This Loophole Can Help Americans Get a Second Passport in Spain

Why More and More Wealthy Americans Want “Plan B” Citizenship

I’ve been a performing musician all my adult life. I’m the organized type, so inevitably I end up in charge of equipment, cables and other items needed for a good live show.

All my music buddies know about “Justin.” He’s a little toolbox that goes to every gig with me. He’s full of tools and spare parts needed to repair cables, amplifiers, speakers and the like.

Justin Case. Get it?

Justin is an expression of my personality and life philosophy. I’ve seen what happens when you don’t have a backup. It isn’t pretty. You’re forced into making choices you don’t want to make. And if there’s one thing I dislike, it’s being forced to do something I don’t want to do.

Plenty of Americans are looking for their own “Justin” these days.

According to recent press articles, inquiries from U.S. citizens interested in residency or citizenship-by-investment programs—sometimes known as golden visas—have doubled since the pandemic. But the nature of these inquiries has also changed.

Under these programs, you can gain citizenship or permanent residency in a country by buying property or investing a certain sum there.

Up until a few years ago, Americans engaging with golden visa programs were primarily interested in foreign real estate for its own sake. But that’s no longer the case. Now, most applicants want what goes with a foreign real estate investment… a residence visa, especially one that eventually leads to citizenship and a second passport.

Until it suspended its program abruptly this week due to overwhelming demand, Portugal was by far the most popular place to invest for residency. In 2022 alone, American expressions of interest in the Portugal Golden Residence Permit Program rose by 83%. That’s nearly four times the increase in 2021.

We’ve long praised Portugal’s program here in Field Notes. For as little as €280,000 ($300,000) invested in real estate, you could get a residence permit that entitled you to travel throughout the European Union. After five years of regular presence in the country, and assuming you learned passable Portuguese, you could apply for that country’s passport, which is an EU passport.

It seems likely that the certain spike in interest from Americans led to Portugal’s decision to suspend the program. Fortunately, it’s not the only option in the EU. Spain (€500,000 minimum) and Greece (€250,000) are also popular destinations. Their pathways to citizenship are longer than Portugal’s, however. Greece requires seven years continuous residence and language skills. Spain asks for 10.

But Spain has a fascinating loophole for U.S. citizens. The country gives preferential treatment to people from Spanish-speaking countries in Central and South America, who can get citizenship after only five years of residence. But the same applies to residents of Puerto Rico, as long as they’ve lived there for two years. Any U.S. citizen is entitled to settle in Puerto Rico.

Although it’s a bit roundabout, the Puerto Rican backdoor to Spain has some advantages. For one, Puerto Rico is the only place on earth where U.S. citizens are exempt from federal income tax on income earned on the island. With a qualifying investment, you’re also exempt from taxes on capital gains and dividends. That makes it a great stepping off point if Spain is your ultimate target.

The best overall bargains, of course, are in the Caribbean market where a real estate investment or contribution to a government development fund provide instant access to a second passport.

Grenada, St. Kitts and Nevis, St. Lucia, Antigua and Barbuda, and Dominica all offer citizenship by this route. The starting investment is as low as $100,000 and provides citizenship and a passport on approval. And since most of the countries are part of the Commonwealth of Nations, they provide visa-free access to the U.K. as well as the EU.

Despite the increasing focus on pathways to foreign citizenship, many savvy Americans continue to reap market-beating gains on their foreign real estate. Portugal and the Caribbean islands have seen especially strong price increases, driven largely by interest from U.S. investors.

I’ll have lots more to report on pathways to a second passport in the coming months in Field Notes. Here, I want to note what’s driving increasing interest from Americans. According to a spokesperson for a company that specializes in citizenship:

Interested buyers are those with both means and deep reservations about the future of the U.S. … especially the division between political parties that’s been rampant in recent years, increased crime, racism and antisemitism. The vast majority of buyers looking to invest in these programs are not looking to make a permanent move; they just want a contingency plan.

In other words, they want their own “Justin.”

The U.S. has reached a turning point. For those at the beginning of their lives, this is as much an opportunity as a challenge. New ways to prosper will emerge from the present moment.

But those of us of a certain age don’t have that luxury. We’ve already put in the hard yards. We remember better times. Our future fortunes depend on preserving and protecting those we have already made, such as they may be.

Increasingly, that means finding your own personal “Justin” overseas.