A second passport opens up numerous opportunities: visa-free travel, access to foreign banks, and tax planning. But behind this attractive façade may lie legal and financial traps. Not all countries recognize dual citizenship, and some require renunciation of the first passport under threat of its loss. In addition, a second passport may lead to additional tax obligations, asset disclosure, and issues with compliance with international standards. Many investors learn about the consequences too late—when they are already facing account freezes or claims from tax authorities.
Our lawyers will help you determine whether you are violating the laws of your country, assess the tax implications of holding two passports and avoid double taxation, prevent issues with reporting and CRS, identify risks in business structures and inheritance, and choose a jurisdiction where the status of second citizenship will be most advantageous.
Risk #1: Double Taxation
Obtaining a second citizenship may seem like an excellent strategy for expanding freedom and protecting assets, but investors often underestimate one of the most critical risks—double taxation. In several countries, tax liability persists regardless of actual place of residence. For example, in the United States, citizens are required to report to tax authorities annually and pay taxes on worldwide income, even if they live and work abroad.
If an investor obtains a second passport without properly severing tax ties with the first country, they may find themselves in a situation where two states lay claim to taxing the same assets or income. This is especially relevant for countries that do not have double taxation agreements or apply them in a limited manner.
This is why a tax analysis is essential before applying for citizenship by investment: determining your current status, understanding where you are considered a tax resident, and how changes will affect your income structure, investments, and reporting. Only legally sound planning involving tax advisors and immigration lawyers can prevent fiscal conflicts between countries.
Risk #2: Military Service Obligations
One of the underestimated yet extremely serious risks of obtaining a second citizenship is military service obligations. Many countries have mandatory military service that applies to dual citizens, including those who actually reside abroad.
Examples of such countries include Israel, South Korea, and Turkey. Minor children of investors are especially vulnerable, as they automatically acquire citizenship along with their parents and, upon reaching a certain age, become subject to local military service laws.
Evasion of military duty in such countries may be treated as an administrative or criminal offense, leading to fines, travel restrictions, or even loss of citizenship. Moreover, in some jurisdictions (such as South Korea), renouncing second citizenship does not exempt an individual from service if they were deemed eligible for conscription before renunciation.
Therefore, before acquiring a second citizenship, it is essential not only to study the investment conditions but also to analyze the country’s military laws: determine whether conscription exists, the age of enlistment, who qualifies for exemptions, and whether deferments or alternative service options are available.
Risk #3: Personal Data Leakage and Jurisdictional Conflicts
Investors obtaining a second passport must take into account that information about their new citizenship enters government registries, immigration databases, and international automatic data exchange systems.
If a country is a participant in CRS agreements and FATCA (for U.S. citizens), data on tax residency, accounts, assets, and affiliation with multiple citizenships may be shared between the tax authorities of different states. This increases the risk of exposure of banking and financial information, especially when offshore structures, trusts, and foreign investment accounts are involved.
Legal issues may also arise in property registration, business transactions, or inheritance. Different countries may impose conflicting requirements for reporting, taxation, and recognition of civil status. The lack of a unified approach to regulating dual citizenship can complicate the protection of investor rights in a dispute.
To avoid data leaks and legal contradictions, it is essential to conduct legal and banking due diligence in advance, determine how your personal data will be handled in each jurisdiction, and plan asset ownership structures in accordance with the requirements of all parties. Our team of consultants helps investors not only choose a safe country for second citizenship but also develop a legally sound strategy for asset and personal data protection under international regulations.
Risk #4: Prohibition or Restriction on Dual Citizenship in the Country of Origin
Not all states allow their citizens to hold a second passport, and in some cases, such a step may lead to the annulment of the original citizenship, the imposition of sanctions, or even criminal liability for concealing naturalization in another country.
For example, Ukraine officially does not recognize dual citizenship. Although there is no formal mechanism for automatic loss of Ukrainian citizenship, the authorities have the right to initiate a revocation procedure if it is established that the citizen voluntarily obtained another passport.
In China, the situation is even stricter. Obtaining a second citizenship automatically results in the loss of Chinese citizenship, even if the individual did not inform the authorities. A similar rule applies in India, where citizenship is not only annulled but cannot be reinstated in the future. Instead, former citizens are granted the limited status of OCI, which is not equivalent to full citizenship.
Such prohibitions create serious legal conflicts for investors, especially if the existence of a second passport becomes known at border crossings, during submission of documents to state agencies, or through banking due diligence. There have been cases where dual citizens faced travel restrictions, lost property rights in their country of origin, or were denied access to bank accounts.
Risk #5: Political and Legal Complexities in Extradition or Rights Protection
The key issue is that with two passports, it may be unclear which state is obligated to protect your interests. If both countries recognize you as their citizen, neither is required to provide consular protection in the event of a conflict. As a result, in cases of arrest and criminal prosecution abroad, you may be left without support from either country—even if you present your second passport.
