On Receiving my Certificate of Loss of Nationality
rachelsruminations.com
rachelsruminations.com
All of this adds up to making Americans less attractive abroad than say Aussies or Brits, which surely has some negative impact on US competitiveness. And for what? Even the IRS estimates the savings in lost taxes to be a mere fraction of the costs of enforcement.
This makes literally zero sense. None. Cut your nose off to spite your face.
Negative impact on US citizen's competitiveness, which means they're less likely to get jobs outside of the US. Which means more looking for jobs domestically, leading to lower cost of labour for corporations inside the US.
>they will be less tempted to jump ship and set up competing businesses that jumpstart a foreign country's industry
The number of instances of this happening has to be close to zero.
I would also counter that citizenship also almost always necessitates an emotional element. Citizenship is a primary part of many people's identity, and identity is the most emotionally charged thing of all.
But if it is meaningful, why should it not come with a cost? Nations as constructed obviously provide value to the people residing there, should this not come with corresponding responsibilities? Like paying taxes? And if there is value and meaning to being a citizen of a specific country why should a nation not place restrictions and requirements on this privilege? I could even see for example the incentive to ban dual citizenship as one. Why is it just assumed that keeping a bunch of citizenships, not paying taxes to that country, all while not living in that country is a thing that should exist?
It seems like these people want their cake and to eat it too. If the country wasn't good enough to live in, why would you expect to keep the citizenship if you leave? "Marriage" is a two-way street..
This I disagree with. Nations are real in the sense that they have a material impact on the world, but are fictions in the sense that they only exist when people believe in their existence. It's like money. Obviously money is real - I have some in my wallet right now - but if no one believed in the currency then it wouldn't exist. It would just be pieces of paper.
> Nations as constructed obviously provide value to the people residing there
I would quibble with the assertion that this is the _reason_ nations are constructed, but I do agree that they provide value.
Some people's lives are just more complicated. I'm a dual citizen myself, with two citizenships from birth. I was born in Canada from two American parents. I've had two passports all my life. I happen to live in the US but I've never really chosen one country over the other. I derive identify from being a citizen of North America. There are plenty of people with slightly more complicated than average stories, they should be able to exist.
But you asked, why remain a citizen? As a citizen, I can freely enter the US, even during a pandemic. When a relative dies, you want to go back and you shouldn’t have to worry about getting a tourist visa, you know? That’s not the only reason, but it’s a pretty big one.
Most people also associate citizenship with right of abode, but that's not always true either. For instance, the BN(O)s from Hong Kong are British Citizens who on that basis cannot live in England or Hong Kong - or anywhere. A separate document, an HKID or a visa, are required for them to live in HK and the UK respectively.
At the end of the day it's just paperwork that decides who negotiates your right to travel and is responsible for coming to get you if things go bad.
It doesn't really mean much else. Where you live and the government you engage with regularly in my opinion has far more bearing on you, your obligations and your benefits.
Obviously, I have no idea what goes on in other peoples heads.
If the only tool you have is a hammer…
People don't take kindly to men being "weak".
https://taxsummaries.pwc.com/united-states/individual/foreig...
Which is technically also a normal bank account.
Would need to look at the tax treaties for the specific country.
I agree with her that the system is really bad. We're in the US now, and my Italian wife has none of these hassles: we live in the US and pay taxes in the US and that's that as far as Italy is concerned.
As someone who has been through this, perhaps you can explain why this is.
What makes it so different from US taxes for people living in the US? You definitely do not need an accountant here.
If you don’t make much money, and what money you do make is cash, you spend that cash immediately instead of putting it in your bank account, and you don’t care about retirement, then sure, it’s easy. Dead simple, in fact!
If you’re pretty normal though, it’s impossible to invest in mutual funds and ETFs outside the US unless you want to deal with PFIC filings (you don’t) and if you live in the EU, you’re double screwed, because they won’t let you buy US mutual funds either. And by the way, the accounting algorithm for FATCA is complete nonsense, because you need the highest value of each account over the year, a number that simply doesn’t exist in most banks, so good luck digging that up properly. And if you don’t, $10k fine if they prosecute.
And for retirement, I’m honestly not even sure what to do there, so yeah.
It’s a shitshow, and I’m not sure what your situation was that you didn’t feel like an accountant was useful.
Not really. Norway does that for 3 years after leaving. Australia is very opinionated and may not allow people to change tax residency, even after physically moving out...
> If you are an Australian citizen or a permanent resident you cannot leave Australia due to COVID-19 restrictions unless you have an exemption.
People used to escape communism for such reasons.
protip: if you live in Maryland, and plan an overseas life, establish a domicile in a tax friendly state beforehand. Then leave. Otherwise, Maryland will own you. A pox on Maryland.
