Andrew Henderson with Nomad Capitalist did something extremely useful recently. His staff ranked every passport in the world from best to worst. They ranked them based on several factors, some of which I personally don’t care about. If you’re interested in the list, you can get it free here (and no, I don’t get paid anything to recommend this).
The passports are ranked based on visa free travel, taxes, dual citizenship, country perception around the world, and how free the country is (comparatively anyway, since there are no free countries). These are given different weights to come up with a total ranking as compared to others.
Since I will be following the Five Flags model, I will not be living in the country in which I will get my second passport (other than perhaps a few years just to get the damned thing), which I define as my “Country B.” Therefore, things like how free the country is (as just one example) doesn’t really matter much to me, provided the country isn’t overly authoritarian.
On the flip side, the most important issue to me is taxes, which I would “weigh” very heavily in my own decision making, probably more than Andrew does, since he’s more focused on things like travel, while I’m more focused on tax reduction and personal freedom.
So, to find the best passport for me, I imported the list into a spreadsheet and did some parsing and sorting. In terms of taxes, the passports are rated based on five categories:
1. Citizens are taxed on their worldwide income no matter where they live
2. Citizens may avoid taxation by moving overseas, but with difficulty
3. Citizens may avoid taxation by moving overseas, without much difficulty
4. Citizens are not taxed on foreign source income no matter where they live
5. Citizens are not taxed at all
Obviously, I will require a passport that is either class 4 or 5. A class 3 passport might work, depending on the country, but it’s less likely. My current USA passport is literally the worst kind there is in terms of taxation; I’m taxed on my income no matter where in the world live, even if I move away from the US and never come back. Because, you know, the USA is the Land of the Free™.
No thanks.
I isolated all the countries that were class 5; where citizens literally pay zero taxes, or at least zero income taxes. If you’re curious, they are:
Bahamas
Bahrain
Brunei
Holy See
Kuwait
Monaco
Oman
Qatar
Saudi Arabia
Somalia
St.Kitts and Nevis
United Arab Emirates
Vanuatu
You can probably see the problem; most of these countries are authoritarian, middle eastern nations. Of this list, only the Bahamas, St. Kitts and Nevis, and Vanuatu (a tiny island nation off the coast of Australia) allow any type of dual citizenship. Getting a passport from any of these other nations would be either extremely difficult or impossible, and even if I pulled it off, they would likely require me to immediately renounce my US citizenship. I will do this someday, but I want to do it when I chose, not when my Country B chooses.
Next, I isolated the class 4 countries. These are countries that only tax you if you live there and receive income from other citizens there. Cool, now we’re talking. These are:
Angola
Belize
Bhutan
Botswana
Costa Rica
Dem. Rep. of Congo
Djibouti
Georgia
Guatemala
Honduras
Hong Kong
Lebanon
Lesotho
Malawi
Malaysia
Maldives
Marshall Islands
Micronesia
Namibia
Nauru
Nicaragua
Palau
Panama
Philippines
Seychelles
Singapore
Thailand
Tuvalu
Zambia
As you can see, a much easier and more workable list. Some definite possibilities there. However, we’re not done. Many of these countries don’t allow dual citizenship, so they don’t count; I’ve marked those countries in italics. Some others don’t allow it, but don’t really give a shit and don’t enforce it. I’ve marked those in bold.
This leaves the following countries that would be the safest Five Flags second passport to get in terms of taxation only:
Angola
Bahamas
Belize
Costa Rica
Djibouti
Georgia
Guatemala
Honduras
Hong Kong
Malaysia
Namibia
Nauru
Nicaragua
Panama
Philippines
Seychelles
St. Kitts and Nevis
Thailand
Tuvalu
Vanuatu
Zambia
The ease of getting these passports for a Westerner is a different story. Some of these places are very hard to get passports, others are moderately difficult, and still others are easy if you give them lots of money. Neil Strauss got his St. Kitts and Nevis passport by buying a $250,000 house there. (Today they’ve raised it to $500,000; with more people fleeing their own countries, demand for this stuff has increased, and thus prices have too).
This list isn’t all inclusive either. There are many class 3 countries (citizens may avoid taxation by moving overseas “without much difficulty”) like Uruguay and Argentina that would work fine. Maybe I’ll examine those countries in a future post.
Lastly, this list also shows good prospects for Country A, where I would actually live. I must live somewhere that doesn’t tax international income at all. Some friendly countries are like this. Some other countries only tax international income if you live in the country for longer than six months (like New Zealand, unfortunately). Again, I’ll examine those aspects further in a future post.
