Dominica’s passport could be an easy win

Dominica’s passport could be an easy win

Getting a passport from a Caribbean nation can help with improved financial independence, autonomy, and travel freedom.

Caribbean passports can be very good travel documents.

They can also anchor you to an alternative tax home.

While most people wait years and suffer through the red tape of naturalization with miles of red tape and bureaucracy, citizenship by investment is streamlined and efficient and is one of the simplest ways to enjoy a strong second passport and residency in a new country.

Enter Dominica.

Dominica is the lowest cost option we’ve seen among the citizenship by investment offerings, and it’s quick: you and your family could have new passports in a matter of months.

Dominica

Nestled in the Eastern Caribbean between Martinique and Guadeloupe, Dominica is one of the best-kept secrets in the Caribbean.

It doesn’t get the crowds that some other islands see but it is well worth a look.

Known for its lush scenery and a relatively safe, unspoiled environment, Dominica is a potential paradise for some would-be citizens and investors.

Year-round beautiful weather can’t hurt either.

Economically, Dominica has a GDP of about $12,000 per capita (PPP) according to estimates. GDP has hovered around this level in recent years, with economic growth year-on-year fairly nominal.

English is the official language.

The country is open to investment but it does have its issues.

Dominica is ranked 111 among 190 economies in the ease of doing business, according to the World Bank. Trading Economics recently noted that the “rank of Dominica deteriorated to 111 in 2019 from 103 in 2018”.

The country has a population of approximately 70,000 and is considered to have a high level of human development, going by the HDI.

Tourism and financial services, together with some agriculture, fishing and light manufacturing, are mainstays of the Dominica economy.

The Passport itself

A Dominican passport punches above its weight for a small country.

You’ll get visa-free access to nearly 80 percent of countries on the globe, and the island is within a reasonable flying time of many major U.S. cities (you may need to change planes though).

It’s ranked 34th on the Henley Passport Index, giving visa-free access to 143 countries.

(Update: Dominica moved up the list on Henley’s 2021 rankings – Gaining 3 more countries.)

This includes the EU countries, Russia and Brazil.

Not bad at all.

The Dominica Citizenship Program was started in 1993, and is one of the longest-running programs in the world.

Citizenship conferred under the Program is good for life and cannot be revoked. You can include your family on your application, and children born after you become a citizen can also benefit.

Given the Office of Citizenship has extensive experience in handling these applications, you can expect an efficient process.

The main benefit for investors is the quick citizenship process, affordability, simplified requirements and ease-of-use for families.

Larger countries typically suffer from the pains of overwhelming demand, leading to lengthy applications, residency requirements and a mountain of paperwork.

Portugal comes to mind.

In Dominica, a short application process and no residency required means that you can be a citizen in just a few months.

But, don’t beat around the bush, what’s the price?

Well, you have two routes: you can go for a contribution to the government fund, which counts as the ‘investment’ required, or you can make a conventional investment in approved real estate.

If you choose the government fund, the contribution is USD 100,000.

There are some additional fees on top, but you’re looking at all said and done at about USD 110,000 – 115,000. (I’m assuming a single applicant.)

You can’t beat that.

It’s a cheap and fast route to a second nationality.

If you opt for the real estate investment route, you can only choose from a certain number of government-approved developments. You’ll be required to put in at least USD 200,000 and hold it for three years.

The advantage of this route is that you can sell afterward, and recoup your principal. Appreciating this perhaps, there is an additional government fee that goes on the top for the real estate option.

For a single person, that’s USD 25,000 or USD 35,000 for a family of four.

That’s still excellent value, even assuming for argument’s sake you lose something when you exit the real estate investment.

You should know that the government was talking about increasing the costs of both routes.

Last I heard, however, they’ve put this on hold because of COVID-19.

Pros of Dominica Passport by Investment

So let’s run through the advantages or pros.

There are many upsides to gaining a second passport. These are the standard ones you’d expect:

  • Your passport will allow you to live in the country indefinitely, either for short stays or as a long-term resident. You can work.
  • If you want to, you can become a tax resident of Dominica.
  • You don’t have to do the time in the country, waiting for residency to lead to permanent residency and then eligibility for citizenship.
  • This means that you can purchase your citizenship while you are still actively working in another country, buy property in Dominica, hold onto it and relocate to the island when you are ready (or not).

Another specific benefit of gaining citizenship in Dominica is the visa-free access to 143 countries, including those in the European Union and the Schengen Zone. Brazil, Russia and Hong Kong are also visa-free.

(China is not included, I’m afraid.)

Unlike some countries which require months of paperwork, interviews and in-person visits for the citizenship by investment process, Dominica has developed a streamlined and simple process that foreigners can complete in as little as three months.