> Moreover, it makes expats ineligible for certain retirement savings in their country of domicile (as the US does not recognize pre-tax deductions for these investments, like those countries do not recognize investments in 401k’s).
This is true but unrelated to taxing worldwide income. Basically, there has to be bilateral/multilateral agreements between countries about how to treat contributions to and distributions from retirement accounts and these are very few and far between.
The US and Canada have such agreements but the US and Australia do not. So Australian superannuation accounts generally can't ever be closed so you have to keep reporting them to the US government every year, whether you're a citizen or not. Even those on work visas have to do this. Worse, it's unclear how gains in such accounts should be treated for US income tax purposes. There are literally no laws and no case law on the subject so everyone just has to guess.
> It also makes it challenging for expats to find banks willing to serve them because elf the added complexity.
So this is also mostly true but again (mostly) unrelated to taxing worldwide income. This is because of FATCA [1]. The US uses access to the US financial system as a wedge to get foreign financial institutions to report accounts of US citizens so being a US citizen imposes a reporting requirement on foreign banks that many don't want to deal with. It's easier not to offer services to US citizens. But again, FATCA reporting requirements aren't really the same thing as taxing worldwide income.
> ... lost taxes to be a mere fraction of the costs of enforcement.
The point here unfortunately isn't really to enforce anything. It's so if the US decides to get you, it's something else they can prosecute you for.
> This makes literally zero sense.
That's not strictly true either. The idea is that US citizenship is so beneficial that it justifies these costs. It's true that a US passport gives you a lot of access to various countries. I believe the US passport is right up there in the top 10 passports. I'd hazard a guess and say the only reason it's not even higher is Middle Eastern countries. Also, the State Department will make some efforts to recover and evacuate US citizens in certain circumstances.
Is this worth the hassle? Probably not but for some it is, I'm sure.
Still, there's definite room for improvement.
[1]: https://www.irs.gov/businesses/corporations/foreign-account-...
https://web.archive.org/web/20191128002117/https://www.passp...
Beyond taxation, the limitations with American institutions when being domiciled abroad put you into a terrible edge-case with needing to crutch on someone stateside with an address. So much stupidity.
One addendum: while FATCA is newish and bad, the concept of taxation of Americans abroad dates back to the Civil War period. FATCA only made an existing injury worse.
I'm not surprised, but could you provide some references on this...I am curious to read.
Starting a business while abroad is especially painful as you are the beneficial owner of a controlled foreign corporation, and the tax reporting there is its own special hellscape.
"You're not part of this project, get out and stay out." There was a bill in the 1990s to permanently ban any Americans who renounce from coming back, which is hardcore.
But we're also a country that to war over a few states leaving. Whatever the reasons, it was equally hardcore to sacrifice so many to stop it. Maybe an intense dislike of people leaving is embedded in our blood.
> Civil War lawmakers were clearly suspicious of Americans who chose to live overseas, especially during the nation's most desperate hour. In his fascinating study of citizenship-based taxation, Kirsch offers a particularly apt quote from one Union lawmaker: "If a man draws his income from our public debt, or from property here, and resides in Paris, skulking away from contributing his personal support to the Government in this day of its extremity, he ought to pay a higher income tax."3
[1] http://www.taxhistory.org/thp/readings.nsf/ArtWeb/3AF72D29CA...
Consider the situation: you're a dual US / Dutch citizen. You want to avoid paying US income tax (or just to avoid filling in a form each year that results in the IRS telling you that your tax bill is $0 because the Netherlands' tax rate is higher). But the State Department's renunciation route takes 3-4 years. So you mail them a letter instead announcing that you are renouncing your citizenship, and you include your US passport with the letter. You don't send the IRS a tax return in subsequent years, and you tell all your banks that you are not a US citizen and ask them to update your details accordingly.
I assume that what happens next is that your bank has a procedure for asking the US State Department if you have renounced your citizenship, and they say "no". So the bank continues to treat you as a US citizen, with all of the reporting obligations that entails.
Your method of enforcing this would (I assume) be to file a suit against the bank in the Netherlands and seek an order to prevent them from passing any information on you to the IRS. You would effectively be asking a Dutch court to rule on whether you can unilaterally renounce US citizenship.
I have never heard of such a case (either in the Netherlands or elsewhere), so I assume this has never been attempted. I don't know if that is because there is a strong reason to suspect that it would fail.
Banks abroad demand proof beyond just telling them that. You need to show the Certificate of Loss of Nationality or present a US Taxpayer Identification Number.
