American Citizenship: a Cost Benefit Analysis

Crossposted from the Flophouse.  Okay, folks, am feeling perkier and so I thought I’d bring this one over.  This is a very modest attempt to explain some of the thinking behind a decision to renounce (or not) American citizenship.  I know there was another thread about this some time ago here at Isaac Brock so I’m sure there is nothing new here.  But given all the recent media attention about this issue, I thought it was timely to bring it up again.  This represents the state of my “internal committee” at this time.  Your mileage may vary.  🙂

The U.S. has a new export that is really taking off:  Americans.  In 2010 a record number of U.S. citizens decided to renounce their citizenship.  A mere drop in the bucket (under 2000) but a trend that has some people worried and others horrified and angry.  This topic has finally hit the mainstream media with articles in the New York Times and the Huffington Post.  Any discussion of why this is so tends to degrade very quickly into an emotional argument with lots of exclamation points, capital letters and a “don’t let the door hit you on the way out” mentality.  It’s a subject that hits all of us (homelanders and expatriates) right where we live.

I think we have a failure to communicate here and so perhaps it might be instructive to use my own case as an example in order to dispel a few myths about why some Americans abroad are considering renouncing.  What follows here is my own situation and my own reasoning – a cost benefit analysis, if you will.  My case is definitely not representative of all Americans abroad but I’m sure it will resonate with some.

I left the U.S. in 1989 for France when I was 23 years old – right after I graduated from the University of Washington. I was married to a French citizen in 1990 and though we have expatriated to other countries during that time, the majority of our life has been spent here in Europe.  When I left the U.S. I had no money and no assets since I had just finished school and had not yet started my working life.  Today not one dime of my savings was earned in the United States and I currently have no property or savings in my home country.  Everything I have in France was earned in France or in Japan.  I have had a modest but good career as an IT manager in those two countries and I have paid taxes in every country I’ve lived in and worked.  I have two children who are dual nationals (French/US citizens).  My husband is a French national and has neither US citizenship nor a Green Card.  As of  this time I am not a French citizen though I currently hold long-term EU resident status. Our family has no intention of returning to the U.S. to live though we have never ruled that out as a possibility for the future.

Given my situation (and looking at it with cold reason) what are the costs and benefits of holding American citizenship?  Let’s start on a high note and talk about the benefits:

Voting in U.S. Elections:  As an American citizen abroad, I have the right to vote in Federal elections (president and congressional representatives).  The way the American system works, I must vote in the State of Washington (my last state of residence) and will do so as long as I remain outside the country. Since our numbers are few, our impact is negligible and I don’t feel terribly well represented in the United States but I will concede that I do have this right which I can exercise or not as I wish.

Right of Return:  My U.S. citizenship gives me the right to return to the United States at any time to live and work.  As a practical matter however, my ability to exercise this right is limited since I am married to a foreign national and I would not think of returning unless my spouse could (and wanted to) come with me and I was assured that he would receive a warm welcome in the U.S.  From the news reports we are getting from the States, it seems rather evident that the “welcome” is not what it was.  Another factor is that I have one minor child (dual US/French citizen) at home and if I chose to return to the U.S. without my spouse, I would have to have his permission to take her to the U.S. Needless to say that just wouldn’t happen and both the U.S. and French courts would forcibly return my daughter to France were I to try this.

Opportunity:  With a U.S. passport and EU residency I have the possibility of working on two continents (Europe and the U.S.) with a minimum of hassle.  This is tempered by the high unemployment rates in both countries and the lack of benefits and worker protections in the U.S.  Given U.S. work laws it is quite conceivable that I could return to the U.S. for work and find myself unemployed with no benefits the day after I arrive.  So moving to the U.S. one day might be a grand opportunity or a complete catastrophe.  I am not complaining about this, mind you, just pointing out that at 46 it is not an obvious decision to pack up and seek a rather risky opportunity on the other side of the Atlantic.  But my U.S. passport does give me access to the U.S. job market which is not a small thing.

