Thinking About Renunciation? The Pros and Cons Of Renouncing Citizenship

Recently, renunciation of citizenship has become a buzzword and trend. In the United States, thanks to political and social issues, and in the UK, due to Brexit. Renunciation is not a decision to be made lightly, so here are the pros and cons of renouncing citizenship.

Citizenship is the most powerful asset any person can wield, and multiple citizenships [or even residencies] level up an individual’s sovereignty to unprecedented levels.

Citizenship and residency come with a plethora of rights and privileges that, while most agree are human rights, in reality, are only exercisable through the status of citizenship. 

Losing citizenship can directly affect such rights and privileges. 

However, in the modern world, many negatives attach to some nationalities – so, when done correctly, renunciation can be a power move for some individuals.

Any decision to renounce citizenship must be based on knowledge and strategy. 

What does renunciation or renouncing citizenship mean?

A person who renounces their citizenship legally severs themselves – and their future generations – from their native country.

While a person can never change the fact that they were born in a specific place, people can – in most circumstances – render that action inconsequential as it reflects their legal identity. 

Renunciation is surrendering your citizenship and all the legal rights, privileges, responsibilities, and duties – as well as governmental control – that may have attached to that citizenship. 

And, to reemphasize, it is not an act that solely impacts oneself; renunciation is an act that will and does echo for generations. 

While at first glance, that sort of move may seem like a bad idea – in fact, drastic – it is more common than one might think. And that is because there are valid reasons for some people to renounce. 

The act of renouncing citizenship shouldn’t be taken lightly, though, but it also shouldn’t be ignored. Like anything else in life, renunciation of citizenship has pros and cons, and it is a very case-specific issue that can benefit many. 

Thus, we have compiled a list of pros and cons for renunciation citizenship, focusing on US citizenship in particular. However, most of the points apply to any nationality.

It must be noted, however, that these pros and cons are not exclusive of all possible outcomes and are solely informative – not to be used, in isolation, for anyone’s decision to either renounce or not. 

Trend of renouncing citizenship in the US and UK

Renunciations are a growing trend in the US and UK, especially among High-Earning-Not-Rich-Yet [HENRY] and High-Net-Worth [HNW] entrepreneurs, investors, and families. 

The US government uses the phrases’ act of renouncing one’s citizenship’ and ‘act of expatriation‘ nearly synonymously. But, to the layperson, being an expat [expatriate] does not necessarily involve renunciation.

The year 2020 set a record for US renunciations, as about 6,500 people gave up their US citizenship. 

The following year, the numbers dwindled, but this drop is attributed to COVID-related embassy closures and the difficulty of scheduling appointments as embassies slowly began re-opening.

In 2022, the number picked up once again, with official renunciation applications reaching nearly 3,400, but it was 2023 that took the matter to a whole new level.

By May 2023, more than 5,300 US citizens officially renounced their citizenship – just about a thousand shy of the record set in 2022.

This paradigm shift can also be seen in the post-Brexit United Kingdom situation. 

Thousands of Brits lived outside of the UK and believed they were falsely informed about what their Brexit vote would mean.

Now, they have not only lost all residency rights throughout the EU – including places they have called home for many years – but with the advent of ETIAS in 2025, those same Brits could lose EU access altogether. 

Thus, many Brits feel betrayed by the UK government and are exercising their loyalty to their EU homes by leveraging the powerful strategy of citizenship by investment or Golden Visas with renunciation of UK citizenship.  

According to a 2023 report, Brexit increased UK renunciations by 30% at last count. 

And, as the UK wants to attack the Non-Dom tax status for expat Brits, the number of British renunciations is expected to continue to increase. 

Pros of renouncing citizenship

There are a lot of advantages to renouncing citizenship, but to access them, it has to be done correctly and strategically with a solid framework.

But the potential benefits include:

Taxes

Benjamin Franklin hit the nail on the head when he said the only two constants in life were “death and taxes.” 

US citizens are subjected to citizenship-based taxation. The only other country with citizenship-based taxation is the African nation of Eritrea, but unlike the US, it does not have the means to enforce it. 

