Ahmet Şener

As a seasoned professional in the realm of investment immigration, I have had the opportunity to observe a plethora of strategies employed by individuals seeking to diversify their assets. One trend that has emerged is the utilization of creative methods to establish a sense of “localness” in the investment destination. This approach not only enhances the overall benefits derived from the investment but, in many cases, it is a necessary prerequisite for maximizing returns. Having advised high-net-worth clients on obtaining second passports and residencies for over seven years, I have personally found that building solid relationships with financial institutions and establishing auxiliary businesses in the new country have proven to be particularly effective methods for leveraging the benefits of dual citizenship. In the upcoming weeks, I will be sharing additional insights on how to further augment the value of your citizenship or residency investment.

Maximizing the Benefits of Dual Citizenship

1) Banking

The establishment of new banking relationships in your investment destination country is of paramount importance and should not be overlooked. One practical step in this regard is obtaining and regularly utilizing a personal credit card from a reputable bank within your new country. This can serve as an effective means of building credit and establishing credibility with local financial institutions. Additionally, maintaining a credit card and responsibly managing debt can enable access to a range of consumer loans and other mid-tier banking services. It is also worth noting that the credit and banking systems of your new country are independent of your home country, which makes it important to establish a separate credit history in your new country. This serves as a form of insurance in the event that you encounter issues with the banking system of your home country in the future.

Furthermore, by leveraging relationships with local banks, investors can potentially realize substantial profits in certain situations. One example is an investor who utilized their impeccable credit score and the real estate property they acquired for citizenship purposes as collateral in Turkey to secure a substantial consumer loan in local currency (TRY) from a Turkish bank. They then invested the proceeds in hard currency investments, resulting in a substantial profit from the arbitrage opportunity. While
obtaining such credit from local banks today can be challenging, it is important to remain vigilant for new opportunities that may arise.

Another example of leveraging relationships with local banks to realize financial gains involved a client who had acquired a property for a Golden Visa investment in Portugal. Through their pre-existing relationship with the bank, they were able to secure approval for a mortgage on an additional property at a highly favorable interest rate and loan-to-value ratio. As the credit was extended at a fixed rate, the client’s rental income steadily increased, while their credit payments remained constant, resulting in a highly profitable investment. These instances demonstrate how cultivating solid relationships with banks can translate into significant financial benefits, and that the investment in a second passport or residency is already yielding substantial returns.

2) Company Formation

In jurisdictions where investment migration programs are available, establishing a company can be relatively simple and cost-effective when working with a competent team. I strive to ensure that our investors have a foundational company structure in place to avoid any last-minute complications with company formation and banking. By clearly communicating the intended purpose and status of the company, most expenses can be effectively managed. Establishing a secondary corporate entity in a country where one holds residence or citizenship can provide flexibility in various scenarios. This is not limited to only extreme situations; it can also come in handy in instances where clients may face difficulty in processing payments to the primary company or when the primary company may benefit from tax incentives for transferring income from international sources.

I would like to present two examples of clients who have effectively utilized their resources. In one instance, the clients established a fully-operational company in Turkey and relocated their marketing department to this entity. It is worth noting that marketing activities can often yield substantial returns for businesses. This marketing subsidiary was able to retain a significant portion of the profits from the main organization, allowing the clients to legally redirect a portion of their international revenue to this subsidiary in Turkey to circumvent restrictive capital controls in their home country. This approach created a streamlined, legal, and efficient system for retaining profits in a more flexible banking environment while also taking advantage of Turkey’s international and cost-effective workforce to enhance their marketing efforts.

In another instance, the client established a company with the goal of gaining access to the European Union. The newly formed company in Greece functioned as a strategic partner for the client’s primary company based in Asia. In this scenario, the primary motivation for creating the company was to convey a certain image, however, it also provided substantial benefits for the client who sought to establish a “neutral identity” for their global trade dealings. While this company can be established without the assistance of a Golden Visa program, obtaining a residency document for the owner can be beneficial for meeting the stringent Know Your Customer (KYC) requirements often imposed by North American companies.

There are various strategies to enhance your connection to your “second home” which can lead to sustainable financial gains and flexibility for yourself and your enterprises. Many investors view Golden Visas and additional passports as mere conveniences, however, the reality for those who choose to fully utilize these opportunities is quite different. In today’s tumultuous and uncertain global landscape, having a Plan B in the form of a fully-established business and personal environment in your investment migration destination is becoming increasingly vital. Keep an eye out for the next installment of this series to learn about more advanced uses of second residencies and citizenships.