exclusion. If you want a low cost exit plan, then you can start with foreign residency.

If you want a second passport, then you need to buy a second passport. This is the only guaranteed route to acquiring economic citizenship and a quality travel document.

I hope you have found this article helpful. Please contact me at info@premieroffshore.com or call (619) 483-1708 with any questions on second passports or residency programs. If you are from a friendly nation, can even help you get Panama residency for free.