Dateline: Belgrade, Serbia
Here at Nomad Capitalist, we frequently talk about the importance of having a second citizenship or an entire portfolio of passports to diversify and protect yourself. Because of the centrality of second passports to a holistic offshore plan, I created a system years ago in which we grouped every passport into one of three tiers.
We’ve made a few caveats to that system over the years, but basically, we’ve divided passports into a three-tier system based on the travel the actual document provides, not the citizenship itself.
If you really want to know what country has the best passport in the world, you would need to look at multiple factors, not just travel. We created the first Nomad Passport Index back in 2017 to look at everything you should take into account when considering a potential second passport, and travel was only part of that. But for our three-tier system, travel is the main component.
Travel is especially important for Western citizens who want to make sure they’re getting a halfway decent second passport, as well as for non-western citizens who currently have a rather average passport and want to expand their travel privileges.
Today, I’m going to walk you through the updated three-tier approach and what you need to know to ensure you are working toward a second passport that will give you what you need.[embedded content] [embedded content]
BEYOND TRAVEL PRIVILEGES
Before we jump into the three tiers of passports, however, let’s examine the foundational reasoning behind why you would want a second passport to begin with. You can always read our in-depth articles on the topic to learn more, but here’s a quick summary:
Travel privileges shouldn’t be the only thing you look at when you consider getting a passport. You should also take into account the freedom of the country, their financial and tax policies, and whether you want to live there or not.
You need to evaluate your needs to ensure you’re not just getting “the best passport in the world” but the best passport for you.
Is this just a backup passport? Is it a way to protect yourself from changing tax policies in your home country? Is it a way to open yourself up to new investments? Is it a way to travel to new places? If you’re from a place like America or Israel, is it a way to travel to places with a more neutral passport?
There are many different reasons people want passports. The industry does a disservice to everyone by focusing on only the number of countries to which you can travel.
What we do with the Nomad Passport Index – which has been featured by Bloomberg, BBC, CNN, and more – is grade each passport on all the different requirements and benefits that come from the citizenship to which it is attached.
Only one of those benefits is the passport itself.
Do not make the mistake of focusing on the travel aspect alone. I’ve heard people suggest that since they’re a Canadian and can already travel pretty much anywhere they want, they don’t need a second passport?
But a second passport helps you do so much more than travel. It helps you to diversify, it opens up your investment options, and it protects you against changing draconian tax laws (if you’re an American, you already have those in your country.) That’s what you’re getting it for.
WHY TIERS MATTER
So, if travel is not the sole benefit of a second passport, does it still matter? Yes!
The tiers matter depending on your situation. If you’re an American and want to expatriate from the United States and renounce your citizenship, you probably don’t want to go from having one of the world’s best travel documents to a really bad one. You don’t want to suddenly see yourself unwelcomed at the borders of many different countries, needing to get a visa.
On the other hand, if you currently don’t have a very good passport for travel, you might want a better one.
And if you’re Canadian or Australian and getting a second passport as an insurance policy (a.k.a. citizenship insurance), you will want to think about what would happen if you had to get rid of your home country passport 20 years from now. What would you be replacing it with?
In all of those cases, you would want a passport with strong travel privileges. But those are not the only cases you will be dealing with, which is why I created three different tiers: Tier A, Tier B, and Tier C.
It’s very straightforward. Here’s how it works:
TIER A PASSPORTS
What we’ve historically said is that Tier A passports are from countries that have visa waiver access to the United States. There are about 40 countries that have that. You can throw Canada into this Tier as well – they are not technically part of the visa-waiver program, but for all intents and purposes, they can visit the United States without a visa.
Approximately 40 out of more than 200 countries and territories that issue passports can go to the United States without a visa. These are the Tier A passport countries.
With these Tier A passports, you’ll often (but not always) get visa-free access to the other CUNA countries: Canada, the UK, New Zealand, and Australia. Canada and New Zealand are sometimes a little bit easier.
Australia is actually even more difficult to get visa-free travel to than the United States. We go with the United States as our benchmark because, thanks to citizenship-based taxation, Americans are more likely to renounce their citizenship, not Australians. So, more people who are looking for a good second passport want one that will allow them to go back to the US versus Australia.
The US is still sufficiently difficult as a country to get into. Most countries don’t have visa-free access to the United States and getting a visa is rather difficult.
