Former Google CEO Eric Schmidt is finalizing a plan to become a citizen of the island of Cyprus, Recode has learned, becoming one of the most prominent Americans to take advantage of one of the ‘passport for- »the world’s most controversial. sales programs ”.
Schmidt, one of America’s richest people, and his family have gained approval to become citizens of the Mediterranean nation, according to a previously unpublished notice in a Cypriot publication in October. While it is not clear exactly why Schmidt obtained this foreign citizenship, the new passport gives him the opportunity to travel to the European Union, as well as a potentially favorable personal tax regime.
This move is a window into how the world’s billionaires can maximize their freedoms and finances by relying on the permissive laws of countries where they don’t live. Schmidt’s decision in some ways mirrors that of another famous tech billionaire, Peter Thiel, who in 2011 controversially succeeded in obtaining New Zealand citizenship.
Americans ‘interest in non-US citizenship increased during the coronavirus pandemic, which severely limited Americans’ ability to travel abroad. Experts say part of this increase is also due to concerns about political instability in the United States.
But it’s still rare to see Americans applying for the Cypriot program, according to published data and citizenship counselors who work with the country. The program is much more popular with oligarchs in the former Soviet Union and the Middle East, and it has become mired in so many scandals that the Cypriot government announced last month that it was going to be shut down.
A representative for Schmidt declined to comment on Schmidt’s movement or thought.
The Cypriot program is one of half a dozen programs around the world where foreigners can effectively purchase citizenship rights, bypassing residency requirements or long queues by making a payment or investment in the host country. They have become the latest way for billionaires around the world to go “borderless” and take advantage of the laws of foreign countries, moving abroad as they might move their assets abroad, a phenomenon documented by the journalist. Oliver Bullough in a recent book. Moneyland.
Small, financially struggling countries – starting with Saint Kitts and Nevis in the Caribbean – have embraced the idea in recent decades, raising money they would never see otherwise in exchange for paperwork. citizenship. But what can be good for one country can be bad for the world: Anti-corruption activists have become deeply concerned about a race to the bottom with these programs, fearing that criminals could buy foreign citizenship to escape prosecution in their case. country of origin, or channeling drugs across friendly borders or hiding their assets from tax authorities.
The Cypriot program in particular – although it helped save the country after its bankruptcy in 2013 by bringing in $ 8 billion since then – has become notorious.
The lion’s share of the 4,000 beneficiaries of Cypriot citizenship since 2013 have been wealthy people from Russia, according to people advising such people on obtaining Cypriot citizenship. Historically, it hasn’t even been marketed to Americans, whose passports usually allow them to travel freely in Europe. However, it’s not uncommon for Americans to take advantage of it, and advisers say it’s happening more frequently in recent months.
An Al Jazeera investigation uncovered the identities of 2,500 people who had purchased Cypriot citizenship between 2017 and 2019 – and only 32, or around 1%, were Americans.
This investigation helped mark the end of the program, which had attracted attention for years. Undercover journalists discovered that Cypriot government officials were saying they could get a passport for someone when they had been told that person was a criminal, a scandal which resulted in the resignation of those responsible. Cyprus announced in mid-October that due to “abuse” it was ending the program. (Which is also, coincidentally, around the time that Schmidt’s endorsement was issued.)
“European stocks are not for sale,” said a European Union official.
It is unclear what role the coronavirus and the new travel restrictions may have played in Schmidt’s decision to apply to Cyprus. Schmidt likely applied six months ago, when the pandemic was raging, and about a year ago, when it hadn’t yet started, according to advisers. Schmidt’s wife, philanthropist Wendy Schmidt, and daughter, media manager Sophie Schmidt, also applied and were approved, according to the list of the Cypriot publication, Alithia.
Theo Andreou, who runs the Cypriot program for Astons, an “investment immigration firm”, said 90% of the firm’s clients apply for Cypriot citizenship either as a back-up plan or as an insurance policy in due to problems in their country of origin, such as the coronavirus. , or for financial reasons. Andreou speculated that Schmidt could make the move for two possible reasons.
“One of the reasons is to have a plan B during Covid. The other reason is that they are developing their activities in Europe, ”he said.
Nuri Katz, a Canadian who has advised the Cypriot government on immigration matters, guessed that Schmidt “feels the need to diversify his citizenship”.
“Eric Schmidt cannot travel to Europe,” Katz noted. “He’s like everyone else – like a lot of other wealthy people who want options. “
People claiming Cypriot citizenship may also be drawn to a reduction in their tax burden, especially if they are willing to give up their US citizenship. Immigration attorney Andy Semotiuk said his only US client who had claimed Cypriot citizenship did so to avoid paying US income tax.
How the program works is that once a foreigner invests between $ 2-3 million in Cyprus, usually through a real estate purchase, they can apply for what is technically known as the ‘Citizenship by investment”. Once the government reviews the applicant’s background, performs a security check, and accommodates a visit from the alien, their application can be approved.
Schmidt, with a net worth of $ 15 billion and many homes in the United States, is a titan of the tech industry: Google’s longtime CEO helped build the company into an international powerhouse and served spearhead of the company’s US lobbying. program. Although he resigned as CEO in 2011 and stepped down from the board last year, he is still a technical advisor to the company and is one of its major shareholders. These days, he spends most of his time as a philanthropist, investor and Democratic political donor at Schmidt Futures, the organization that gives his and his wife’s money, and speaks out on issues such as competition. with China and how Silicon Valley can cooperate with the US military.
At Google, Schmidt was a supporter of the company paying as little tax as possible, even if it meant capitalizing on the tax rules of foreign countries. The company has long been pursued by allegations that it was not paying its fair share of U.S. taxes using foreign tax rules in countries like Bermuda or the United Kingdom.
“I am very proud of the structure we have put in place. We did this based on the incentives that governments offered us to operate, ”Schmidt told an interviewer in 2012.“ It’s called capitalism.