Friday, July 17, 2009

Dual Citizenship: Is It For You?

Two recent disparate news stories highlighted the issue of "dual citizenship" - the legal right to be a citizen of more than one country, invested with official passports from each nation.

Dual nationality, (or dual citizenship, the terms are interchangeable), simply means that a person legally is a citizen of two countries at the same time, qualified as such under each nation's law.

This status may result automatically, as when a child born in a foreign country to a U.S. citizen becomes both a U.S. citizen and a citizen of the country where he or she is born. Or it may result from an operation of law, as when a U.S. citizen acquires foreign citizenship by marriage to a spouse from another nation, or a foreign person naturalized as a U.S. citizen retains the citizenship of their country of birth.

200,000 Missing Fathers
Last week The New York Times reported on the sad plight in France of so-called enfants de Boches, roughly, "children of the Huns", born during World War II to French women and German soldiers. Some of these offspring, now aging, are hunting for long lost German fathers they never knew and are speaking openly of the persecution they suffered from their French neighbors. It is estimated that 200,000 children were born of these wartime affairs.

Although this may not be very helpful a half century later, as a gesture of good will, the German government has offered to grant to French children of German soldiers dual citizenship, promising that applications would be handled "generously."

Election Sore Losers
Far away in the Republic of Panama, the recent conservative electoral triumph in national and local elections saw the Revolutionary Democratic Party (PRD ) lose not only the presidency (to Ricardo Martinelli), but also control of the National Assembly and their traditional stronghold, the office of the mayor of Panama City.

Sore losers, the PRD made an issue of the dual citizenship prohibition in Panama's constitution against the mayor-elect of Panama City, Bosco Vallarino, (left) a member of President Martinelli's conservative Alliance Party. For a time he was blocked from taking office by a PRD lawsuit alleging since Vallarino holds citizenship in both Panama and the United States that made him ineligible to serve as mayor.

This became a moot question when the new conservative majority in the National Assembly restored Vallarino's full Panamanian citizen rights.

Martinelli Too!
As with U.S. complaints about whether President Obama really was born in the U.S., some disgruntled PRD losers complained about the citizenship status of Panama's new president.

Martinelli (right) also has dual citizenship, because he acquired Italian citizenship under Italian law from both of his parents, Italians who immigrated to Panama where he was born. Since he did not acquire Italian citizenship by naturalization, this differed from Mayor Vallarino, who was born in Panama but naturalized as a U.S. citizen when he lived in the U.S. years ago.

Rarely Enforced
Even though Panama's constitution forbids dual citizenship, this provision rarely has been enforced, in the sense that a foreigner who is naturalized as a new citizen of Panama is not required to surrender his foreign passport or renounce the existing citizenship. But local politics made this a big issue for a few days.

So in one instance, Germany offers dual citizenship willingly as goodwill gesture; in the other a nation's basic law forbids dual citizenship.

Dual Citizenship O.K. for Americans
The U.S. Supreme Court has affirmed Americans' right to hold dual nationality. The U.S. government recognizes dual nationality but doesn't encourage it because it thinks problems and conflicts might result.

People who became naturalized U.S. citizens until recently had to swear to renounce "fidelity to any foreign prince, potentate, state or sovereignty." But the updated oath was changed and the government made no attempt to enforce renunciation.

While it's impossible to know exactly how many Americans have acquired another passport, experts put the number of U.S. citizens who either hold, or are entitled to hold, a second passport at over 40 million. On the basis of ancestry, several countries, notably Ireland, Italy, Poland and Israel positively encourage Americans to sign up.

Why You May Need It
Depending on where you actually reside, even for Americans, a second passport can be of great value. In various ways, governments increasingly use issuance of a passport as a means of coercion and control.

In the U.S., a citizen can be denied a passport simply for being in debt to the Internal Revenue Service, because of problems with other federal government agencies, or because they are behind in excess of $2,500 in back payments for court-ordered child support.

Since 1986, the U.S. State Department has been informing the IRS of all persons who renew their U.S. passports using a foreign address. Since passport renewals require an applicant's Social Security number, this is also used by the IRS to check if applicants have filed income tax returns. An IRS official speaking in Zurich said a special effort was being made by the agency to track all U.S. citizens who renewed U.S. passports while living in Switzerland, for reasons we can surely guess.

International Tax Grabs

There is a growing tendency in major countries to follow the unfortunate lead of the United States in taxing non-resident citizens. Dual citizenship is, therefore, increasingly important as a personal and powerful tool for international estate and tax planning. As a national of two different countries, you may be able to enjoy lower taxes and greater privacy in your banking and investment activities.

In the final analysis, it is the nation that is seeking to impose its control over a dual national that determines what law governs. Dual nationals owe allegiance and obedience to the laws of both countries. Either country has a right to enforce its laws, especially when the person is physically within that country.

Safety Factor
And it is no exaggeration to observe that not having to identify yourself as a U.S. citizen these days can be a real, even life saving advantage, in many circumstances.

Contact Banker Trust on a 2nd passport from the Dominican Republic. Email: BankerTrust@gmail.com