Does Renouncing U.S. Citizenship Work for Me?

What the alternatives?

The American Dream and Beyond: When Success Leads to Expatriation Considerations

For many individuals, the United States of America offers a thriving environment to build wealth and pursue their dreams. Over time, as the business and success of these individuals grow, a few may begin to consider emigration or expatriation. For these individuals, who are often high net worth individuals and investors. Various opportunities are available to streamline their financial landscape and expand their horizons.

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The decision to move requires comprehensive considerations, such as the residence requirements and tax implications. In addition, emigration and expatriation regulations are an intricate and complex matter, especially for those with international interests. While US citizenship offers well-recognized and unique benefits, there may be times when exploring alternative residency options, naturalization, or even expatriating becomes strategically desirable.

This article will explore the reasons why Americans are considering renouncing their U.S citizenship and discussing the alternative opportunities like Golden Visa programs, Citizenship by Investment options, Citizenship by Ancestry options to evaluate the expatriation strategies.

Key points

  • Rising Trend of US Citizenship Renunciation: The number of Americans renouncing their citizenship is significantly increasing, likely due to tax implications.
  • Process of Renouncing US Citizenship: It’s a complex process with specific requirements and an exit interview at a US consulate.
  • Consequences of Renouncing US Citizenship: You lose certain rights and benefits, face travel restrictions, and potential tax liabilities.
  • Alternatives to Renunciation: Consider Golden Visas, Citizenship by Investment (CBI), or Citizenship by Ancestry (CBA) programs for global mobility and tax benefits.
  • Golden Visa Programs: Residency with potential citizenship paths in exchange for investments (e.g., Portugal, Spain, Greece, Hungary).
  • Citizenship by Investment (CBI) Programs: Direct citizenship acquisition through significant financial contributions (e.g., Caribbean countries).
  • Citizenship by Ancestry (CBA) Programs: Dual citizenship opportunities for those with qualifying ancestral ties (e.g., France, Italy, Spain, Slovakia).
  • Importance of Professional Consultation: Consult tax and immigration lawyers before renouncing US citizenship or pursuing alternative pathways.
  • Weighing the Decision: Consider the emotional ties, financial implications, and long-term consequences before renouncing US citizenship.

Rising tide of renouncing or terminating US Citizenship

Americans are relinquishing their citizenship at unprecedented rates. A clear picture was reflected in the data. According to a New York tax firm, Bambridge Accountants, 5,816 individuals renounced their US citizenship in the first half of 2020 alone, doubling the total full-year record of 2,072 renunciations in 2019.

The trend has continued, with IRS data revealing at least 3,260 individuals renouncing citizenship in 2021 and a further rise to at least 3,840 in 2022.  

Understanding the Process of Renouncing US Citizenship

Renouncing US citizenship is a dedicated process that requires careful consideration and adherence to specific legal procedures.
To renounce your US citizenship, you must first meet eligibility requirements by being at least 18 years old and voluntarily choosing to renounce your citizenship.

You cannot be stateless at the time of your renunciation, which means you need to have a second citizenship. You will then need to complete the necessary forms and documents required by the US government and schedule an appointment with the US embassy or consulate. Once the review by the US Department of State is completed, you will receive a Certification of Loss of Nationality (CLN) to officially confirm the cessation of your US citizenship.

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    Consequences of Renouncing US Citizenship

    Renouncing US citizenship is not a decision to be taken lightly, you may consider the consequences before making next move:

    1. Loss of Rights and Benefits

    You will lose the right to vote in US elections, access to consular protection abroad, and eligibility for certain government benefits and services.

    2. Travel Restrictions

    Without a US travel document, you may face travel restrictions to the United States. You will need to apply for a visa or participate in the Visa Waiver Program (if eligible) to enter the country.

    3. Tax Implications

    Renouncing US citizenship does not absolve you of historical tax obligations. You may still be required to file US tax returns and pay taxes for the year in which you renounce your citizenship. Additionally, you may be subject to an “exit tax” if your net worth exceeds a certain threshold. While tax reasons may seem as a motivating factor, it is important to note that renouncing U.S citizenship for tax purposes exposes individuals to being inadmissible to enter the U.S. 