One catch is that if the passport is like the UK or US passports (i.e. perhaps all?) it will show your place of birth, and if (like the UK Prime Minister) that was within the US, anyone with half a brain will know that from the US perspective, you were born a US citizen.
This is incorrect. The method of enforcing tax obligations is spelled out in bilateral tax treaties. In this instance the US would lean on the Netherlands to enforce it and failure to pay the obligations to the Dutch would be punished by whatever their tax law says.
Further, you might still be able to prevail in a court. You would essentially be asking a court to find that you have a unilateral right to renounce a citizenship. Again, I doubt such a right is explicitly set out in any Netherlands law, but you would would be arguing that such a right is implied by some other principles. If the court were to find in your favor, the fact that the Netherlands has a treaty to the contrary would merely mean that the treaty was now incompatible with Dutch law.
I would strongly recommend against going that route.
Besides that, you still have to get your 'new' country to give you citizenship as well, which will go a lot smoother if the new citizenship is paired with renouncing the USA one, you really don't want to become 'stateless' for many reasons.
I'm not a lawyer but I'd guess that since you're citizen at the time, you'd have to follow the law for renouncing citizenship. You "unilaterally" renouncing it wouldn't mean anything since the law of the country says different.
Perhaps consult a lawyer and if they say that there might be something there try to crowdfund it.
But this is exactly the point. US law specifies what you must do to give up US citizenship. And the US would continue to regard you as a citizen - you definitely put yourself in a position of not being able to set foot on US soil without consequences if you go this route.
But remember, in this scenario you live in the Netherlands. You want Dutch law to agree that you are not a US citizen, thus relieving you of your obligations so long as you continue to live in the Netherlands.
There is something similar that happens regularly.
Perhaps look at gaining citizenship at country that allows only single citizenship. It should make American citizenship null and void.
I suppose another test case would be if you were to apply for German citizenship following your unilateral renunciation.
And nowadays without difficulty if the other country is a EU country. But that is a deviation from German law tradition EU has forced on them.
Statelessness exists, but the UN treats it as a human rights concern so I doubt Germany would impose it.
You apply for Austrian citizenship while you still have your original citizenship. Austrian authorities decide whether or not you should receive citizenship, *but do not grant it to you*
Instead they give you documents that basically say that you have an entitlement to Austrian citizenship the second you renounce all other citizenships, if possible. There are exceptions for some, none cooperative nations.
So if you are a US citizen you would basically have a document that says you are an Austrian citizen the second you renounce your American one. I imagine the Germany handles it similarly
https://hr.vanderbilt.edu/international-tax/tax_treaty_savin...
They could prevent the Dutch banks transmitting your info, but they can do that regardless of your US citizenship.
The likely outcome is the Dutch court refuses to touch it. Even if you win, I don't think they'd touch your citizenship. They'd just refuse to extradite. They don't have to do what the US wants just because the subject is a US citizen.
The US is going to be infinitely more interested in preventing this than the Dutch are in allowing it though.
It also applies to Greencard holders for more then 8 years, defined as long term permanent residents.
The Exit Tax is a huge tax penalty (37%) on anyone owning more than $2 million [3].
[0] https://taxfoundation.org/outraged-facebook-expatriate-sens-...
[1] https://www.politico.com/story/2012/05/ex-patriot-act-would-...
[2] https://www.casey.senate.gov/news/releases/casey-schumer-ann...
[3] https://www.irs.gov/individuals/international-taxpayers/expa...
"IRC 877A imposes a mark-to-market regime, which generally means that all property of a covered expatriate is deemed sold for its fair market value on the day before the expatriation date."
Unless this document is leaving something out, the gains would not be taxed at the marginal income rate unless they are short term gains. Presumably most people with large amounts of unrealized gains would be paying long term capital gains taxes, which are currently a 20% rate.
I thought this provision was simply to ensure that you didn't make large amounts of wealth in the US then skip out on paying taxes on your gains. That seems very reasonable to me, although perhaps I am missing something.
https://www.americains-accidentels.fr/
I'm not complaining. This is all voluntary (though I think the adoption licensing is excessive, given it's even worse than getting a security clearance whereas a biological parent just needs to inject sperm into someone). But living overseas is also voluntary.
I completely agree that the US government is unnecessarily overbearing about this kind of thing compared to most other countries, but let's be honest about how widespread this is. It's not at all limited to burdening expats. Even down to cosmetology licensing, we do this kind of thing everywhere, at every level of government, to many types of people.
