Thinking About Renunciation? The Pros and Cons Of Renouncing US Citizenship

Recently, there has been a trend of individuals renouncing their US citizenship due to various political and social issues. Over the last decade, more than 10,000 US citizens had formally renounced their citizenship, according to the US government’s data. This process has multiple implications, so any decision to do so should be made with a well-thought-out strategy.

Note! The Astons company does not encourage you to renounce your citizenship. This is a personal decision, and we are here to assist you in navigating this process smoothly.

What does renouncing citizenship mean?

Renouncing citizenship involves giving up one’s citizenship along with all associated legal rights, privileges, responsibilities, and governmental obligations. The process of renunciation includes the following steps:

• Appear in person before an American consular or diplomatic officer
• Sign an oath of renunciation
• Pay the required fee.

Note! Citizenship is officially terminated on the date of the renunciation ceremony.

Pros of renouncing US citizenship

Renunciation of citizenship offers several advantages, but it’s essential to follow the correct procedures to access these benefits.

Taxes

US citizens are subject to a unique system of citizenship-based taxation, meaning they must pay taxes to the USA no matter where they live in the world. This requirement persists even if they haven’t been in the United States for decades. For instance, if a child is born in this country and receives citizenship but does not live in the state, they are still obligated to pay taxes throughout their life. Renouncing American citizenship can help individuals avoid significant financial burdens, including double taxation.

Prospects of new citizenship 

Some countries, such as Japan, Austria, and the Netherlands, do not permit their citizens to hold multiple passports. In these cases, renouncing US citizenship is often the only way to obtain a new citizenship and nationality.

Financial privacy 

US citizens must comply with the Foreign Account Tax Compliance Act (FATCA), which requires them to report their foreign financial assets. However, after renouncing their US citizenship, individuals are no longer obligated to do so.

Cons of renouncing US citizenship

It is important to consider the disadvantages of renouncing American citizenship, which include a loss of the opportunity to live legally in the USA, closed access to the American market, etc.

Loss of the opportunity to live and work in the USA

Renouncing US citizenship means losing the legal right to live and work in the country. One significant advantage of US citizenship is the ability to access the world’s largest importer market and the second-largest exporter market without restrictions. For business people and those working in economic sectors, losing citizenship can pose a considerable disadvantage.

Loss of the opportunity to travel the world

The USA offers one of the most powerful passports globally, granting visa-free access to over 185 countries. Renouncing your US citizenship will eliminate this advantage, making it more challenging for you to travel easily around the world.

Irrevocable act with generational impact

In the US, renouncing citizenship is legally considered an irrevocable act, meaning it cannot be undone. This decision not only affects the individual but also has implications for future generations.

Fees and documents required to renounce US citizenship

To renounce US citizenship, you will need to provide the following documents:

• A passport or birth certificate as proof of citizenship
• A US consular report of birth abroad, if applicable
• Bio-pages of all active foreign passports
• Evidence of any name changes, such as marriage or divorce certificates, if applicable.

Note! The cost to renounce US citizenship is $ 2 350.

In addition to the documents, several government forms must be submitted:

• Form DS-4079 — for determination of a possible loss of citizenship 
• Form DS-4080 — an oath and approval of US nationality renunciation 
• Form DS-4081 — a statement of understanding concerning the consequences of renouncing US citizenship.

Note! All forms are available on the website of the US government. 

How to renounce American citizenship

Renouncing US citizenship must be done abroad at a US embassy, and the entire process typically takes between 4 to 6 months. The key steps involved are as follows: 

1. Meeting the requirements: A US citizen must pay all taxes before beginning the renunciation process. 
2. Preparing the documents and attending the first interview: After selecting an embassy, you can schedule the first interview. At this initial stage, only copies of the required documents (without signatures) are needed. 
3. Attending the second interview: For this interview, you must provide the original documents. Following this interview, you can sign the necessary forms, take an oath, and pay the applicable fees.
4. Obtaining a Certificate of Loss of Nationality (CLN): This final stage may take several months to complete. 

Astons – Experts in Plan B strategies

In most cases, investors renounce their country’s citizenship upon obtaining another passport. For example, you can get a Maltese passport by buying a property with a minimum cost of €700,000. Such a passport will allow you to live in a country with a more affordable quality of life and enjoy the benefits of a strong passport. Maltese citizens can visa-free travel to 190 countries, including the UK and the US.   