There are some countries whose passports will get you into a handful of the CUNA countries. The Solomon Islands is one that has talked about a citizenship by investment program. They have visa-free access to Canada. But we’ll see how long that lasts if they start a citizenship by investment program.
Other countries like Vanuatu that have citizenship by investment programs have limited travel privileges to some of the harder-to-access countries like Australia and New Zealand. What most people don’t know is that citizens of Vanuatu have visa-free transit through Australia and New Zealand. This means that if you’re flying from Vanuatu to somewhere else, you can fly through Australia but you can’t go in. It’s worth something, but not the full boat.
Tier A passports, on the other hand, give you just about everything.
Sometimes, people will say a country’s passport is Tier A-minus. Take a country like Brazil or Argentina, for example, that allows you to go pretty much everywhere in the world with its passport, sometimes the United States, and maybe Canada and Australia are the only ones you can’t go to.
An Israeli passport can get you into a lot of countries as well, including some countries westerners can’t access. You can go to Canada and New Zealand, though the US and Australia are off-limits, which makes it more of an A-minus passport.
To keep things simple, a Tier A passport gives you US access. An A-minus is in a similar vicinity.
Tier A passports include:
- The United States
- New Zealand
- Most EU countries
*Poland recently got visa waiver access to the US, so it’s now a solid Tier A passport.
That’s pretty much it. There are also some solid B+ candidates which we’ll get into in a moment.
I frequently talk to high-net-worth individuals considering expatriating from the US but who don’t want to lose any travel options at all. They want to be able to go to Canada and the US whenever they want.
They want a Tier A passport.
But if you’re looking to get a Tier A passport, those passports are hard to come by. It’s hard to be naturalized in those countries. If you’re a high earner, you’re going to pay a boatload of tax if you live in a place like Belgium and decide to move there for five or six years to take a stab at naturalization and get a passport.
Most of these folks choose, instead, to look at some kind of fast-track passport or citizenship by investment. Most must rely on the one or two countries that have pretty favorable tax policies – and they’re more difficult to get into and keep up with.
Tier A passports are hard to come by unless you have one in your family tree. If your father is Canadian or your mother was German or your grandfather was Irish, you can get a citizenship by descent. Otherwise, get ready to spend some money if you want a Tier A or Tier A-minus passport.
TIER B PASSPORTS
The benchmark for Tier B passports is access to Europe. We’ve historically defined that as the Schengen area.
What we’ve seen over the years – most recently with the coronavirus situation, but even before that there were other run-ins – is that as the European Union and Schengen Area have expanded, we’ve seen a few countries decide to put up more borders for this or that at certain times. It’s been hard for Europe to control that.
You’ll continue to see some kind of borderless movement in Europe, although right now it is looking more fractured than it has been in recent years.
If the Schengen area were to go away – this borderless travel zone where you fly into one country and can then move all across the European continent – we would then define Tier B as a passport that gives you access to most of the countries in Europe.
Just as you’re seeing with the UK passport with Brexit, you may not have full freedom of movement in the EU, but you will still have access to the EU or the Schengen area, it just won’t be quite on the same terms.
If the Schengen area goes away and you’re an American or Canadian it will be like it was for me in Europe in the early 90s. You go to Portugal and get your passport stamped and then you go to Spain and get a stamp there, etc.
A country that had access to most of those European countries would still be a Tier B passport if anything were to happen. But currently, if your country has a visa-waiver to the Schengen countries, I would call that Tier B.
I’m not including the UK or Ireland in the benchmark for Tier B. Those are separate countries and they are more difficult to get into.
Lots of countries fall into this tier, including those in places like the Western Balkans, the South Pacific, Georgia and other Caucasus countries, and a number of South American countries. Most have access to Europe and the Schengen area because the requirements are more straightforward, but they cannot go to the UK or Ireland.
If you can go to the UK as well as Europe, then I would consider it a Tier B+ passport. The UK is not as difficult to get into as the US but it’s more difficult than Europe.
The philosophy here is that if you can go to the US or if you can go to Europe – most people are happy with either one of those, some people want both – that’s a pretty good passport.
Tier B passports generally have decent visa-free travel, at least to certain parts of the world.
Eastern European passports have decent access all around Central Asia, Eastern Europe, and Southeast Asia. Other passports have excellent access to South America.