This presumably contributes to why Americans are so anti-government compared to Europeans. Our main points of interaction with governments are often things like this. Just this morning, I finally managed to pay off four years worth of back property taxes. The stupid thing about it is I've been trying to pay the entire time. The money has always been sitting in an escrow account. But something about our deed was incorrect, the county had no record of my lot existing, and we couldn't pay! When they finally corrected the deed, we not only got the four years worth of charges, but late penalties on top of it, even though I'd been trying to pay! And because the past year's charges were all listed as supplemental, the escrow account didn't even pay it and I've been fighting with them for 8 months to give me back my money so I can pay my taxes.
So you are not alone, Rachel Heller.
There's a lot of complaints here about annoying and costly taxation of "expats" but there's no discussion of why it should be valid to have citizenship but not reside in that country's borders?
What is citizenship for except to actually be a citizen? And what does that mean, living in another place and being a citizen there? Or should it mean actually contributing to the country you are a citizen of by living and working there, building the "community" you claim to be a part of? Should it not come with obligations to pay taxes to the country you are a citizen of?
I don't get the mindset that views it as some right and not a privilege that comes with responsibilities.. I think it's even perfectly valid for nations to ban dual citizenship itself.
People like the OP who produce dozens of posts documenting the supposed injustice following her own decision to move to another country are the epitome of the term "rootless cosmopolitan". What interest of a nation does it serve to cater to these people that have left for greener pastures?
I don’t think anyone would mind losing their US citizenship as soon as they leave the country, if you could also regain it as soon as you enter
I see very little reason as to why rootlessness has been made really hard in our current global system. I am not sure in whose interest it is that this cosmopolitanism has been made so bureaucratic.
Until a few years ago when the US gov declared that I would be a criminal unless I became a full fledged US citizen. They also made this as difficult, expensive, confusing and time consuming as possible. For example having to find some paper documentation that is was living in Canada in 1967 etc. Huge costs - all of it going to specialist accountants - none to the IRS. And a huge complicated ongoing burden.
I am not even allowed to renounce until I have gone through this charade for a few years.
What has the US got out of this? They have processed lots of paperwork on my behalf and they have sent me some (unsolicited) stimulus checks which paid a tiny portion for the (Canadian) accountant fees they have saddled me with.
The Canadian banks then have to report all the accounts of US citizens to the US gov. The banks comply with all this because otherwise they get super nasty fines against their us operations.
Also: they tell you that if you come in under the amnesty program (like I did) that their will be no big penalties - but if you wait until the amnesty program expires - and they then find you - they will treat you like a criminal.
There are people who, during their lifetime, live on different countries. So according to you someone who lives in four countries should change nationality three times?
> I think it's even perfectly valid for nations to ban dual citizenship itself.
Some do, some don't. In doubt I always vote for the option giving the individual more freedom: so even though I don't hold dual citizenship, I'm glad for those who do (except when it's US + another one and the US one proves to be a pain when living outside the US, as is the case in TFA).
> What interest of a nation does it serve to cater to these people that have left for greener pastures?
All I see is a free individual telling her tale.
BTW you used the term "rootless cosmopolitan" to describe her: apparently that's some soviet-era antisemitic insult.
The evil free individual, how dared she abandon the nation state?
Of course it makes sense for countries to restrict who they want to come in, and no I don't think my logic dictates that citizenship should be granted to anyone just because they want to come in.
I'm describing people who have "rejected" being a citizen of a country by virtue of leaving, living in another place and working for the economy and community outside of the nation who they were a citizen of before.
I'm saying that being a citizen has value and so it should come with a cost, or it should be given up (or taken away). And that this shouldn't be very controversial. Certainly if you left an organization and worked for someone else you wouldn't be considered part of the old company? Or if you were on a sports team and left to another, same thing. It is up to each organization to determine the standards by which they assess granting membership.... leaving the org is certainly an legitimate criteria for revoking it.
>The evil free individual, how dared she abandon the nation state?
In and of itself I don't think it's that big of a deal, what I'm saying is, from the perspective of the home nation and its people... the citizens who didn't leave, why would it make any sense for them to cater to the people that left? To worry about their every whim and desire? They left. A nation and its people are those who are there and working to contribute to it and make it stronger. This is such common sense I don't understand the mindset who would think otherwise.
The crux of the argument here comes down to this: OF COURSE from the perspective of individuals moving all over the world, they want absolute freedom, to do whatever they want, to go wherever they want, to have all the rights and priviliges of all the places they can possibly get with no costs. But this has nothing to do with what is best and desirable for a nation itself. What is best for the nation as a whole, including the people that actually live there, doesn't always match up with what people roaming all over the world want. And so the interests of people actually living in a place are no less valid nor do they matter less (I think they matter more, actually) than the interests of people that don't live in a place.