So, in summary, we can list the advantages as:

  • Cost – Dominica’s program is the most inexpensive, if not the cheapest, of the passport by investment programs available today.
  • Speed and practicality – Once approved, you and your family will get their new passports quickly. Not always the case elsewhere. No interview or personal attendance is required. You don’t even have to visit as part of the process…
  • Peace of mind – Your contribution or investment not required before a decision is made on your application. You may have to pay a deposit or due diligence fee in advance, however.
  • Passport power as a travel document – Visa-free access to a substantial number of countries is a key advantage. I’ve said enough on this. If you’re coming from a country where the passport is generally less useful, you will appreciate this.
  • Workable tax situation – While not a zero-tax jurisdiction, Dominica’s progressive tax rates are workable. The tax brackets range from 15% to 35%, with a tax-free allowance for income under $30,000. Generally, only Dominica-sourced income is subject to income tax. After your third year of residence, however, some income from foreign investments, etc. is subject to taxation. You are considered a tax resident of Dominica if you spend more than 183 days in the country, in a given year.
  • Durability for the future – Dominica nationality, once obtained, can be transmitted to new children you have under certain conditions. It also can’t be revoked under the present nationality laws. The country also has a relatively long track record with the investment program, which has to score a few points with us.

Cons of Dominica Passport by Investment

Let’s cover the stuff common to any second passport you get, and then the Dominica-specific stuff.

This seems fair to me.

Second passport cons:

  • When you hold dual citizenship, you may have obligations to both your new country and your home nation. In the case of military service, for example, you may be required to serve in your home country while still living in Dominica. If a war broke out between Dominica and the United States, for example, you may be in danger of losing your U.S. citizenship. This scenario, however, is highly unlikely and not something that most people consider when planning to get a second passport.
  • Taxation is, however, a major problem that many expats face. The United States is one of the only countries in the world in which citizens are required to pay taxes on income earned outside of the country, a major consideration when thinking about gaining a second passport. If you do plan to earn a significant income while in Dominica ($US 100k+ per year), or you don’t plan to live on the island full-time, this is of lesser concern. Many people who purchase citizenship are independently wealthy, retirees on fixed incomes or entrepreneurs who are only earning money in one country or the other.
  • In addition, holding dual citizenship in Dominica may preclude you from certain careers in the United States government. You may also have the same issue if you come from another country. If you are seeking a position that requires a security clearance, holding a passport in Dominica can disqualify you from the position or be grounds for denial of access to secret documents.

Dominica-specific cons:

  • Small country island citizenship – This is a small country, some 70,000 people and it relies on its second passport program for significant income. This is both a pro and a con for you when thinking about obtaining the passport.
  • The passport gets you only limited living options – If you’re looking to get a passport that allows you greater access to places to live, with lots of choice, then Dominica is not the passport for you. You’ll only get residence rights on the small island country itself. It’s not, for example, an EU passport where you have a lot of living options.
  • The local economy is touch and go – Given the economic situation in Dominica, this isn’t the type of place where you are going to be planning to work locally. You might open a business, sure, but local labor rates and GDP mean that it is not going to be a haven of job opportunities for you and your family.
  • The real estate investment option is tightly controlled – Like a lot of programs, you can’t just invest in any type of real estate locally to meet the investment criteria. You have to go with government-approved programs. The liquidity of these later on, and whether you can sell for face value or more is an open question. While there should be reasonable demand for such government-approved property, even just as a result of the passport porgram, it is not a ‘sure thing’ that you would get all your investment back or make any type of gain. This is something to take account of in your financial planning.
  • Perception of ‘convenience’ passport – Because the Dominica second passport program is well known, or at least a Google search away, people and governments might assume you’ve purchased the Dominica passport as a convenience passport. This problem is, to be fair, common to a lot of small island countries with a passport by investment program.
  • Limited number of citizens and passport holders worldwide – On the other hand, border control may not be so familiar with the Dominica passport and may run some additional checks on you when you travel on this passport. I haven’t heard of any major problems, but it’s not like the average border control officer in Asia sees a Dominica passport every day. If you have a Portuguese or Cyprus passport, by contrast, this issue doesn’t really come up.

Our verdict on a Dominica passport

When it comes to gaining citizenship through investment in Dominica, this could be a great opportunity for you.

The sticker cost is low, and the key requirements for a passport are very manageable. Adding family members to your application isn’t hard and doesn’t push up cost too much.

This is a no-fuss, quick second nationality. No doubt about that.

The island itself is a hidden gem. If you do choose to spend some time there, you will not be disappointed.

The economy leaves something to be desired, sure, but could pick up in the future. (And it is not so different in profile to many other island economies. This is par for the course.)

The flip side of the economy aspect is that Dominica needs you and is prepared to make its passport attractive.

As a travel document, the Dominica passport does what it says on the tin.

It enables solid visa-free access. It has done for many years.

So if you are a Russian, Saudi or Chinese passport holder – this could be an extremely good deal for the cash.

For cost and practicality, the Dominica passport is an option that could well be worth a closer look depending on your specific needs and profile.

For some folks I’d say, surely an easy win.

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Last Updated: 2021-02-17 04:56
Suitcase Investor Team

Suitcase Investor Team

Our trusty writers at Suitcase Investor comprise a team obsessed with the business, travel, tax, and immigration strategies of an international lifestyle. Call them tragic passport geeks, if you want, but these are folks who know the landscape and work hard to keep on the pulse of new developments.

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