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Joanna
Posted at 06:06 am, 12th March 2017I have been talking about this very subject today since I need to start planning my great escape. A friend of mines been raving about how amazing life is in Namibia and its interesting to see its on the list for the very things she spoke about. Everyone is urging me to go to Auz but I’m not feeling it because it’s hotter than where I live and has huge spiders. Also getting citizenship will be difficult since no one really wants South Africans as we are fleeing like cockroaches and bombarding international destinations namely Auz, NZ and Canada (which is cold no thanks) RSA passport is pretty worthless in the grand scheme of things…Maybe I should make contact with my father and try scheme a passport off him but the hoops I need to jump through make me go ‘urgh’ and eeew being greek nowadays is even worse than being South African. I like these kinds of posts and look forward to more because you write about all the things that I ponder about. Its so hard making decisions that effect your entire life especially since I would (left unchecked) pick a country because I saw a pretty postcard and the name rhymed with something I like. Lucky I have 5 years to filter out all the silly ideas that will invariably pop into my nogin.
Caleb Jones
Posted at 03:59 pm, 12th March 2017Bizarrely, South Africa may likely has a brighter long-term future than the US.
Joanna
Posted at 05:19 am, 13th March 2017I remember watching some program when I was about 10 yrs old about South Africa becoming some super power in the future *insert stirring music* damn I was air punching like a mofo (it was some sci fi show about the weird and wonderful that I was seriously addicted to) However the same program a few weeks later said we will all be dead by 2000, so go figure? Friends who actually pay attention to news complain that the tax has gone up again, since I don’t watch news (because its like the anchors try to be boring), instead I wait for my facebook feed to blow up about something after which I ask my best friend whats true and what isn’t…she loves that kinda stuff and regales the details with relish (and will send me links and a detailed explanation on her plan to overcome it). Guess I will care when I do have money and then I will eagerly join the ranks of the ‘complaining masses’ Here here!
Kurt
Posted at 10:13 am, 13th March 2017Joanna,
Southern Australia and Taz are quite cool in climate.
Joe
Posted at 01:58 pm, 13th March 2017Nice write up of your analysis of NC’s passport list. I’ve got question.
Why not get an Italian passport?
They scored a “50” on the NC list and I remember reading that you have Italian family and are elegible for one.
I’m about to start pursuing an Italian passport myself and have talked to 2 people (also Americans) who have one and paid under $1000 total.
Cheers
Caleb Jones
Posted at 02:23 pm, 13th March 2017I’ve heard too many horror stories. Years of time, piles of hard-to-find paperwork, lots of bureaucratic screw-ups, etc.
1. How long did it take them? Months, years?
2. How many hours of work did it take them?
Joe
Posted at 03:27 pm, 13th March 2017I talked to my friend Mike, who has an Italian passport today. Some notes:
– Mike and his brother both got their Italian passports but had separate experiences.
– They are from the Bay Area and got their passports from the Italian Consulate in San Francisco.
– These guys had got their passports 10-20 years ago. rules and operations may be different today but still worth looking into.
1. How long did it take them? Months, years?
* Mike got his in about 6 months, but it was 20 years ago… His brother took about 2 years to get his around 10-15 years ago
2. How many hours of work did it take them?
* Not a ton. Here is what Mike did:
– He first went to the Italian consulate and asked for a list of their “recommended” translators.
– The translator he hired was a concierge throughout the process.
– Mike had to gather several documents proving his heritage, but his family had already preserved most of these (this part could be a pain if you need to find the documents yourself)
– He submitted these documents to the consulate in person, then had a followup meeting a couple months later. After the followup meeting they processed his Passport and he went to the consulate, a third time to pick it up.
– Total cost was $200-$400
I’d like to ask an American who got their Italian passport more recently if the process and costs have had large changes since Mike got his. He made it sound like this was a painless process. I much prefer this process over investing $200,000+ in a random tropical island! but a lot in the world has changed since the late 90s!
Cheers
Rod
Posted at 04:59 pm, 13th March 2017Hey Caleb –
I actually live in Costa Rica and there’s a bill in Congress to apply Global Income Tax to anyone spending more than 6 months down here.
http://qcostarica.com/shaking-the-money-tree-costa-rica-proposes-global-income-tax/
Hope they don’t actually pass this bill. I know a lot of people (including myself) that benefit from not being taxed on foreign income.
Caleb Jones
Posted at 08:46 pm, 13th March 2017Yeah, that was a long time ago, and yeah, I’ve looked into it. I’ve honestly heard nothing but horror stories. Screwed up paperwork, the process taking literally years, etc. I’ve discounted that as an option unless someone can give me a recent example of it working well.
I know there are firms to help you through the process, but I’m not sure if that’s worth it either.
Sorry to hear that. I’m not surprised; many countries are cracking down on this. You’ll have to eventually leave if they pass it.