These are the benefits that I currently enjoy as a US citizen.  What about Social Security, you might ask, or the right to pass American citizenship onto my children or consular protection?  Well, the first does not apply since I never worked in the U.S. long enough to qualify for benefits.  The only pension plan I am vested in is the French national system.  As for the second, my children are already U.S. citizens and it’s irrelevant at this point whether I remain a citizen or not – they will keep their US citizenship regardless of my status. And finally the third just doesn’t exist.  If I am accused of breaking the laws in my host country (France) the only help I will get from the U.S. embassy is a visit (if I wish) from a consular officer and help finding an English-speaking lawyer.  Concerning the latter, my French is fluent and I already have a very good lawyer here so I don’t really envision needing that service.  As for a U.S. passport being a useful bit of protection when traveling, I think that time has come and gone, my friends.  It’s certainly not worth more then an EU passport these days.  Most places I’ve visited have either been strictly neutral about my pretty blue passport or slightly hostile (perhaps that was my imagination but I did sense a rather cool reception in a few places.)

Against these benefits, let’s look at the costs:

Tax Compliance:  It is costing me between 500 and 1000 USD per year to be compliant with all the tax and reporting requirements of the U.S. government.  This is not a huge amount of money but, as I start saving for retirement, the complexity of my tax situation will grow and I will surely have to pay more just to keep up.  I’ve had estimates from 1000 to 10,000 USD depending on the amount, types of investments and so on.  There will also be taxes to pay in the U.S. in addition to what I pay in France.  Not all French taxes count as a tax credit in the U.S.  Capital gains (on the sale of a house, for example) are a direct hit.  I would need a professional to quantify this for me in a more precise manner but what is sure is that I will pay more and more every year (unless, of course, I throw caution to the wind and stop saving for retirement at all).

Discrimination:  I have already had one interview with a U.S. company here in Europe that didn’t even want to talk to me until I showed that I was a long-term EU resident.  Clearly the fact that I was an American citizen was not a point in my favor.  I have also had my bank give me trouble over certain kinds of investments because I am a U.S. citizen.  From the stories circulating among other U.S. expats here in Europe it seems that Americans are becoming persona non grata in the banking communities in our host countries.  From what I am hearing, I am probably safe for now with my existing accounts but may have trouble opening new ones which means not being able to change banks.

Lost opportunities:   I have always wanted to work as an independent or start my own business here in France.  A quick look at the U.S. tax rules for Americans living abroad who do this sent me running for cover.  Ouch!  Very complex.  Potentially very costly.  In addition, just as Americans are becoming pariahs to the local banks, local business is becoming less then eager to start up a venture with an American partner because of the onerous reporting requirements.  And, finally if I have trouble opening new bank accounts here in my host country, I may be seriously limited as to the kinds of local investments I will be able to make in the future.

Stress:  The FBAR/FATCA fiasco came out of nowhere for many (if not most) Americans abroad.  The U.S. Congress is constantly cooking up all kinds of brilliant ideas that impact us and we are usually informed after the fact.  I have to wonder what else they have planned for us.  Over the past few months I’ve seen some pretty persistent people trying desperately to get the U.S. government, politicians, and the public to listen to our grievances and to take them seriously.  While I am so grateful to all of the organizations and individuals who are tirelessly working on the behalf of all Americans abroad,  I’m not seeing much traction.  I feel like a pigeon waiting to be plucked with very little say over the next surprise to come out of Washington.   I greatly fear that next year’s (or the year after) legislation will financially ruin me and my family.

Rejection:  I am also getting very tired of reading headlines about how we are “tax evaders” and “ingrates.”  Clearly homeland Americans do not love their diaspora.  Since there seems to be a large number of homelanders who think we should “shut up and comply” or “get the hell out” I have to wonder why I’m even bothering to maintain my membership in the club as they seem perfectly happy to see me and others go.

On a last note, to be brutally honest with you, I’m just very tired.  Tired of writing letters, tired of explaining, tired of fighting.  There is so much about this that I simply cannot change.  I cannot make homeland Americans feel differently about their expatriates.  My influence (even as a U.S.voter) is practically nil. I have lost all faith in the U.S. government (Obama and company included).  I no longer think it will improve – on the contrary I can think of a hundred ways it could get worse.  And I have slowly come to the realization that American citizenship and globalization are an imperfect fit these days.  Perhaps it will get better with time but that, it seems to me, is something I can hope for for my children’s sake but not something I am coming to believe that I can realistically expect to have for myself.