US citizens have to pay (or at least file) taxes wherever they reside in the world. It doesn’t matter if an expat hasn’t set foot on US soil for decades; they are liable for taxes. 

This is an issue that nearly all foreign parents who engage in birth tourism fail to understand or appreciate. The baby born on US soil and never again returns is liable for US taxes their entire life. 

It is a massive financial crutch and a colossal banking inconvenience to many, and the only way out is by renouncing US citizenship.

The US taxation system is complex and brutal – arguably the most intrusive in the world. 

It can also become more complex for expats as the regulations become more confusing.

Eliminating this immense burden is a critical objective for many expats, especially those with no intention of returning to the US.

Citizenship-based taxation is a massive issue that currently only affects US citizens, but possibly not for long.

Other countries, such as India, have been considering implementing the practice. The only way out of citizenship-based taxation is to remove the citizenship part. 

If a US citizen obtains citizenship in a tax haven country, they can effectively renounce their US citizenship and be rid of taxes forever, having a massive impact on their wealth – currently and generationally. 

Financial & banking regulations

Each country has its own financial and banking regulations, and in many, specifically the US, opening a foreign bank account invites an entirely new level of government surveillance.

But, that degree of intrusiveness is not solely focused on American citizens outside the US – it’s becoming a pervasive problem in the US and other countries as well, such as the UK.   

A recent New York Times report examined over 500 cases of US banks suddenly locking out their customers and closing their accounts with little to no explanation – completely severing citizens from their own legally earned money.

US banks call this practice de-risking, in which they close the accounts of customers based on suspicious activity reports (SARs).

However, the suspicious activity the banks reference may not be criminal. Atypical cash deposits or withdrawals, foreign transactions, or otherwise legal financial moves may be flagged.

Every transaction of $10,000 or more automatically generates a SAR, so having never moved that much money into your account before could be considered suspicious. 

According to the New York Times, one account was locked and closed after the company the account owner worked for was acquired by a cannabis company. 

Another account was locked and closed due to larger-than-average withdrawals to pay a contractor.

In both cases and many others like them, the banks would not explain why they closed the accounts—the US banking regulations side with banks by default and not their citizens.

As with many US practices, it is a guilty until proven innocent standard – prioritize the government’s agenda over the day-to-day activities of the population. 

Foreign-based banking

Opening a bank account abroad is another option for US citizens, but as with citizenship-based taxation, the burden of US regulations and laws will follow. Moving money abroad and back home is becoming increasingly difficult for US citizens.

And, due to US regulations, most international banks will not accept US citizens as clients, as it could result in the bank being fined or sanctioned if something were to go wrong. 

For those who have had enough of the US legal system and want to access a more citizen-focused environment (the Caribbean, for example), renunciation is their strategy. 

Passport attack vectors

Another major issue that single-nation-citizens can face is passport attack vectors. 

Passport attack vectors refer to cases where someone’s passport is rendered directly or indirectly useless based on specific actions.

Some vectors, like stolen or damaged passports, are common; others are not. 

Passport attack vectors can result from the inability to renew a passport due to atypical situations – for expats, this is typically an embassy-related issue. 

This is more common due to very limited appointments being available during times of crisis or in areas of conflict, especially in conflict with the US.

US citizens may find out that their all-powerful US passports have been rendered useless due to the government’s inability to renew them – US citizens will be denied entry into the US if they don’t have a valid US passport. 

Of course, other attack vectors are even more severe, such as the US government flagging a person and removing their travel rights due to adding their name to any of the thousands of lists the US government maintains. 

Commonly, a person is wrongfully added to such lists due to having a similar name or other non-foundational connections, including the overreaching excuse of US security concerns.

It should be noted, however, that obtaining a second passport and dual citizenship is a more effective Plan B and remedy to this scenario.

Investment opportunities

Some investment opportunities, such as new cryptocurrency offerings, may be restricted by nationality. 

For example, in some countries, like China, crypto is illegal, and US cryptocurrency investors have been denied access to opportunities in the past and may face it again.

US citizenship may be a hindrance rather than an asset for those who base their livelihood on non-traditional investments like these.

Again, dual nationality and a second passport can fix this issue. Still, if high-level due diligence is applied, even then, US dual nationals may need help leveraging these investment opportunities.  