At least it’s only acquisition price you need to worry about.
e: I was wrong; see below.
Sure, it's a very difficult path in practice... But in theory I don't see why something like this wouldn't be possible: you renounced your citizenship, win the Nobel Prize 30 years later, get an EB-1 visa based on that achievement, then get naturalized five years later.
> (E) Former citizens who renounced citizenship.— Any alien who is a former citizen of the United States who officially renounced United States citizenship is inadmissible. https://en.m.wikipedia.org/wiki/Reed_Amendment_(immigration)
This reentry ban has never been enforced but could be in the future, if anyone has actually been able to say they renounced due to tax avoidance.
* https://www.greenbacktaxservices.com - give them your foreign tax return and they file your US return
* https://wandererswealth.com - international tax consultant
* https://nomadcapitalist.com/book - modern flag theory, talks about moving your life and business overseas to control your tax rate
For bank accounts, I had trouble opening them in Germany (US citizens are to foreign banks like GDPR is to US companies) except for Number26 however that's an online-only account:
Edit: Why am I getting downvoted for sharing useful resources? I'm not affiliated with these links in any way.
I'm not an accountant but having filed multi-jurisdiction tax returns myself I don't see a mechanism by which this could happen.
Where you get screwed is when countries have different philosophies on things. E.g. Canada doesn’t tax gains on your home, but you can’t write off mortgage interest on your taxes. Meanwhile USA taxes gains on your home but lets you deduct mortgage interest.
If you’re a dual citizen living in Canada, you pay both.
Or if you live in a country with predominantly sales taxes and no income taxes, well, now you get to pay lots of sales taxes and US income taxes.
Under U.S. law, citizenship and nationality are two different things. The common refrain, well-established and reified by no less a body than the Supreme Court, is, "All citizens are nationals, but not all nationals are citizens." In other words, the set of U.S. citizens is a subset of the set of U.S. nationals. (The set of U.S. nationals is itself is a subset of the set of U.S. persons; viz. U.S. entities such as corporations or LLC's are U.S. persons but not U.S. nationals.) The rights and privileges, and duties and obligations, conferred on the two groups, U.S. citizens and U.S. nationals, substantially overlap, but do not coincide. Both U.S. citizens and nationals have the right to enter or exit the United States of America at any time and for any reason, both have the right to reside indefinitely, and both are authorized to work without restriction. In general, U.S. citizenship confers all of the features of U.S. nationalship, plus some; U.S. nationals are barred from certain activities, such as voting in federal elections and, generally, are exempt from being called to serve on a jury.
The author of this article found her U.S. citizenship to be too burdensome to maintain, and therefore relinquished her U.S. nationality, thereby indirectly relinquishing her U.S. citizenship. Was this necessary? You will notice that the IRS claims the authority to tax (a) the income of U.S. persons (which includes U.S. citizens, U.S. nationals, U.S. entities such as corporations or LLC's, and non-citizen and non-national residents), and (b) the worldwide income of U.S. citizens.
But does the IRS claim the authority to tax the worldwide income of non-U.S. citizen, non-U.S. persons...such as non-resident U.S. nationals?
It really makes you think.
Apparently she wasn't paying taxes (to the US) anyways.
It's like, you took almost half a mil in debt to go to a PRIVATE SCHOOL to get a degree that you would have no hope of ever using to pay back your _crippling debt_. Student load debt is a real problem in USA..but that's not it.
I think the issues are pretty simple; if you are a US citizen but living and working in another country permanently with no US local income, she found the impact of FACTA and tax reporting obligations to be too expensive and or pain-in-the-butt to make it worth keeping her US citizenship.
There are very real impacts and constraints on ex-pats in this situation; whether or not they are worth it to you is a personal evaluation I suppose.
This is nothing like the schoold debt issue you describe.
She wanted to still be an American, but didn't want to do the yearly paperwork to keep her citizenship.
Got it.
One of the worst parts about this situation is the difficulty in investing from abroad. Can't buy US ETFs/Mutual funds because they don't report properly abroad and can't buy foreign ETFs/Mutual funds because they don't want to report to US. This is a totally unnecessary financial burden on US Expats.
So, first it's difficult to find banks that'll even accept US citizens and then once you do, it can still be very restrictive.
Say you're a dual US / German citizen. Will that help a German bank more easily bank with you? Do you even have to disclose to the bank that you're a dual citizen, or can you simply present yourself as a German citizen?
You may misrepresent your tax status towards the bank, but I'd assume that takes you on risky grounds, legally.
https://www.irs.gov/individuals/international-taxpayers/clas...
Whether the bank finds out or not is maybe another thing, but in principle what matters is if you count as a US Person.