51 thoughts on “American Citizenship: a Cost Benefit Analysis

  1. I read it at flophouse, and it is in the Victoria tradition, a well constructed article and good read. It has already been twittered about. 🙂 It is as Nendazman says, “temperate”, and so might reach out to those that are less receptive to the issue.

    Good to have you back Posting.

  2. Great article. The analysis was essentially the same for me except for the voting issue, since I have never voted in a US election and have no intention to start to do so. I also could not imagine leaving all of my friends now that I am so established back in my home country to go back to the US, so the right to work there doesn’t mean much for me. I was also shocked by US healthcare whilst resident there: Recently I got an X-Ray in Belgium done – The overall cost to me was only 63 Euros. I once had the same region X-Rayed in the US and it cost 700 dollars after the insurance company said it would pay 30%. What was the point of having insurance there? I was disgusted.

    Anyway, the one issue that has me worried actually is if I ever get a job in the future where I would need to regularly travel to the US (or at all really). I am really concerned about being bullied at the US border for having relinquished citizenship and it got me thinking about the perfect solution: US “BNO” style passports, as the UK government issued to Hong Kong residents before the handover. They allow no right to work or live in the host country, but allow visa free access back.

    This will of course never happen, but I would be thrilled to have an “ANO – American National Overseas” passport just to handle the border. It would be a fair trade in my view: I renounce any right to vote or reside, and in return you, the US government, renounce your right to act like I never left yet give me an olive branch in the form of the ANO passport or something similar like Indian Overseas Citizenship. I hate the US attitude – Either accept getting bullied to death or renounce to be free. There is no middle ground 😦

  3. On a last note, to be brutally honest with you, I’m just very tired. Tired of writing letters, tired of explaining, tired of fighting. There is so much about this that I simply cannot change. I cannot make homeland Americans feel differently about their expatriates.

    I fully sympathise with this feeling, but regardless: thank you for taking the time to write this. The media and public may be going out of its way to smear us all as rich tax evaders living the glamorous life abroad, but at least we know who we are and why we make our choices — and at least we have a platform where we can advertise those views to others.

    A couple of years ago I had never heard of anyone renouncing U.S. citizenship besides Kenneth Dart, Dave Aldwinckle, Mike Gogulski. I thought it was an action for tax evaders and political protestors, not ordinary people like me. Then my high school classmate renounced. Then I came across Phil Hodgen’s writings on Hacker News. And then I found everyone here.

    You succeed in poking holes in the mainstream narrative. Even if this does not overturn the unjust system, it might at least slow the rate at which it gets worse. That in itself makes a big difference for anyone who is on the fence about renouncing and honestly needs more time to make the decision.

  4. Thank you, folks, for your kind comments. Feels good to be back.

    @Dom: I’ve been thinking along the same lines. As a practical matter Americans abroad are not full US citizens. Elizabeth Cohen has a very nice methodology for determining degrees of citizenship that I would like to see applied to our case.
    Once we have some clarity then perhaps we could negotiate something like Overseas Citizenship.

    @Eric: Thank you. I hope the piece does some quiet good. Have to admit as well that part of my fatigue is probably due to just having got out of the hospital. (and after I write this I plan to go straight back to bed – I promised my Mom that I would take it easy. 🙂 And as a parent myself, I do plan to keep on writing about this because, whatever my ultimate decision, I want a better world for the Frenchlings.

  5. Victoria pretty much sums it up for me (I’m a 20+ expat with EU citizenship) living in the UK. What particularly is galling is the ignorance of homelanders thinking we’re traitors, they can just pass a law at a stroke of a pen and everyone abroad is suppose to roll over and comply.

    And Victoria’s analysis of the “product,” the US passport is correct and it is a product if you want to be brutally honest. A pass to get around “Go,” a membership card that allows you to bypass all the usual membership requirements and allows to you temporarily enter other people’s clubs for a limited time before you must leave. And what makes matters worse is this membership has various costly “toxic get out” clauses associated with it as well ($450 renunciation fee, long dragged out process, members left behind making you feel guilty, exit tax if you’re wealthy).