Astons offers confidential consultations with experienced professionals who can analyze your situation and understand your goals and requirements. We will provide you with tailored solutions for your Plan B strategy, including options for dual citizenship programs and golden visas.

Frequently Asked Questions

What happens if you renounce your citizenship?

Renouncing citizenship means giving up your citizenship along with all associated legal rights, privileges, responsibilities and governmental obligations. 

How to renounce US citizenship?

Renouncing US citizenship must be done abroad at a US embassy, and the entire process typically takes between 4 to 6 months. The key steps include paying all taxes, preparing the documents, attending interviews and obtaining a Certificate of Loss of Nationality (CLN). 

How to renounce US citizenship?

Yes, US citizens can renounce their citizenship. In most cases, investors renounce their country’s citizenship upon obtaining another passport. For example, you can get a Maltese passport by buying a property with a minimum cost of €700,000. 

If I renounce US citizenship but my spouse does not, does this affect the legal status of our marriage?

Astons is not a legal expert in the area of marriage law and how you marital status could or may not be affected by the act of renunciation.

Superficially, marriage and citizenship are not connected, in that, it is common for US citizens to marry foreign nationals.

On its face, the act of renouncing, in and of itself, may not have any impact on the legal status of being married, however, it would have a direct impact on your ability to legally reside or physically be in the United States.

Thus, having to leave the US could result in an abandonment issue within the marriage which is often an issue raised in divorce proceedings.

However, this question and issue is one that you would need to consult a divorce expert about in the United States.

As a US expat retiree, does renouncing terminate my social security benefits?

To emphasize at the start, Astons is not an expert in the US social security system, however, if a client were seeking to invest into one of our solutions and asked this question, we would leverage our expansive network and community of legal experts to get the necessary answers for our clientele.

Superficially, the simple act of renouncing US citizen does not – by default – terminate a person’s right to access or receive social security benefits that they have already paid into and were previously entitled to.

Astons would only venture into this legal area for individuals who were contracted as our clients.

Can I invest in an EU Golden Visa and then renounce US or UK citizenship without it affecting my Golden Visa status?

This is a complex question as the specific country and Golden Visa program could alter what the correct and accurate answer is.

This is something that Astons could advise on in a private consultation.

Thus, if you are interested in one of our Golden Visa solutions, schedule a Free Confidential & Comprehensive Consultations with one of our worldwide offices.

As an additional, note, if you were to acquire Maltese citizenship through the Malta citizenship by investment program and then later renounce, it would not affect your Maltese or EU citizenship status.

Does Astons provide assistance with renouncing citizenship?

No, Astons does not assist, advise on the specifics of, or engage in any way, the renunciation process of any country.

In the area of citizenship renunciation, the only expertise and area of partnership that Astons provides our clients with is their Plan B – their backup/second citizenship and passport and identity to have and use so they are not rendered ‘stateless’.

If you solely seek assistance, guidance, or legal advice on the renunciation process alone, you need to seek out a lawyer in the specific country of question with a specialization in renunciation law.

Does renouncing citizenship free me from all tax liabilities associated with that citizenship?

Astons does not provide legal advice on specific renunciation laws, requirements, and consequences for renouncing any nationality.

Superficially, the simple act of renouncing citizenship would not erase any existing tax liabilities or tax evasion matters.

In fact, for most countries, a part of the renunciation process is a tax audit.

If you seek advice, guidance, or assistance that is specifically related to renouncing your citizenship, you need to contact a lawyer in that country who specializes in tax and renunciation law.

Could someone accidentally renounce their US citizenship?

This is a very interesting question, as how you define ‘accidentally’ directly impacts the answer.

Under existing US law, citizenship can only be renounced by an adult who engages in a “voluntary” act of renunciation.

For example, dual citizens have a legal and constitutional right to run for political office and to hold political office in both of the countries they have citizenship in.

Yet, under US law, holding a political office in a foreign country can be an act of renouncing US citizenship.

If you did not know that prior to running for the office, you could consider that an accidental renunciation, but nevertheless, it is an act that you voluntarily engaged in.

However, it must be emphasized, that Astons cannot provide any such legal advice or guidance in the area of what does constitute or won’t constitute an act of renunciation for any nationality.