Some countries won’t let banks refuse to open an account.
I’m sure some people lie to their bank (or continue to hold accounts from before they would ask these questions). But it’s more complicated if your place of birth is USA. But that could be bypassable too if you have the right documents.
Just because you don't belong to a group that has enough power to force the changes YOU want doesn't mean that you aren't being represented. I have no idea why any single person would expect to have a disproportionate amount of power simply because of where they don't live.
It reminds me of Chappelle's "Since when did America give a ** about any of us?"
What about the residents of Washington D.C.?
Having disproportional political power based on residency is central to the American political system. What you probably don't understand is her particular preference as to how that disproportionality is arranged.
That makes sense to me that expatriates have some level of representation to defend their interests.
And of course I only have to pay taxes in the country where I live. US citizens living abroad seem to have it way more difficult than we do.
So, if I understand correctly, the very fact that I was squirted out here in this country puts me at a -$2350 just for being born.
So US citizenship = -$2350
A very cheap lifetime insurance policy for $2350.
Civis romanus sum
And there are many cases where they have. This guy certainly got his $2,000 worth when Seal Team 6 swooped in, killed a bunch of people and rescued him. https://www.independent.co.uk/news/world/americas/us-electio...
Trump administration had over the years rescued 55 hostages in 24 countries. Their only qualification of rescue, being american citizens.
> This is a myth. It is not true.
Thus it is true, and it is not a myth.
People waste more money on lottery tickets.
US citizenship essentially became IRS trap.
Then in a completely separate line of decision making decides to make the lives abroad unnecessarily difficult.
Will it? It barely survived 4 years of Trump. If he gets another crack at it he'll know exactly where to strike to bring it down.
She also doesn't complain about paying taxes, but having her accounts reported to the IRS, and having to disclose the fact that she has access to funds in accounts not in her name....as well as not being as represented as she feels she should be from said taxation.
Come on, it's your bank account numbers, that's only because the US government already knows what your account numbers are.
> I pay almost $1000 per year to an accountant to fill out the forms—more and lengthier than they’d be if I lived in the US—only to prove I owe nothing, since I pay taxes here in the Netherlands.
If I had to pay $1000 to an accountant, I'd probably learn how to do the forms myself.
It's also quite stressful, since there are many ambiguous questions, most of the proprietary tax software is ill-equipped to consider the situation of an American living abroad, and a wrong answer can subject you to audit.
https://www.hrblock.com/tax-center/income/other-income/how-m...
(Note that I am not a tax professional and you should not rely on anything I say.)
With that said, $1k annually is a small price to pay to maintain your US citizenship through annual tax filings. The benefits (imho) outweigh the cost (employment access, residency, repatriation).
Tangentially, this sounds like a startup opportunity.
If you make more, Form 1116 can be a pain to get right but if you have an accountant do it once you can figure out how to modify the form for subsequent years.
Many of my compatriots wait longer, pay less in absolute but more in relative terms and celebrate afterwards.
Lots of us would do well to be more grateful.
Is it whiny and melodramatic to want to be able to utilize the retirement savings plans of your country of residence?
This isn’t just economics and convenience. It is basic living and Americans abroad are treated like second class citizens relative to those of other countries.
Banking and investment and retirement are entirely economical reasons.
Convenience is not wanting to file taxes, etc.
But lot of people are treated like second class citizens because of their passport in Netherlands (or in America, for that reason). There are a lot of people who get treated worse in their native countries. And her story is nothing out of ordinary.
Sure, it might be hard to get a bank account opened. But on the other hand, she most likely could travel to Netherlands without a visa -- this is very difficult, expensive and time-consuming process for the rest of us. I dare say the paperwork to just to get a work visa for a citizen of most countries in the world is probably greater than her taxes forms (and they also include information about the source of the money, by the way).
Also, where I'm from, lots of young men would love to renounce their nationality just to avoid conscription. We don't have the chance: you need to have another country's citizenship just to renounce yours.
So being in a position when you just can renounce your nationality is a great privilege, and I don't see her acknowledging that.
The whole system with citizenships and visas is severely broken, and she is not the one who is harmed the most. So it's difficult to empathise with someone who has it much easier than we do.
I had a friend complain pretty vehemently because their Ukrainian partner had to get a visa to go to a country.
I then had to explain that for most of the rest of the world going to most countries requires a visa, and that my passport at that moment was at an embassy for a visa application.
I also had to point out that it is in fact possible that your visa might get rejected so then all you've booked for your trip is potentially wasted.
Astounding.