    Before I committ to anything in life I alway ask myself what are the costs for getting in, maintaining the committment, and getting out if I change my mind, that way I don’t get my fingers burnt. Hey Carl how does the US passport stack up against other passports in your honest opinion when this criteria is used?

    The break even point of US Club Membership by cost benefit analysis is raised by FATCA If these terms of membership were used by someone trying to run a health club for example under US citizenship rules, the club would be empty.

    Let’s look at Michelle Bachmann gaining Swiss citizenship:

    entry cost for Swiss citizenship about 3300 CHF (or $3300 US) probably about the same as the US when you take into account all the fees, classes and other regulatory bullsh*t because the US passport is soooo good.

    I think Swiss passports are cheaper (and then you have the ID Card for travel around the EU) – the standard US is $135 and only gives you 90 days in the Schengen Area.

    -The Swiss don’t tax you if you leave Switzerland (except for Swiss held assets).

    -Can Travel to Brazil or other South American countries and save on the reciprocity taxes Americans have to pay which can add up to over $500 US.

    -Ya Swiss Taxes are lower, but at the end of the day when you include the “cost of living” tax, for most people on ordinary incomes it’s a wash if not the erring on the more expensive side of the equation.

    -Swiss citizenship is harder to get, you can’t just walk into the country and drop the baby at the airport and expect the child will have a Swiss passport like Juanita crossing the US border from Tijuana- the Swiss are a little more choosy. Most Swiss citizenship is acquired by the Jus sanguinis principle (you have to have a Swiss mom or dad basically). There are small exceptions, but birth at the airport isn’t one of them. Did you watch Michelle Bachmann closely, her requirement was 6 years of marriage to a Swiss citizenship and close ties with Switizerland (did you hear her rattling off all the times she’s been to Switzerland, where, and about her husband’s family town to cover off that requirement).

    -No Exit Tax or sour grapes if you decide to renounce.

    One final point – could have Michelle Bachman been looking out for her interests? She actually voted against the The Hiring Incentives to Restore Employment (HIRE) Act of 2010 which contained FATCA. Maybe after the election dual citizen Bachmann may help repeal FATCA in a bigger way.

    For Michelle it’s basically all gain no drawbacks to gain Swiss citizenship (except for some votes she’ll lose in her re-election campaign by homelanders because she’ll be branded as un-American or a traitor).

  6. Bachmann voted against the HIRE act? If she is actually opposed to FATCA then she has my support. At this point I really couldn’t care less about her or any other US politicians’ positions. Any other notables who voted against the HIRE act? Good to know who potential supporters might be!

  7. I meant that I couldn’t care less about any other position they hold other than FATCA: they could be a lunatic for all I care but if they oppose FATCA they are in with me 🙂

  8. I’m eligible for social security payments when I turn 65, or 68, is it now? Albeit the amounts are very small because I didn’t pay in for much more than the minimum. I don’t think you lose that if you renounce because you earned it. Maybe someone who works in the legal profession can say definitively because it was rather hard to find on the internet.

    I agree on the “has been” sooo much. I wish they would do anything and everything to avert the fall from grace. But it seems like they just can’t “see” it, mainly out of pride. Once this FATCA is firmly in place, a US resident citizen will have little option to immigrate/move assets outside of the US.

    And the American Dream seems to be wearing thin too. Look at the sky high unemployment claims that doesn’t appear to be improving. Yesterday while having lunch, I saw the video of the police tasering and beating the homeless guy. I just ate my food quietly, hoping nobody there knew me or that I am American. People from here would look at the video and say “What is that!!? Why all the force for someone who is unarmed?”

    Sometimes I feel like being American overseas is somewhat of a liability. With this cowboy crazy government, you never know who in the world the US is going to attack, which could make us walking targets or subject to abuse, even if we carry CLNs in our wallets. That’s why I keep telling people “PLEASE tell me which words I say that have an accent!!!” I want to lose all traces of there, if possible. I think the US is good for many people that live there, but for Americans abroad, I don’t think so– not even including the paperwork and compliance issue.

