Many of our clients have asked about possibly obtaining a legitimate and legal second passport, or about obtaining residency for the Dominican Republic and Panama.  To provide some general information on the subject and to answer some questions, we have prepared the following information.  Keep in mind that this discussion is mainly geared toward the US client, but some of this information certainly applies to our non US clients as well.  But before we go into specifics, let us discuss some myths that some clients have heard.  
 

This is completely false.  There is absolutely nothing in the US constitution that prohibits a person from holding both a US passport and that of another country.  To be sure the IRS does not like it.  Neither does some other government agencies, but it is not a violation of the law for someone to pursue second citizenship. You will not lose your US citizenship if you obtain another passport.  In fact, for tax reasons, the US government would like the opportunity to tax you death regardless where in the world you reside (we will touch upon this and other issues a little further on). 
 

Well, it certainly does offer visa free travel to many places, but it is also the most expensive passport in the world to own. The truth is that there are plenty of other passports that permit Visa free travel to Europe, Asia and Latin America.  The ironic thing is, the US requires visas from the citizens of almost every other country that permits US citizens to travel to that foreign country without one.  The one notable exception is England.  This is a recent exception that came about between a deal negotiated by ex-prime minister Margaret Thatcher and former US president Ronald Regan.   This is the only reason why British citizens are one of the few nationalities permitted to enter the US without obtaining a visa from the US consulate first.     
  
As a US passport holder, keep in mind that the US government is one of the few governments on earth that looks to tax it's citizens on their worldwide income.  As a US citizen living abroad, there are some tax breaks for income earned due to employment out side the US (only up to a certain amount), but you are still liable for US tax on dividends, interest and capital gains regardless of the source.  The meaning is that even if you have no US investments or real estate, any capitals gains or interest earned outside the country is subject to tax - simply because you hold the US passport.  That is why it is called, "the most expensive passport in the world to own".  You will pay plenty.   In contrast to this, Canada and most European countries do not impose such a tax on it's citizens due to the theory that if a person is not living in the "Passport Country", then the individual is not benefitting from services that you pay tax for in the first place.   To illustrate this further using Canada as an example.  While Canada does currently have some of the highest income and other taxes in the world, If a Canadian citizen is living & working outside of Canada,(and has all investment income derived from non Canadian sources), the Canadian citizen has no tax liability to their home country.   
 

Another potential problem with the US passport is personal safety.  Many countries and peoples of the world do not like the US government. Regardless of whether you think US foreign policy is right or wrong, or if people in other countries are correct in their thinking or not, being a US citizen in some places can pose a danger to your personal safety.  I know of many Americans that pretend to be Canadian when traveling for this reason.   The point is, if you are a passport holder from say tiny Andorra, Belize, Canada, or any number of other "quiet" countries, you are less at risk.   As an American, you are a scapegoat for your government's policies. 
 

Many countries offer differrent type of legal and government sacntioned economic citizenship programs.  Other countries that may not have such formalized programs, do offer a realtively simple process for obtaining residency and becoming nationalized.  

It really comes down to how quickly you wish to obtain your residency and also your finances.  Most governments that do offer these type of instant citizenship programs usually require what amounts to a donation to the country in the neighborhood of US$50,000 and up.  This money is not retained if you are not approved, but the funds must be deposited at the time of the application process.  Once approved, you normally obtain your new passport and citizenship documents within 30 days.  The advantage to this is of course the expediency, and many of the countries offering these type of programs do offer a passport permitting visa free travel to Europe and elsewhere.   

If you are willing to wait, both the Dominican Republic and Panama both have a very cost effective process for obtaining permanent residency and an eventual passport (Panama also offers the immediate program, but it can be costly).  
 

While the Dominican Republic does not have an formal economic citizenship program, it does have an very inexpensive and simple process for both permanent residency and citizenship.  For the cost involved, and the waiting period for a passport in comparison to other countries, we think it is one of the most economical ways to obtain a very legal and official second passport.   

In the past, the Dominican Republic has taken a somewhat "laissez-faire" attitude towards tourists that overstayed their tourist visa.  We know of many Americans and Canadians that have lived in the Dominican Republic without official residency for many years.  Under current guidelines, if a tourist overstays by one day or ten years, the fine is the same, 100 pesos or about US$6.  The logic is that if you are a tourist spending money and are not taking away employment from a dominican, then live and let live.  

