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Options for Employees Creating Permanent Lives Overseas
 

By Katie Davies  4/18/2014
 
 

When it comes time to start moving employees around the map, the first thing HR professionals worry about is visas—they’re as vital as plane tickets for getting talent where it needs to be. But if you’re asking employees to make a longer commitment, they may have questions about their status that go beyond visas: if and how they might be eligible for permanent residency and, maybe one day, even citizenship.

The good news is that many countries are catching up with today’s more mobile workforce and updating their residency and citizenship laws to better accommodate the growing number of workers who spend long periods of time living abroad. The trend advanced steadily in 2013, and there’s no reason to expect it will slow down in 2014. The not-so-good news is that there are still some major holdouts.

The Trend

Since the 1990s, there’s been a pronounced trend toward permitting dual citizenship. Now a majority of countries in the world permit their citizens the right to have citizenship in at least some other countries.

These national governments are bowing to the reality that we live in a more mobile, interconnected world. In 1990, there were 154 million international migrants, a number that has now grown to 232 million, according to United Nations figures. A report by the International Organization for Migration estimated that the number could top 400 million—7 percent of the world’s population—by 2050.

Many of these internationally mobile people are high-skilled workers whom governments are especially eager to hold on to. That’s why many have decided they’d rather have the workers’ divided loyalty than no loyalty at all.

And because the countries most plugged into the global economy tend to have the biggest incentive to be more flexible, you’re most likely to encounter accommodating rules in the countries where you’re likely to be sending talent. Even Germany, one of the biggest holdouts on dual citizenship, has now bowed to internal pressure to loosen its rules. German dual citizens used to have to renounce one of their citizenships at the age of 23, but the Social Democrats secured an end to that rule late last year as the price for continuing to participate in Angela Merkel’s ruling coalition.

Singapore, perhaps more than any other country, bends over backwards to accommodate high-skilled workers—as long as they’re willing to give the city-state their undivided loyalty. Though it doesn’t permit dual citizenship, the city-state caters to expat workers, who can acquire citizenship after holding permanent resident status for two years if they’re gainfully employed and who, for first-generation males, don’t have to complete the two years of national service required of natural-born citizens. These workers must then give up citizenship in their native countries.

Most countries that do permit dual citizenship require a bilateral agreement with the other country to mutually recognize the dual citizenship rights. But some countries have begun going even further to accommodate mobile workers, unilaterally granting dual citizenship. Countries that pursue this route generally have high-skilled citizens who leave for economic reasons, and their governments want to keep those emigrants in the fold even as they build lives overseas. Mexico, the Dominican Republic and Colombia, for example, all now unilaterally grant dual citizenship to nationals who obtain citizenship elsewhere, at least in certain circumstances—largely to hold on to valuable citizens who naturalize in the United States.

Another trend is the expansion of voting rights for citizens who are living abroad (the U.S. already allows expats to vote in federal elections, while each U.S. state has its own rules for local and statewide elections). Ireland, which has seen many of its young educated workers leave the country to find employment, is considering amending its constitution to allow nonresident citizens to vote in presidential elections.

On the receiving end, countries that want to position themselves as international economic hubs often grant more rights to expat workers.

The Exceptions

However, the trend toward accommodating long-term and permanent foreign workers isn’t universal. Of course, economics isn’t the only factor behind citizenship rules, and countries with a strong sense of national identity often put this value over the potential economic gains of permanently absorbing high-skilled workers. For international businesses, the two most prominent examples of this are Japan and China.

Japan, in part because it’s an island, has maintained an especially strong sense of national distinctiveness. While this means that Japan doesn’t grant dual citizenship, it also means that workers of other nationalities are less likely to feel a desire to assimilate and gain citizenship while working there.

China doesn’t offer dual citizenship either. The country has also been cracking down on foreign workers without the proper paperwork. The enforcement is primarily aimed at low-skilled migrants but it has caught plenty of knowledge workers in its snare, so multinationals should be up on their paperwork. But China, too, is moving toward greater accommodation of foreign talent. Last year it introduced reforms to allow professionals with valuable skills to receive multiple-entry visas for terms up to five years.

Then there’s the U.S., which operates by its own set of rules. It’s one of a very few countries that requires its citizens to keep paying and filing U.S. federal and often state tax returns while they live abroad (a requirement that can create double tax and social security costs and will almost always require companies to grant extra tax assistance to American employees they send abroad). It also recently passed a law that will require foreign financial institutions to report to the U.S. on certain American account-holders. The purpose of the new rule is to crack down on wealthy tax-dodgers, but many non-American spouses of American expats have chafed at the prospect of sharing the details of their jointly-held accounts with the U.S. government. Thousands of American expats have chosen to renounce their U.S. citizenship rather than comply.

But even the U.S. is realizing that in the scramble to secure the long-term loyalties of the world’s most productive workers, it needs to do more. Decades ago, U.S. immigration law relied on quotas based on national origin. In the 1960s, Sen. Ted Kennedy, D-Mass., championed reform of immigration laws to make them more humane and largely based on family ties. Now there’s a broad bipartisan consensus that the laws need to evolve again, not just to accommodate the reality of the millions of Mexican citizens now living in the U.S., but also to provide more access to permanent legal status for science, technology, engineering and mathematics (STEM) workers.

Washington wants those STEM workers journeying to the U.S. to have the option to stay permanently. Of course whether, and when, Congress will act is another question.

What It Means for You

In the long run, your employees can expect to have more options to make their lives permanently overseas if they want to.

In the short run, though, all that change means more things to keep up with. The changes in residency and citizenship rules don’t all happen magically at the same time around the world with the wave of a wand. Instead, there will be more updates to keep track of, understand and communicate to employees as countries across the globe inch toward looser citizenship requirements one regulatory issuing at a time.

Of course, for anyone with some cash to blow, there is one easy option. If you, your employees or anyone else for that matter wants dual citizenship and wants it now, give Malta a call. The cash-strapped island, which is a member of the EU, is now auctioning off passports at 650,000 euros a pop. Now that’s one citizenship regulation that speaks for itself.

Katie Davies is senior director of Advisory Services at High Street Partners, an international business software and services company.

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