Cons of renunciation of citizenship 

Renunciation does come with its disadvantages. Proper planning and strategy can offset some significant negatives, so it is crucial to get it right from the start. 

Some of the most important to consider are:

Irrevocable act with generational impact

In most cases, and specifically in the United States, the act of renunciation is legally considered irrevocable – meaning it is permanent and can never be undone. 

And, it cannot be understated; a person is not renouncing their own citizenship; they are denying citizenship to their future generations as well. 

Citizenship is, nearly universally, a birthright. Thus, the act of renunciation by one person will echo for generations. 

Statelessness

If a person renounces their citizenship without having another one, they end up in a “stateless” status. They have no legal rights, cannot travel, and day-to-day activities are all but halted. 

Opening bank accounts, getting a job, and renting a home all require legal status, either as a resident or citizen, and stateless people cannot do those things. 

Statelessness is very much like refugee status, except you chose the status and thus, typically, will not benefit from any of the refugee protections. 

Travel 

Though the US passport is not the strongest in the world and has been consistently losing global mobility strength over the last decade, it is still among the best.

If travel is not a concern or if a person has a more powerful passport, such as an EU passport, or a passport with nearly equal strength, such as a Caribbean passport, then there aren’t many negatives to losing a US passport.

However, if travel is important, and a person does not have a strong second passport as a backup, that loss of global mobility will be massive.

Luckily, many countries in the Caribbean, as well as Malta, offer citizenship by investment programs, allowing people who want to renounce their US citizenship the opportunity to get a robust second passport.

Most EU Golden Visas offer a pathway from residency to citizenship, typically in only five or so years. 

Access to the US market

US citizens have unhindered access to the world’s largest importer and second-largest exporter market. Losing that access can prove costly for those who conduct business in the US economy.

Of course, there are workarounds as they can still operate as residents or through local companies, but it doesn’t give the same freedom as operating in the market as a US citizen.

Loss of political rights

Once a person renounces their citizenship, they lose all their political rights, such as running for office or voting in elections. 

But the loss of voting rights isn’t the only issue. 

Ex-citizens no longer have access to the services of their former countries or their embassies, so critical issues such as finding legal representation if arrested in a foreign country are no longer available.

Also, the purpose of dual citizenship is to strengthen one’s individual sovereignty. 

Suppose a person is a dual citizen and renounces one of their citizenships. In that case, they return to being at the mercy of one single government, effectively lowering their overall individual sovereignty and placing them in a higher risk situation as their citizenship is now monopolized.

Even if a person is a multiple citizenship holder, losing one of these citizenships could lower their overall individual freedom levels unless done correctly and strategically. 

Additional notes on renunciation

Finally, renouncing citizenship, specifically for US citizens, can be a costly process. 

To begin with, the process itself requires an application fee of $2350. 

This fee and the overly burdensome process have triggered a lawsuit filed by the Accidental Americans Association on behalf of expats and victims of birth tourism who had to pay the higher fee.

Along with the application fee, US citizens can expect to be subjected to an extremely intrusive and violating tax audit that spans nearly a decade. 

In theory, the renunciation process should only take 3-6 months, but it can take years to receive final government approval of your application. 

Astons – Experts in Plan B strategies

There are a lot of factors at play when it comes to renunciation. 

The key is to plan and build up to it efficiently, strategically, and comprehensively – which requires the assistance of experts in global mobility, wealth management, and immigration. 

However, the most important strategic element of renunciation is your Plan B – your new legal identity. 

This is Aston’s expertise.

Dual citizenship is not simply a second passport – it is a new legal alternative identity in which you can live, travel, conduct business, and invest just as you would with your original identity, just separate from it. 

During every Free Confidential and Comprehensive Consultation with an expert at Astons, we analyze your individual case, understand your wants, dreams, goals, and demands, and then provide you a list of solutions that satisfy them.

Ultimately, any decision to renounce must be a personal decision.

But whether renunciation is an option for you or not, every entrepreneur, investor, and family needs a real-world Plan B strategy – dual citizenship programs and Golden Visas are the best Plan B money can buy.

 

Frequently Asked Questions