In recent years, the trend for an array of Americans has been to renounce their citizenship in order to immigrate elsewhere and save money on taxes. In the first half 2014 alone, more than 1,500 Americans gave up their nationalities, the first time this has been that high since 1998. Those seeking to give up their passports should be prepared to pay higher fees.
According to an announcement from the United States State Department, the fee to renounce your citizenship has soared to $2,350, a 422 percent jump from the original $450. Officials say the new fee is the real cost to actually process an application to end a citizenship.
Under Secretary of State Patrick Kennedy wrote that the demand for this process has increased significantly over the past number of years, which is also taking up a lot more time and resources. The wait time for an expatriation interview has increased to about six months in some areas, but as little as two to four weeks in others. It is estimated that about three-quarters of all renunciations are processed by Canadian, British and Swiss consular offices.
“Documenting a U.S. citizen’s renunciation of citizenship is extremely costly, requiring American consular officers overseas to spend substantial amounts of time to accept, process, and adjudicate cases,” he wrote. “The department believes there is no public benefit or other reason for setting this fee below cost.”
This summer, new disclosure rules were implemented under the Foreign Account Tax Compliance Act (FATCA). This means that foreign financial institutions are turning over their American clients’ data and personal information to the U.S. government. Expats feel they are being enticed to give up their citizenship since the U.S. is the only Organization for Economic Cooperation and Development (OECD) country to tax citizens wherever they reside.
Essentially, if you’re an American and you live in Australia, for instance, and you want to avoid paying U.S. taxes then you’re only option would be to hand over your citizenship and passport to U.S. authorities and save money.
