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The Cost to Renounce US Citizenship

Expat

February 10, 2025

For the better part of a century, we’ve been told that taxes are the price we pay for living in ‘civilisation’.

Governments, from France to the United States, have long bought influence by offering freebies to the middle class. 

However, US expats, overseas entrepreneurs and even local high-net-worth individuals (HNWIs) are questioning the need to contribute while they operate and live overseas.

That train of thought often leads many, with Americans among them, to consider renouncing their citizenship. 

At the same time, the process itself seems to have become increasingly complex – it’s not as simple as calling Uncle Sam and letting him know you’re packing your bags.

High costs and complications are precisely why, at Nomad Capitalist, we often stress the importance of having a Plan B: even if renouncing isn’t in your immediate plans, it’s wise to be prepared for unexpected changes.

And, before you ask – yes, renouncing US citizenship is about more than just shedding a passport. 

It’s about embracing global mobility and financial freedom.

It’s about untethering yourself from a system that no longer serves your ambitions and going where you’re treated best.

If you’re considering a bold move towards a life less ordinary outside the United States, this guide will walk you through the costs and considerations. 

Why Renounce Your US Citizenship?

Why Renounce Your US Citizenship

Renouncing US citizenship is a move that, in most cases, reflects a desire for personal freedom. 

It is largely driven by a desire to make better, more strategic life choices, especially as it relates to finances or business.

Take, for example, Andrew Henderson, founder of Nomad Capitalist, who renounced his US citizenship in late 2017. His journey was methodical, highlighting the importance of thorough planning for such a significant decision.

Each year, Mr Henderson reassessed his situation, weighing the benefits and drawbacks of retaining his US citizenship. 

By 2017, the scales tipped in favour of renunciation, as the constraints of US citizenship no longer aligned with his global aspirations. 

We share this story because it resonates with many high-net-worth individuals who find themselves questioning their national affiliations and the cost of renouncing their US citizenship.

Ultimately, while renouncing citizenship is a big decision to make, it can also be a liberating one, offering a pathway to a life that is truly crafted around your unique desires and strategic goals.

The following are some of the main reasons American citizens have renounced their citizenship.

Freedom from US Tax Requirements

For high-net-worth individuals (HNWI), the US taxation system can feel like an ever-present dark shadow looming over you.

It is, after all, one of only two countries in the world that taxes citizens on their worldwide income regardless of where they reside. 

This extraterritorial reach can become increasingly burdensome, especially for those with diverse international investments. 

The hefty tax obligations often do not align with the benefits received, pushing many to question the value of maintaining US citizenship.

For the financially focused, therefore, renouncing citizenship offers a path to financial liberation. It frees people from the clutches of complex US tax codes and allows them to optimise their wealth in jurisdictions that better suit their financial strategies and lifestyle goals.

Renounce Your US Citizenship Tax Requirements
For high-net-worth individuals, US tax compliance can feel unrelenting.

Financial Reporting Requirements

The financial reporting demands imposed by the US can be both invasive and cumbersome. 

High-net-worth individuals are often required to navigate an intricate web of compliance, such as the Foreign Account Tax Compliance Act (FATCA) and Foreign Bank Account Report (FBAR), which mandate detailed disclosures of foreign assets. 

This lack of privacy isn’t just annoying; it can potentially expose personal financial landscapes to scrutiny.

For those who prioritise discretion and simplicity, the decision to renounce US citizenship is often a helpful move towards achieving greater confidentiality.

Personal and Professional Reasons

In addition to financial reasons, personal and professional considerations frequently play a significant role in the decision to renounce US citizenship. 

The allure of global mobility and the flexibility to live and work in environments that resonate more closely with their aspirations often beckons those seeking a freer existence. 

By giving up their US citizenship, they can remove geographical and bureaucratic barriers and create a life that reflects their true priorities.

How Much Does it Cost to Renounce US Citizenship?

How Much Does it Cost to Renounce US Citizenship
At the heart of the cost of renouncing US citizenship are tax implications.

The cost of renouncing US citizenship starts with the US$2,350 fee imposed by the US Department of State

This non-refundable fee applies to everyone, regardless of age or financial status and covers the administrative expenses associated with the renunciation process.

While this fee may seem steep, it’s only the beginning of the financial considerations for high-net-worth individuals contemplating renunciation.

At the heart of the cost analysis is the exit tax, which specifically targets ‘covered expatriates’.

To be classified as such, you must either have a net worth of US$2 million or more at the time of renunciation or have an average annual net income tax exceeding US$201,000 for the five years preceding expatriation. 

Additionally, failure to certify compliance with all US federal tax obligations over the past five years will also land you in this category. 

For long-term residents, defined as those who have held a green card for at least eight of the last fifteen years, the exit tax criteria are similar.

The exit tax is designed to prevent affluent individuals from severing ties with the US to sidestep tax responsibilities. 

It effectively treats all worldwide assets as if they were sold at fair market value the day prior to renunciation, potentially resulting in substantial tax liabilities

How to Renounce US Citizenship

Before you begin the process of renouncing US citizenship, we recommend understanding the full scope of this decision. 

This includes the legal and tax ramifications, such as losing the right to live and work in the US without a visa and potentially facing an exit tax if classified as a ‘covered expatriate.’ 

If you are convinced and qualify for the exit tax criteria, then you should consult with legal and tax experts, who can give you valuable guidance specific to your unique situation and financial setup.