Regarding the taxation when living abroad, doesn't it actually make sense? Sure it sounds like an oddity because the US are the only to do it, but most emigrants I know still use the consular services of their country of origin every now and then, benefit from its diplomatic protection, and can return any time if circumstances require it (implying they should be contributing to keeping the country safe and functional in the meantime, call it an insurance policy if you will), and probably many other benefits I'm not thinking of. Some countries will even send special forces abroad to recover citizens in danger.
So yeah apparently the practicalities of it suck sometimes (and that should definitively be improved) but in principle it's not as outlandish as it sounds, imo.
The complaint is not about having to pay taxes to reflect your status, it's about having to pay accountants etc. to complete forms that show you don't owe any tax to the US.
The United States doesn't actually do much for its citizens; it's the states that do things for citizens, and if you're not in a good state, you get no real value from the United States or any part of your country. It wasn't always this way, but it's been this way for as long as I've been alive.
Sentiment is overrated and irrational if the country's never given you anything, and the United States just doesn't give anything to a substantial volume of its citizens.
A common argument is that the United States gives the right to free speech, or to guns, or to varying abstract concepts, but it would also give this even if everyone stopped paying their taxes and the United States was unable to enforce anything.
I'm a big fan of taxation, and of most laws. The US, though, really doesn't do anything with it that has ever benefit me.
The poster really does seem like, if anything, she cares too much for the country.
Or probably skeptic, because they're planning on moving to a good state.
Or most probably, they don't care. They're moving countries, they probably don't have the most nationalistic bent to them.
I don't hate the United States, I'm just not being unrealistic about how beneficial it's been for me.
Maybe that's what happens when someone means so little to their country?
>I could vote in the US, but no one represents the needs of US citizens abroad because our votes are dispersed over all 50 states.
* there's hundreds of millions of people and only two parties in the U.S. no one represents anybodies needs well
>I pay almost $1000 per year to an accountant to fill out the forms—more and lengthier than they’d be if I lived in the US—only to prove I owe nothing, since I pay taxes here in the Netherlands. FATCA forces me to hand over my private financial information, as well as my non-American husband’s, to an extent that homeland Americans don’t have to unless they’re suspected of a crime. FATCA strong-arms our local banks into handing over our private financial information as well. It treats my local accounts as being equivalent to hiding money overseas.
* Taxes and the FATCA issues....to me and I'm sure billions of other people: $1000$ bucks a year is well worth it for a U.S. citizenship...Turning over financial records of the non-American spouse...this one doesn't add up, just do Married Filing Separately status in tax return.
>Without an address in the US, I can’t open an investment account there; with US nationality, it is becoming more and more difficult to do any investment or borrowing outside of the US.
* this doesn't make sense. Why would having a citizenship affect if a Dutch bank loaned you money as long as your credit score was good?
The reasons she gives don't make sense to me...something feels off here.
Regarding the difficulty of investing/borrowing outside the US: Non-US banks are required to report stuff to the US if they have US customers. So they might not want US customers because it's a hassle for them.
I know several people that have gone down this path and a few who are doing it right now, the US seems outright vindictive against those that want to leave, a bit like an abusive spouse that can't imagine there is a life after them for you.
The problem in the Netherlands isn't so much expats who grew up in the US, but "accidental Americans" who were born in the US and left as small children. They are US citizens, but don't have an SSN, which Dutch banks require to comply with US law (and with pandemic-related embassy closures, obtaining one isn't necessarily easy).
Problem is that FATCA requires banks to actively send the US government personal information about its customers with US citizenship, while the GDPR forbids them from doing so without consent from their customers (https://americanexpatfinance.com/tax/item/632-eu-data-protec...)
But yes, accidental Americans definitely are a weird case. Some of them don’t even know they have US citizenship until the IRS sends them a message, or when, upon visiting the USA, border control requires them to show a US passport (https://en.wikipedia.org/wiki/Accidental_American#Awareness_...)
I noticed you said 'many' and not 'all' banks.
It looks like these banks work for expats.
https://dutchreview.com/expat/best-banks-expats-netherlands/
Something doesn't add up.
From a non rich persons perspective it appears that person gave up her citizenship so she could essentially have a better selection of banks and to not have to use a VPN?
It seems like a US citizenship is worth it?
The actual real problems are not clear to me.
Yeah, how to remain non rich: keep your money in a savings account and not invest in stocks, etc. Want to start a business? Need a loan for that? Sorry...
Also that webpage doesn't even say those banks accept American clients, "expats" don't mean American, EU freedom of movement and ease of getting work visa means there's people from all over the world in the EU, either temporarily or permanently.
Addendum: I've also talked to someone who said she couldn't take some jobs because if she has access to the company's bank account, she has to report that to the IRS, maybe even the amount in that account, which of course no foreign company would volunteer unless they really have to.