  9. Wow that was good. I’ve already made the decision to renounce. I’ve lived in the UK for over 20 years and am a dual citizen through descent. It’s been a loooong time since I felt even remotely American. My hope is also that the US is a very different place by the time my children grow up. At the moment I feel their dual citizenship has gone from something to be proud of to something to keep hidden.

  10. @geeze – I’m in the same position. i’ve heard this concern before. If you renounce, you keep your social security. I took will only get the the minimum. In years to come, I’ll probably just have it put into a US savings account and withdraw it by ATM overseas depending on the FATCA/political regime at the time.

  11. @Scotgirl – I too have been in the UK for over 20 years, and my kids have dual US/UK. However, it’s of my opinion if they have a UK place of birth, some sort of british accent, how on earth are they going to be tracked by the US? At present they even enter the US on their British Passport, the US ones lay expired in a drawer and haven’t been used for years. Why should they pay $135 for a passport they’re only going to use entering the US, what a waste of money! Sorry my father is Scottish and my penchant for not wasting money wins out at times!

    Going back to the kids, if the US’s tracking becomes too efficient then they can renounce at their convenience not Carl Levin’s.

  12. @geeze, John
    you do not lose social security entitlement by renouncing. depending on your country of residency you can have your cheques deposited to you local bank. Tax laws vary by country, in Canada social security is taxed only in Canada and is not reportable to the US.

    Also the US has harminization agreements with many countries, where if you have not enough qualifying quarters for social security, your contributions may be blended into the pension from your country of residence

  13. @John – that’s exactly how I feel! I only got them US passports because a very grumpy official at the US Embassy in London told me they wouldn’t be able to enter the US with me unless they had one (as I’d be entering the US on mine and they would either need US passports to or some “No Claim” form if they didn’t have a claim to US citizenship). At the moment their passports have expired and i’m loathe to renew them until I absolutely have to.

    i will not, however, get them social security numbers, so other than these little expired blue books, they are British through and through. I’m getting increasingly alarmed at the recent changes – e.g. (UK citizen) DH was looking at taking out Junior Stocks & Shares ISAs for them. All of the “desirable” investment companies now make you declare on the application form that you are not taking one out for a “US person”. So unless you want to lie (not sure what the consequences would be – fraud or merely a closing of the account if uncovered), various financial doors are already being closed to Accidental Americans in the UK.

  14. @Scotgirl – my kids have social security numbers, but it’s not going to make any differnece. They tick off the NO box, who is going to doubt them. Unless they start drilling down to the next level asking about their parent’s origin (which they could lie about again) all this becomes a non-sense. At the end of the day, if you walk in with a UK passport, buy their shares and they’ve done due diligence (as per FATCA), what does the investment company care or how is the US to know? There’s really only so far they can go with this. Let’s remember and people sometimes forget, we’re in a foreign country.

    In my opinion if you are a UK citizen and investment companies are refuse services based on your US place of birth, that’s discrimination. How can a UK citizen born in India or Pakistan enjoy the benefits and financial freedoms other UK citizens partake in, and you as a UK citizen are excluded by virtual of being born in the US. It’s discrimination. It’s no different if a UK company placed a job ad in the newspaper stating “all applicants welcome except US citizens or persons of US place of birth.” It’s discrimination.

    Place the link of one of these investment companies and I’ll enquire about buying some shares and after being refused I’m going to have a chat with their company solicitor about discrimination and see what they have to say about it.

    see this link –

    “The Race Relations Act 1976 makes it unlawful to discriminate on the ground of race. It is unlawful to refuse a service, or to not give the same standard of service extended to others, on the grounds of race, colour, nationality or ethnic origin”

    I’m not sure of all the ins or outs but it’s worth a discussion with the investment company. If you only hold an American passport without legal residenency the FFI may have an out, but as a resident UK citizen they are discriminating against you based on nationality or possible ethinic origin. Of course it’s down to interpretation.

  15. Just found this in my mailbox from my friend, JJ, and thought it was perfect for the occasion/topic:

    “The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”

    “Le pessimiste se plaint du vent; l’optimiste espère qu’il va changer; le réaliste ajuste les voiles. ”

    William A. Ward (1921-1994)

  16. Victoria has written a very well thought out and reasoned piece. I relate to all of the sentiments.

    In this reply, I would like to elaborate on a real life experience related to the “protection” afforded me by the US government in times of crisis overseas.