Once you are done with that, you can follow these steps and renounce your US citizenship:

Book Your Departure

Assuming you and your trusted advisors have come to the conclusion that renouncing US citizenship is the best move for you, you will need to then book an appointment at a US Embassy or Consulate.

Availability can vary, so it’s wise to plan well in advance, especially if you want to expedite the process.

Assemble Your Paperwork Portfolio

As your appointment approaches, gather the necessary paperwork and familiarise yourself with the required forms.

Forms such as DS-4079, DS-4080 and DS-4081 capture your intent and ensure you understand the ramifications of renouncing your citizenship. 

Take the Final Step

The process concludes with an interview and oath ceremony. 

During your appointment, a consular officer will review your documents and confirm your understanding of the permanent nature of renunciation. 

You’ll then take the Oath of Renunciation, officially cutting your ties as a US citizen. 

Remember to account for the US$2,350 non-refundable renunciation fee and the potential exit tax, which, again, could affect your global assets.

Pros and Cons of Renouncing US Citizenship

Pros and Cons of Renouncing US Citizenship
Renouncing US citizenship is more than changing your tax status – it means greater freedom and mobility.

Is renouncing your US citizenship the right decision for you? 

Here are some common pros and cons that we’ve observed while assisting our clients through this process:

Pros of Renouncing US Citizenship

  • Freedom from US tax obligations: By renouncing US citizenship, you are no longer subject to the extensive tax liabilities imposed by the US on global income. This opens you up to manage your wealth without the constraints of US tax laws.
  • Increased global mobility: Renouncing US citizenship can simplify travel and residency in other countries, as it eliminates the need for complex reporting to the US government.
  • Alignment with personal values: As mentioned, for some, renouncing US citizenship is a statement of personal or political beliefs.

Cons of Renouncing US Citizenship

  • Loss of the right to live and work in the US: One of the most significant drawbacks is the loss of the automatic right to reside, work or retire in the US. Returning would require navigating the visa or immigration processes, which can be complex and extremely time-consuming.
  • Potential exit tax: As mentioned, this tax treats worldwide assets as sold at their fair market value, potentially leading to substantial tax liabilities that you will have to manage carefully.
  • Emotional impact of severing ties: Renouncing citizenship can evoke a profound emotional response, as it involves cutting formal ties with your country of origin. This decision might affect personal relationships and even make you feel nostalgic or regretful. It’s important to prepare for that accordingly, or at least to be aware that it could happen.

Is Renouncing US Citizenship Right for You?

It depends.

In the end, the decision to renounce US citizenship goes beyond practicality. Instead, it leads to a deep exploration of personal sovereignty and freedom. 

At its core, this choice is about taking control of your destiny, aligning your identity with global opportunities and crafting a life that resonates with your deepest values.

It’s possible to create a life where your allegiance is defined not by birthplace but by the ideals and environments that truly nourish your soul (or business and bank account). 

And as far as we’ve seen, there are many better options out there that treat you better than the US.

This is also the essence of sovereign living: It challenges us to look at the rules that govern our lives and ask if they really help us achieve our goals.

In this context, renouncing US citizenship is not merely an exit from tax obligations or a shift in legal status – it’s an embrace of possibility, a conscious decision to lead a life that is authentically your own. 

Reflect on your desires and the kind of legacy you wish to leave: does your current citizenship empower or hinder your true self? 

The answer to the question of whether renouncing US citizenship is right for you lies in the answers to those kinds of questions.

The Cost to Renounce US Citizenship: FAQs

Does it cost money to renounce US citizenship?

Yes, there’s a US$2,350 fee associated with renunciation and you may face a hefty exit tax bill as well.

Can you still live in the US after renouncing citizenship?

After renouncing US citizenship, you lose the automatic right to reside in the US. You’ll have to apply for a visa or permanent residency to live there, subject to approval by immigration authorities.

Can you reacquire US citizenship after renouncing it?

Reacquiring US citizenship after renunciation is challenging and not guaranteed. It requires a complex legal process, with approval remaining at the discretion of US immigration authorities, who evaluate each case individually.

How long does it take to give up US citizenship?

The process of renouncing US citizenship can take several months. It involves scheduling a consular appointment, submitting required documentation and attending an interview, culminating in the issuance of a Certificate of Loss of Nationality.

Can you renounce US citizenship if you owe taxes?

To renounce US citizenship, you must be tax-compliant for at least five years. This means you must have filed an income tax return every year for the past five years and pay any tax debts you owe.

What is the Certificate of Loss of Nationality in the United States?

The Certificate of Loss of Nationality (CLN) is an official document issued by the US Department of State. It confirms that you’ve voluntarily renounced your US citizenship, formalising the end of your legal allegiance to the United States.

Create a Plan B Strategy Beyond the United States

Create a Plan B Strategy Beyond the United States
To renounce US citizenship, you must first take care of your final tax obligations and tax compliance.

Depending on how you go about it, renouncing US citizenship is a strategic manoeuvre within a well-crafted Plan B strategy. 

By reconsidering national ties, you can ensure sovereign living beyond borders – a core theme of going where you’re treated best.

At Nomad Capitalist, we guide high-net-worth individuals through this journey, offering the expertise required to unlock a flexible and secure global lifestyle. 

Our services empower you to transcend national constraints, whatever that looks like for you. 

Whether you’re interested in tax optimisation, lifestyle enhancement or greater personal freedom, we ensure that your decision to renounce will be both informed and strategic. 

Apply to work with us to gain the insights needed to access a gateway to endless global opportunities. Your path to true global citizenship starts here.

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