Some Caribbean citizenship by investment programs can have great visa-free travel access. One of them literally has access to every country in Europe and every country in South America. That’s a solid Tier B passport.
If you have access to Europe, it probably means other countries have taken notice as well and you have a decent amount of visa-free travel around the world.
TIER C PASSPORTS
Tier C passports do not have access to the US or to the Schengen area.
This would pretty much be every African passport outside of Seychelles and Mauritius. This tier also encompasses a number of Asian passports such as Thailand and Vietnam and a few countries in South America. But overall, there aren’t that many Tier C passports.
A lot of countries that people think would be Tier C are not. El Salvador, the poorest country on mainland North and Central America is a solid B+ passport. You can do a lot of travel as a Salvadorian.
The exceptions that stand out to me as decent Tier C passports would be Turkey and Russia. I would call these C+. These countries have such size and enough relations all over the world that they have been able to get decent visa-free travel.
Both of these countries have come from the doldrums 15 years ago to have decent visa-free travel except to the US and the EU. That’s largely political.
But if you’re a Russian, you’ve got a pretty good passport for traveling anywhere but the West.
If you want to go all over Asia or all over South America or the Caribbean or to parts of Africa or Central Asia or Eastern Europe, it’s a breeze. You’re very welcome in those places. Turks are somewhat similar.
Then there are the Tier C passports that are just terrible. We have friends who are Egyptian or Moroccan and they really don’t have many travel options. But even those aren’t the worst. They can still go to some countries but are going to be limited to 40 or 50 different countries for visa-free travel and a lot of those are pretty far-flung places or little islands.
Tier C doesn’t necessarily have to be bad, but most of them are very limited in terms of their travel privileges. People with these Tier C passports are already those who are historically looking for a second citizenship.
A lot of the wealthy Middle Eastern countries are considered to be Tier C. Despite being the wealthiest country on earth by some metrics, Qatar’s passport is not that great. It’s similar to places like Bahrain and Kuwait.
The UAE now has a very solid Tier A-minus passport. But the rest of the gulf countries’ passports aren’t that great.
It seems that even a country’s socioeconomic status does not matter. An El Salvadorian passport is much better than a Qatari passport despite the huge disparity of wealth between those countries.
Sometimes politics play a role which is why I like to have multiple citizenships because I never want the politics of one country to define where I can go, how I can invest, how I’m going to run my business, etc.
THE BEST PASSPORT IN THE WORLD IS A PORTFOLIO
So, in a nutshell, those are the three tiers of citizenship: Tier A, Tier B, and Tier C.
If you have a Tier A citizenship and you plan on keeping it, then sometimes it’s not a bad idea to get a Tier C passport. There are some Tier C passports that may become Tier B in the future. There are some mediocre Tier B passports that will become pretty solid Tier B passports later.
I’ve watched a number of passports over the years and have witnessed this unfold. Serbia has been an amazing performer. Georgia has actually done pretty well, too. Those are two countries we talk about on our YouTube channel frequently. Their passports have dramatically improved.
A lot of passports have dramatically improved over the years. Russia is another one. It still doesn’t have access to the West, but a lot of passports that are mediocre now are improving. Even Ukraine recently got access to the Schengen area.
So, could some of these things change? Yes.
Obviously, there’s a huge amount of chaos around the world right now. I’d rather have a Canadian passport than a Serbian passport in terms of keeping visa-free travel.
But if you already have a great passport and are planning on keeping it, you want to look at passports that are affordable, easier to get, potentially faster, and complementary to the one you have – like an average B or C that could open up new countries that aren’t even available on your Tier A passport.
For instance, a US passport does not have visa-free access to Russia or China, but there are Caribbean passports you can get through investment that will give you access to both. Depending on where you need visa-free access, you can look to different regions and countries with different alliances.
You might want another passport from a country that you know is going to leave you alone. You could get one from a small country that isn’t going to bother their citizens living overseas. That can be a good thing.
I’ve often told Brits and Canadians and Australians to get a lower quality passport as an insurance policy. It will probably appreciate in value over time (i.e. gain more visa-free access) and you won’t have a lot of maintenance.
Overall, you need to understand what you’re getting with your passport and why you’re getting one in the first place. And if you want the ultimate insurance policy, don’t set your sites on the best passport in the world, aim to build a passport portfolio to cover all your bases.
If you need help figuring it out, you can contact us here.