The situation becomes particularly complicated in countries that do not recognize dual citizenship. For example, under Russian law, if a Russian citizen holds a second passport, they are still regarded exclusively as a Russian citizen while on Russian territory. Foreign citizenship does not grant immunity from legal responsibilities, including participation in criminal proceedings, military service, or exit restrictions.
Extradition cases create legal conflicts as well. For instance, if one country requests the extradition of a citizen under an arrest warrant, while another formally considers the person its resident, both states may assert conflicting claims. This can lead to prolonged legal proceedings, overlapping legal obligations, and a lack of unified rules for protection.
The Benefits of Dual Citizenship That Should Not Be Overlooked
One of the most obvious and sought-after advantages is visa-free access to dozens of countries. For example, a Dominica passport opens access to over 140 destinations, while a Maltese passport offers entry to more than 180.
Citizenship in a country with a high level of social infrastructure automatically grants access to quality higher education, health insurance programs, and medical treatment. For instance, holders of EU citizenship can enroll in public universities on the same terms as local students, including discounts or even full exemption from tuition fees. Similarly, residents of certain Caribbean countries and Turkey gain access to government healthcare programs and insurance.
A second passport provides access to banking, investment, and insurance products that may be unavailable to citizens of other countries due to “high-risk” classifications or sanctions.
Additionally, citizenship in a country with favorable or zero taxation can legally reduce fiscal burdens. For example, Vanuatu, Saint Kitts and Nevis, or the Bahamas do not tax income earned outside the country. A second passport can also be instrumental in structuring international business operations, asset ownership, and estate planning.
In times of political and economic instability in one’s country of origin, a second passport offers an alternative route for relocation, capital repatriation, and family protection. It allows the choice of a jurisdiction with an independent judiciary, a transparent business environment, and legal mechanisms for property protection. Furthermore, having dual citizenship provides an opportunity to avoid restrictions on currency operations, cross-border transfer controls, and account freezes.
How Can Investors Avoid Risks When Obtaining Second Citizenship?
1. Legal and Tax Due Diligence — A Mandatory First Step
The first thing any investor should do when considering second citizenship is conduct a comprehensive legal and tax assessment of their current situation. It is crucial to evaluate:
- Whether dual citizenship is permitted in the country of origin;
- What obligations remain with the state after acquiring a second passport;
- The possibility of double taxation;
- Any risks related to automatic data exchange systems;
- How this will affect the structure of asset and trust ownership.
Such due diligence helps identify jurisdictional conflicts in advance, avoid mistakes when changing tax residency, and properly plan the application process.
2. Country Selection: Not Just the Program, but the Legal Framework
A key criterion for choosing a jurisdiction should not only be the cost and timeline for obtaining a passport but also the country’s legal stance on dual citizenship. Acquiring a second passport in violation of the home country’s requirements may lead to sanctions, loss of original citizenship, or restrictions on rights — including the inability to pass citizenship to children, open bank accounts, own property, or leave the country.
3. Considering Personal Circumstances and Future Goals
An investment citizenship program must align with your individual circumstances. If you plan to reside abroad, you must account for any physical presence requirements. If you are obtaining citizenship for your children, it is important to investigate matters such as military service obligations and automatic status transmission.
It is also vital to assess plans for asset transfer and inheritance, the need to protect your family from political risks, banking requirements for opening foreign accounts, and access to education, healthcare, and social programs in the new country.
4. Professional Guidance — The Key to Security
The process of obtaining second citizenship includes more than submitting documents. It involves background checks, financial audits, source-of-funds verification, and compliance with immigration regulations.
Working with an experienced legal team ensures proper structuring of the process, full compliance with the laws of both countries, client data protection at all stages, and a reduced risk of denial or future revocation of citizenship.
How We Help Investors Avoid the Pitfalls of Dual Citizenship
Our legal team provides full support to investors seeking to obtain a second passport without legal consequences. We begin by individually selecting suitable countries, taking into account the client’s goals, legal status in the country of origin, family composition, and future plans. We then conduct an in-depth analysis of tax implications, including the risks of double taxation, CRS/FATCA reporting obligations, and the impact on asset structures.
We support the client at every stage of the process — from application submission to passport issuance — ensuring compliance with all the requirements of investment citizenship programs. Our specialists guarantee full data confidentiality, handle correspondence with government authorities, and conduct due diligence checks to minimize the risk of rejection or future revocation of status.
We also assist in properly exiting tax residency, advise on legal protection in extradition matters, military obligations, and the transfer of citizenship to children.
Dual citizenship should work in your favor — not create additional complications. Contact us today, and we’ll develop a second citizenship strategy tailored to your needs — without hidden risks.
