Google’s billionaire former CEO, Eric Schmidt, is finalizing a plan to become a citizen of the island of Cyprus, according to a story in Recode, an affiliate publication of Vox.
The move makes Schmidt one of the highest-profile Americans to take advantage of Cyprus’ controversial “passport-for-sale” programs which has received global scrutiny.
Schmidt, one of America’s wealthiest people, and his family have won approval to become citizens of the Mediterranean nation, according to an official government publication that was shared in local media.
While it is not clear why exactly Schmidt has pursued this foreign citizenship, the new passport gives him the ability to travel to the European Union, along with a potentially favorable personal tax regime.
Interest from Americans in non-American citizenship has been spiking during the coronavirus pandemic, which has sharply limited Americans’ ability to travel overseas. Experts say some of that increase is also due to concerns about political instability in the United States.
Officials from Greek consulates and Embassies in countries with large diaspora communities have also spoken of large numbers of new citizenship applicants, especially from the United States.
But it is still uncommon to see Americans apply to the Cyprus program, according to published data and citizenship advisers who work with the country. The program is far more popular with oligarchs from 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 to be shut down.
The Cyprus program is one of about a half-dozen programs in the world where foreigners can effectively purchase citizenship rights, skirting residency requirements or lengthy lines by making a payment or an investment in the host country.
They have become the latest way for billionaires around the world to go “borderless” and take advantage of foreign countries’ laws, moving themselves offshore just like they might move their assets offshore, a phenomenon documented by the journalist Oliver Bullough in the recent book Moneyland.
Small, financially struggling countries — including St. Kitts and Nevis in the Caribbean — have embraced the idea over the last few decades, raking in money that they would otherwise never see in exchange for citizenship papers.
But what can be good for one country can be bad for the world: Anti-corruption activists have grown deeply worried about a race to the bottom with these programs, concerned that criminals can purchase foreign citizenship to escape prosecution in their home countries, or to funnel drugs through friendly borders, or to hide their assets from tax authorities.
The Cyprus program in particular — despite helping save the country after its 2013 bankruptcy by bringing in $8 billion since then — has become notorious. The lion’s share of the 4,000 Cypriot citizenship recipients since 2013 have been wealthy individuals from Russia, according to people who advise these individuals on obtaining Cypriot citizenship.
It has historically not even been marketed to Americans, whose passports usually allow them to travel freely in Europe. It is not unheard of, however, for Americans to take advantage of the program, and advisers say it has been happening more frequently over the last few months.
An Al Jazeera investigation discovered the identities of 2,500 people who had bought Cypriot citizenship between 2017 and 2019 — and only 32, or about 1 percent, were Americans.
That investigation helped spell the end of the program, which had drawn scrutiny for years. Undercover journalists found that Cyprus government officials were saying they could arrange a passport for someone despite being told that the person was a criminal, a scandal that ended up leading to the officials’ resignations.
Cyprus announced in mid-October that due to “abusive exploitation,” it was shutting the program down. (Which is also, coincidentally, around when Schmidt’s approval was published.)
It isn’t known what role the coronavirus and new travel restrictions might have played in Schmidt’s decision to apply to Cyprus. Schmidt likely applied between six months ago, when the pandemic was raging, and about a year ago, when it had yet to begin, according to advisers.
Schmidt’s wife, the philanthropist Wendy Schmidt, and his daughter, the media executive Sophie Schmidt, have also applied and been approved, according to the listing in the Cypriot publication, Alithia.
Theo Andreou, who heads the Cyprus program for Astons, an “investment immigration firm,” said that 90 percent of the firm’s clients seek Cyprus citizenship either as a backup plan or an insurance policy due to concerns in their home country, such as the coronavirus, or for financial reasons. Andreou speculated that Schmidt could be making the move for two possible reasons.
“One reason is to have a Plan B during Covid. The other reason is that they are expanding their business 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,” according to the report in Recode.
“Eric Schmidt cannot travel to Europe,” Katz noted. “He’s like everybody else — like a lot of other high-net-worth people who want to have options,” he said in the report.
Individuals who claim Cyprus citizenship can also be attracted by a reduction in their tax burden, especially if they’re willing to renounce their US citizenship. Immigration attorney Andy Semotiuk said that his only American client who had claimed Cypriot citizenship did so to avoid paying US income tax.
The way the program works is that once a foreigner lays down between $2 million and $3 million worth of investment in Cyprus, typically through a real estate purchase, they can apply to what is technically called the “Citizenship by Investment” program.
After the government reviews the applicant’s background, conducts a security check, and hosts a visit from the foreigner, their application can be approved.
Schmidt, with a net worth of $15 billion and many homes around the US, is a titan of the technology industry. While he stepped down as CEO in 2011 and left the board last year, he still serves as a technical adviser to the company and is one of its largest shareholders.
The full report from Recode here.
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