    For the above reasons, those considering renunciation should consult with both a tax and immigration lawyer before taking any definite decisions

    Renouncing US Citizenship : Alternative options

    Before deciding to renounce US citizenship, consider exploring alternative solutions like a Golden Visa that can lead to a citizenship in Europe for instance, a citizenship by investment program or naturalization via a citizenship by ancestry program that addresses your challenges based on your nationality.

    These alternatives can provide benefits including:

    • Tax Efficiency: Adopt new tax responsibilities that are more suitable for your needs. 
    • Global Mobility: Enjoy the freedom to live, work, and invest in multiple locations that align with your lifestyle and financial goals.
    • Diversification: Expand your investment portfolio and explore new market opportunities.

    1. Golden Visa Programs

    Golden Visa programs offer residency and, in some cases, a path to citizenship in exchange for investment in a country’s economy. These programs can provide a solution for those seeking to live and work abroad without immediately surrendering their US citizenship. Residency can be obtained by following popular Golden Visa programs though different investments:

    • Portugal Golden Visa: real estate investment, job creation, or capital transfer.
    • Spain Golden Visa: property investment or business development.
    • Greece Golden Visa: real estate investment.
    • Hungary golden visa : investing in investment funds or real estate.

    2. Citizenship by Investment (CBI)

    Citizenship by investment programs allow individuals to obtain citizenship in a foreign country through significant financial contributions. The Caribbean offers several attractive CBI programs, including:

    • St. Kitts and Nevis:  Real estate investment or a donation to the Sustainable Growth Fund.
    • Dominica: Real estate investment or a contribution to the Economic Diversification Fund.
    • Grenada: Real estate investment or a contribution to the National Transformation Fund.
    • St. Lucia: Financial contribution to the Saint Lucia National Economic Fund or government bonds.
    • Antigua and Barbuda: Real estate investment, business development, or a donation to the National Development Fund.

    3. Citizenship by Ancestry (CBA)

    For those with familial ties to certain countries, Citizenship by Ancestry (CBA) programs can provide a pathway to dual nationality without significant financial outlays. This option can be especially appealing for individuals who wish to maintain their US citizenship while reconnecting with their heritage and accessing the benefits of an additional nationality. Here’s a closer look at some notable CBA programs:

    France Citizenship by Ancestry:

    French citizenship can be passed down through generations. If you have at least one French grandparent, you may be eligible to become a French citizen yourself through a process called “acquisition of French nationality by descent.”

    Italian Citizenship by Ancestry:

    Italian citizenship can be yours through “jure sanguinis” (descent). This is often the most affordable path for many. Qualify if you have an Italian ancestor born in Italy after March 17, 1861, with a clean citizenship lineage (meaning no ancestors renounced or lost their Italian citizenship). Unlike other options, residency or investment isn’t required.

    Spain Citizenship by Ancestry:

    Spain’s “Jus sanguinis” program grants citizenship based on ancestry. This means even if you weren’t born in Spain, you could still qualify if you have a Spanish parent, grandparent, or even great-grandparent (under certain requirements). Residency or fluency in Spanish isn’t required. 

    Slovakia Citizenship by Ancestry:

    Since April 2022, anyone with Slovak residency and a Slovak-born Czechoslovak ancestor (parent, grandparent, or great-grandparent) can apply for citizenship. This applies regardless of your birthplace or Slovak language/culture knowledge

    Making Informed Decisions

    The decision to renounce US citizenship is significant and requires careful consideration of legal, financial, and personal implications. Individuals weighing their options should consult with legal and financial experts to analyze their specific circumstances and ensure compliance with US and international laws. 

    Choosing to renounce US citizenship is a profound decision with far-reaching implications. It necessitates a thorough understanding of the legal, financial, and personal outcomes associated with such an action.

    The alternatives outlined above provide viable avenues for achieving global mobility and financial efficiency without severing ties with the United States. Individuals weighing their options should consult with legal and financial experts to analyze their specific circumstances and ensure compliance with US and international laws.

    Contact Us Now

    Harvey Law Group assists you to make informed decisions with confidence. We’ll be by your side throughout this transformative journey, helping you achieve your global aspirations. If you are interested in learning more about Golden Visa programs, Citizenship by Investment or Citizenship by Ancestry programs, please contact us by email at [email protected] for a consultation.

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