Bunq, the first bank that's listed, has special requirements: https://together.bunq.com/d/2318-why-are-there-special-regul...
With an SSN you can open a basic checking and savings account. However, you'll be denied for any type of investments. This also means U.S. citizens can't participate in pension plans of Dutch employees.
Even local crypto exchanges are refusing service: https://bitonic.nl/en/faq/33/what-is-a-us-person
Meanwhile, banks and brokers in the U.S. require a permanent residential address. For example, Wealthfront states they don't "support clients residing outside of the U.S., including U.S. citizens residing abroad".
Additionally, The Netherlands has a wealth tax. Even on unrealized gains. Each year you pay taxes on stocks you haven't sold yet. Then, when you actually do sell, you can't use the previous years of Dutch taxes that you've paid to offset the U.S. capital gains tax.
It's especially complicated for so called Accidental Americans. Many of whom don't have or know their SSN. To get one you must submit your birth certificate and US passport. If you don't have those it's quite difficult to get them.
When you finally obtain your SSN, renouncing is a challenge in itself. It requires filing tax returns for the past 3 years + 6 years of FBAR (you'll most likely need an accountant for this or face steep penalties), pay $2300 to renounce, and then file another tax return for the year in which you renounced.
As long as one has non-US local friends/family who can cash out, I don't think this matters much (albeit in a local currency)
I think in this day in age, all of this is really depends on ones personal preference in how deeply they want to tie themselves directly to the traditional banking system (and traditional asset classes/financing/jobs/organizations) without even trying to give up US citizenship (because obviously, the process is a PITA).
As an American expat for five years, I can assure you her complaints are accurate. 1. Not remotely the same. As a resident of a particular state, your senators and congresspeople are certainly looking out for your state’s interests. As an expat, almost nobody cares. 2. FATCA doesn’t care how you file. If you’re married, your spouse is included. 3. Most investment banks will no longer accept expats as clients, and go so far as to monitor and close accounts for people consistently logging in from overseas. When we lived abroad we had to be very careful with VPNs, and often had our US-resident parents monitor our accounts for us just in case.
You've apparently forgotten a whole lot in your five years as an expat.
Im NOT! I'm trying to understand it.
It appears that she's giving up her citizenship so she doesn't have to use a VPN and has a better selection of banks and to avoid paying $1000 a year?
Seems like a citizenship is worth WAY more than that!
Something doesn't add up here!
Or do people with a lot of money just have a lot less tolerance for inconveniences than average moneyed people?
You can transfer money into that account via digital transfer?
OF course your Netherlands employer won't match 401k, they prob don't even know what that is.
Will they match it a 401k if you GIVE UP your citizenship?
Doesn't make sense.
So, long story short, she's ineligible for investing as a US national unless she jumps through hoops to maintain a US address and appears to reside in the US. Meanwhile, she's ineligible for investing as a Dutch national because EU brokers won't deal with US nationals. Limbo.
I'm a dual US/UK citizen, living in the UK for four years. I have been turned away from local banks for being American. I have also had American banks and brokerages unilaterally terminate my prior accounts for moving abroad. I cannot reasonably purchase local life insurance policies nor mutual funds without tripping over IRS regulations that strip them of any preferential tax treatment and impose unimaginably onerous reporting requirements (PFIC).
As a dual citizen, you would think I could just bank with my British passport and conceal my American citizenship. Except foreign banks in countries with normal diplomatic relations with America are required to proactively search their customer database for indications of potential American citizens, report their details, and possibly preventatively withhold 30% of all payments to those accounts (FATCA). This is a right pain in the ass, so those institutions will often preemptively exclude customers who seem too American from the outset.
I have to rigorously report the highest monthly balance / value of every single one of my foreign assets and accounts, every year, to both the IRS and FinCEN, on entirely separate and incompatible forms.
And I get to pay thousands of dollars a year for the pleasure of being locked out of basic financial vehicles (life insurance policies!) and proving to Uncle Sam that I don't owe him anything. It's especially galling because this kind of reporting and taxation for foreign-domiciled citizens is unique to America, at least of developed countries.
Not to mention that all of this joy, and more, extends to your spouse, regardless of their citizenship.
I keep doing it, year after year, because I still believe in America. But after a few years without stepping on American soil, the question why am I still doing this comes of its own accord.
I'd rather just use a VPN and lie to get around the bullshit if possible.
You're literally not doing anything wrong by wanting to keep the money you have to support yourself and your family... the laws are just stupid and extremely unfair.
Was it Vanguard or Charles Schwab? Did they give a notice before terminating the accounts?