The growing trend of renouncing United States citizenship?

Renunciation of U.S. citizenship has seen an upward trend over the past decade, influenced by various factors, including tax regulations and global financial reporting requirements. Here’s an overview of the available data:

Annual Renunciations:

• 2013: Over 3,000 Americans renounced their citizenship.

• 2014 to 2016: An average of about 5,000 U.S. citizens renounced their citizenship each year.

• 2016: A record 5,411 individuals gave up their U.S. citizenship, marking a 26% increase from the previous year.

• 2020: Over 6,000 Americans renounced their citizenship, setting a new record.

   

Trends and Factors:

The increase in renunciations has been attributed to several factors:

• Taxation Policies: The United States taxes its citizens on worldwide income, regardless of their residence. This unique approach can lead to double taxation and complex filing requirements for expatriates.

• Foreign Account Tax Compliance Act (FATCA): Enacted in 2010, FATCA requires foreign financial institutions to report information on accounts held by U.S. citizens. This has led to increased compliance burdens and, in some cases, difficulties for Americans abroad in accessing banking services.

• which countries do they opt to get citizenship of?

  When U.S. citizens choose to renounce their citizenship, they often seek new national affiliations based on factors such as personal heritage, economic opportunities, political environments, and quality of life. Notable trends and examples include:

  United Kingdom:

  The UK has seen a significant increase in American applicants for citizenship. In 2024, over 6,100 Americans applied for UK citizenship, marking a 26% rise from the previous year and the highest number on record. This surge is attributed to political changes in the U.S., particularly the re-election of Donald Trump, and modifications in UK tax policies. Affluent Americans are drawn to London’s stable legal and financial environment, with areas like Notting Hill and Holland Park becoming popular among American expatriates.

  Financial Times

  thetimes.co.uk

   

  European Union Countries:

  Many Americans pursue citizenship in EU nations to enjoy benefits such as freedom of movement, access to diverse markets, and cultural experiences. Some leverage ancestral ties to obtain citizenship:

  • Poland: Individuals with Polish heritage can acquire citizenship through descent. For example, one American secured Polish citizenship by utilizing her grandfather’s Polish passport.

    businessinsider.com

     

  • Portugal: Portugal offers citizenship to descendants of Sephardic Jews expelled during the Inquisition. An American utilized this provision to obtain Portuguese citizenship, highlighting the importance of thorough genealogical research and legal assistance in the process.

    businessinsider.com

     

  Other Countries:

  While specific data is limited, other countries have also been destinations for former U.S. citizens:

  • Singapore: Some individuals, such as Beijing-born film actor and martial artist Jet Li, have renounced U.S. citizenship to naturalize in Singapore, often for personal or professional reasons.

    en.wikipedia.org

     

  • Taiwan (Republic of China): Professionals like Nobel laureate Yuan T. Lee have relinquished U.S. citizenship to take up positions in Taiwan, reflecting career motivations behind such decisions.

    en.wikipedia.org

    The trend over recent years is as follows:

    • 2020: 6,166 renunciations
    • 2021: 2,426 renunciations
    • 2022: 2,390 renunciations
    • 2023: 5,315 renunciations

      The cost of renouncing U.S. citizenship includes both government fees and potential tax liabilities.

      1. U.S. Government Fee

      • The official renunciation fee is $2,350 USD (as of 2024).
      • This fee is non-refundable and must be paid at a U.S. embassy or consulate.
      • It is one of the highest renunciation fees in the world (compared to many countries that charge little to nothing).

      2. Potential Exit Tax

      If you are classified as a “covered expatriate,” you may owe an exit tax:

      • If your net worth is over $2 million, or
      • If your average annual U.S. tax liability over the past 5 years is over $190,000 (2024 threshold), or
      • If you haven’t complied with 5 years of tax filings before renouncing.

      The exit tax is calculated as a capital gains tax on your worldwide assets as if you sold everything at fair market valuebefore renouncing.

      • First $821,000 of unrealized gains is tax-free (2024 threshold).
      • Anything above that is taxed at 15–20% (capital gains rate).
      • Retirement accounts, deferred compensation, and trusts may also be taxed.

      3. Additional Costs to Consider

      • Legal & Tax Advisor Fees:
        • Most people hire a lawyer or tax professional, which can cost $3,000–$10,000+ depending on complexity.
      • Citizenship & Residency Costs for a New Country:
        • If you don’t already have a second passport, securing one (through investment, naturalization, or ancestry) can cost anywhere from a few thousand to hundreds of thousands of dollars.
      • Final U.S. Tax Return (Form 8854):
        • You must file a final tax return with Form 8854, confirming your compliance with U.S. tax laws.

      Total Estimated Costs

      Expense	Estimated Cost (USD)
      Renunciation Fee	$2,350
      Exit Tax (if applicable)	Varies ($0–Millions)
      Tax Lawyer / Accountant	$3,000–$10,000+
      Second Citizenship Cost	Varies ($0–$500,000+)
      Final Tax Filings	$1,000+ (if using an accountant)