While this may sound like an argument against residency, it is not. The Dominican government has also recently cracked down on foreigners that started small tourist oriented businesses without residency.  Many have been deported, leaving a thriving business behind.  Remember, a tourist visa gives you the right to be a tourist, it does not give you the right to work or own a business.  The entire residency and related passport process is easy , inexpensive, and a must if you wish to establish a business or work.  The Dominican government also permits dual citizenship, so you will not have to renounce your current passport in the process. 
 

Clients are advised to obtain 5 certified or offical copies of thier birth certificate prior to their arrival in Santo Domingo.  You will not need all five copies, but it is a good idea.  Depending upon where you live and your local government office or health department, this may cost anywhere from $5 to $15 per official copy.  

It is also highly suggested that a letter of good conduct from your local police department be obtained.  While we have assisted clients that did not posess such a reference letter, it is a good idea to have a document indicating up-front that you do not have a criminal record in your home country.  This helps with your own credibility. A to 
"whom it may concern" letter stating your lack of a criminal record is sufficient. 

Clients will also be required to take a general physical, chest x-ray and aids test, which is quick and inexpensive. 

Upon completion of all paperwork, and aproval, the client will receive a temporary residence card.  This process can take anywhere from 60 to 90 days. This card is normally valid for six months, but we have seen validation dates of up to 12 months on some.  Regardless of the expiration date on your temporary resident card, you will have the right to live and work in the Dominican Republic.  You will also have the right to leave the country whenever you wish and re-enter with your temporary residence document (you will not need a tourist card or toursit visa to re-enter). 

Six months from the issuance of your temporary card, you will receive your official residence card or "Cedula", which is 
valid for one year.  Upon completion of that initial one year period, you will re-new your residence for a second year.  Upon completion of this second year period, you can become formally nationalized and obtain your Dominican Passport.  All told, you would have obtained the immediate right to live and work in the Dominican Republic (or own a business), with a legititmate  and official government issued passport after about 2 1/2 years from the date you started.  All told, for under $3,000, it is a very good deal.   
 

Unlike the Dominican Republic, Panama has quite a number of formal and official programs.  Unlike the Dominican Republic, Panama is also much stricter about visas and related issues. 

Since there are too many programs to discuss here, we will narrow our article to the two programs most commonly used by our clients. 

This program basically is most applicable to someone that wishes to have some sort of business in Panama.  The fact that it may be a very public business,  such as a resturant or convenience store, or a service business run out of your home is irrelevant. The process and paperwork is the same. 

The main thrust of this program is to generate employment for local Panamanians, so you are required to have a minmum of three Panamanian employees.  If it is a small home based bsuiness, the quoata can be achieved by including your maid, driver, messenger or secretary.  I do not want to start a discussion about the local wage scale, but keep in mind that your monthly payroll for all three will be $1,200 or less. 

You are also required to prove a minimum investment of $50,000 
or more.  We usually help the client achieve this through the formation of a Panamanian Incorporated company.  The investment is somewhat open ended, meaning that computer equipment, office furniture and related items required for your business can be included.   

Like some other programs, permanent residency is obtained fairly quickly, with the passport application to follow within five years of the initial process.  While this program does not grant an immediate passport, it does provide for permanent residency status and is a good way to tie in the residency process if your goal is some sort of business in Panama. 

The one thing that investors should be aware of is the extensive paperwork involved with this type of program.  While it allows for a much lower investment than some other programs, the legal fees will be higher to correspondent to the filings involved. 

The program simply involves that the client establish a time deposit or  "Plaza Fijo" in the amount of US$100,000 or more with a local banking instiution.  Since most banks in Panama offer a CD deposit normally no longer than 18 months, the client would establish a time deposit for this length of time (and of course renew the CD or explore other investment options t that time).   

The main concern of the government is that the applicant has the ability to support him or herself.  This of course is to make sure that the applicant will not be taking away employment from a Panamanian or will become a social burden.  With this type of bank deposit, the applicant is proving that they have sufficient funds to live on.  With proof of your CD or "plaza Fijo" deposit and a minimum of related paperwork, the client has the opportunity to obtain pernanent residency in Panama, with the right to apply for a Panamanian passport later on.