The United States may soon reduce the hefty fee of $2,350 (2,242 euros) for expats who wish to renounce their citizenship to a more reasonable $450 (429 euros). This comes as a response to the Association of Accidental Americans (AAA) filing a court challenge against the rates, arguing that the right to renounce U.S. nationality is fundamental under the U.S. Constitution and that the tax “essentially forces U.S. citizens to remain U.S. citizens against their will.”
Until 2010, US citizens did not have to pay a fee to renounce their citizenship. When it was first introduced the fee was $450, but in 2015 Americans saw a tantalizing 422% increase to the current $2,350.
The waiver fee is intended to cover administrative costs. Applicants must take an oath of renunciation before a U.S. diplomatic or consular office abroad and will then receive a Certificate of Loss of United States Nationality (CLN).
However, AAA points out that it was introduced at the same time as the Foreign Account Tax Compliance Act (FATCA). US citizens are subject to citizenship-based taxation that applies to their income, regardless of where they live.
FACTA targeted U.S. taxpayer defaults on foreign accounts and was expected to cause more Americans to give up their accounts. citizenship.
In a notice published Oct. 2 in the government’s Federal Register, the U.S. State Department proposed changing the opt-out fee citizenship at $450.
It says it will accept public comments until Nov. 1. These issues will then be addressed and a conclusion will be announced as quickly as possible.
The State Department says the $450 fee it is far less than the administrative costs associated with renouncing citizenship. The fee is said to have been increased to cost price in 2015 due to an increase in demand for the service.
However, he received complaints that the highest fee it served as a deterrent to giving up. It also recognizes FACTA-related difficulties as a potential rationale for some waivers.
Bringing the fee back below cost would ease the cost burden and bring it into line with fees for other services provided citizens abroadsuch as the Consular Report on births abroad, concludes.
Many other countries charge a fee to renounce citizenship, but it is typically much lower. For example, in the United Kingdom the cost is 372 pounds (429 euros), in Italy 200 euros, while in Germany it is free. Canada charges C$100 (€70) and Singapore charges S$35 (€24). Most other countries also offer citizens the option to become tax nonresidents rather than renounce their citizenship.