How Much Does It Cost to Renounce Your US Citizenship

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

This message is the same in the big cities and small towns across many Western countries. 

From France to the United States, Western governments have long bought influence with the illusion that they are giving stuff to people for free.

There is one government service that is far from free. In fact, the price only keeps going up: the renunciation of US citizenship. 

We frequently emphasise the importance of having a Plan B at Nomad Capitalist. Even if you don’t plan on renouncing, circumstances can change unexpectedly, and knowing that you have options is reassuring. 

We are here to help you if you are interested in discussing your Plan B and the possibility of renouncing your US citizenship.

The Cost of Renouncing US Citizenship

Firstly, renouncing US citizenship requires that you obtain a second citizenship to even start the process. Some people have become stateless (i.e., they renounce, only to have no nationality), but that is not only dicey but often forbidden by embassies.

How do you go about obtaining a second passport? There are five ways that you can obtain a second citizenship: naturalisation, investment, descent, marriage or citizenship by exception. 

By acquiring a second passport, you regain control. Having multiple passports offers you an exit strategy and gives you the opportunity to live, work, study and travel in other countries, enhancing your personal freedom while at the same time reducing your tax burden. 

Besides the cost of actually qualifying to renounce citizenship, the US government imposes a fee for their time and hassle. 

Up until a few years ago, there was no fee: processing citizenship renunciation was a benefit you received from all those years of paying taxes.

A number of years back, the government added a US$450 fee to cover the ‘paperwork’ involved at their US embassies. That was about five times the average of other Western countries that charged a fee for renunciation, and while a bit insulting, it was reasonable.

In 2016, in the wake of year after year of record-high numbers of US citizens turning their passports back in, the government raised the fee to US$2,350 – more than twenty times what some European countries charge.

Few Germans, Polish, or Brazilians renounce their citizenship because there is no reason for them to do so. As soon as they stop living in their home country, they stop being taxed and regulated as residents.

Only US citizens who leave remain subject not only to US taxation but also to US regulations. 

The only way to escape is to turn your passport back in, with the US government all too happy to charge you a ransom.

The Cost to Relinquish US Citizenship

For those who didn’t wish to renounce their citizenship, there was a second option: relinquishment. 

The late Tina Turner did this by taking Swiss citizenship – something that took her well over a decade to get – with the intention of giving up her US passport.

If you look at a US passport, you’ll see that you can lose US nationality in any number of ways, including pledging allegiance to a foreign state with the intent of being deprived of US citizenship.

It’s a bit of a semantics game, but it has worked for some folks. 

However, the US – with its trillions of dollars worth of debt – has caught on to yet another loophole by the ‘evil rich’ and has increased the fee for processing a citizenship relinquishment from zero to the same US$2,350 that renunciation costs.

The government explains it thus: ‘Currently, nationals who renounce nationality pay a fee of US$2,350, while nationals who apply for documentation of relinquishment of nationality by the voluntary commission of an expatriating act with the intention to lose nationality do not pay a fee.

‘However, the services performed in both situations are similar, requiring close and detailed case-by-case review of the factors involved in a request for a Certificate of Loss of Nationality, and both result in similar costs to the Department.

‘In the past, individuals seldom requested Certificates of Loss of Nationality from the Department to document relinquishment. Although the Department was aware that an individual relinquishment service was among the most time-consuming of consular services, it was rarely performed, so the overall cost to the Department was low, and the Department did not establish a fee,’  the government continues.

Regardless of what the government says, it boils down to the fact that the US has the world’s most outrageous laws on taxes and regulation. 

And as it imposes even more ridiculous requirements on people who don’t even live here, a lot of the most successful citizens are flying the coop.

While America claims to be a free-market economy, it actually operates more like a modern-day plantation and can’t allow people to merely leave the country without taking a final pound of punitive flesh.

Sure, these citizens have likely paid tens or hundreds of thousands of dollars in taxes.

 Some may have paid even more, and no doubt many of those tax dollars were paid by said citizens while living overseas and enjoying not a single benefit the country has to offer.

These citizens didn’t enjoy the below-standard education system or the sky-high medical costs.

Despite all the money the government has collected from these expats, the message is clear: a government that wants to take from you will take from you at any opportunity it can get. 

If leaving your home country is part of your ‘Plan B,’ then you should know that the more desperate they get for cash, the harder and more complex it will be.

From $0 to US$450 to US$2,350 in just a few years, this is the trajectory the United States is on. 

Your country could be next if it chooses to implement the same draconian tax laws. Keep an eye on Canada and Australia, especially.

Is the Fee for Renouncing US Citizenship Worth It? 

The answer depends on your own personal scenario and your future goals, but the numbers speak for themself. 

Despite the skyrocketing fee for renouncing US citizenship, the number of US citizens deciding to renounce continues to skyrocket as well. 

In many cases, these individuals will save well over the US$2,350 fee by escaping the US tax system. 

If you decide to renounce, you will truly experience the benefits of freedom. Declaring dividends from foreign companies, opening new bank accounts, or starting a corporation will no longer be subject to reporting for US tax as a non-US citizen.

We work with our wealthy clients as the architects and general contractors of their holistic strategies, helping them preserve freedoms, especially in uncertain times. 

If you are seriously considering obtaining a second passport before renouncing your US citizenship, contact the Nomad Capitalist team.