    I was in Egypt in 2010 when the government fell. Most people wanted out. I was lucky enough to have 3 options:
    1) The US government was herding masses of people on to expensive flights to nearby destinations to get them out. I do not know if they provided help to get you to the airport. People reported chaos at the airport terminal.
    2) The Swedish government (my other citizenship) told Swedish citizens to stay put and avoid going outside. They issued regular reports on the situation. They did not know when the crisis would end, but they were monitoring the situation.
    3) My company organized charter flights for all non-essential personnel and their families out of the country. They have an insurance and as it was private, transportation was provided to the airport and the hangar that they used was not mobbed by masses of frightened and confused people.

    I was in a position in which I could choose what to do and I chose the second option. I will not deny that there was danger and fear, but my assessment of the situation was that I would be safe following the advice of the Swedish embassy. I also had my company as a fallback. So in my specific case, I did not need the protection of the US.

    What struck me about this entire episode was the two different approaches to the crisis by the US and Sweden. It has made me seriously question the value of this “protection” afforded me by my US passport. I think it was very responsible of the US government to offer its citizens an option for leaving. However, as it worked for me once already, if faced with the same situation again, even if I did not have a company to pull me out, I would follow the advice of the Swedish embassy again.

    The situation has led me to wonder if the US was so responsive because its citizens were more at risk just because they were Americans. It seems to me that the “protection” required is likely correlated with the greater risk that comes from being American.

  17. @John: “Place the link of one of these investment companies…”

    Here’s one. Just happens to be the first I came across. I’m sure there will be others. In fact, quite possibly TD is in the majority here.

    Under “Open an account”: “To open a trading account online with TD Direct Investing you will need to meet the following requirements: You are a private individual aged 18 or over; You are a UK resident; You are not a US national”. Also, later on: “Please note due to international tax reporting it is not possible to open an account for US nationals living in the UK.”

  18. good post @Victoria – and a temperate and interesting cost/ benefit analysis of your situation. best wishes for your recovery, and good to see your thoughts here again.

    As someone living outside the US permanently, and from a very very young age, I never considered any economic aspect of US citizenship – because my decisions were always based on access and citizenship only as it afforded me the ability to visit and if necessary, to assist family in emergencies. I never knew about the expatriate banking and tax laws, the estate laws, and all the permutations, restrictions and draconian penalties that we are grappling with, until the end of last year. I had – and have no intention of ever moving there. Whether to be with family now, to work, or for business.

    The cost for me and my non-US family is too high. There is no possible ‘benefit’. The requirements are too complex and intrusive, and the penalties and pitfalls are too numerous and seemingly impossible to navigate and comply with. When all types of savings – except the most basic options – ex. cash deposits are threatened by the labyrinthine reporting and incomprehensible rules – the layered and growing risks of inadvertent errors and subsequent obliteration by penalties – I can’t live with that. If I can lose even more than we have saved (entirely outside the US), – and possibly end up in massive penalty debt to the IRS – through sheer ignorance or lack of facility with the forms and comprehension of masses of technical rules, there is nothing in the world that could outweigh the jeopardy. I also can’t pay every year for expensive specialized tax and legal help with this – that just puts me further in the red.

    My non-US family members do not want to live in the US, and would never consider it. We could never afford the lack of healthcare either. There is nothing in the US that I don’t already have here in Canada. I was too young to have had any say in leaving the US originally, and later on, it wasn’t really an option for me to dissolve my life and move there when I became old enough to choose. I had family here to look after here, as well as there.

    I did not ever consider renouncing before – for reasons of family relations, and some kind of theoretical concept of heritage and history. The US won’t let me continue to honour that even symbolically, by keeping my citizenship without jeopardizing my family’s financial safety. It is very clear that Congress only wants me as a ‘taxpayer’, and penalty revenue source. The congressman in the area where I would vote doesn’t return my e-mails and calls – although I have been temperate I think, while still underscoring the urgent and harmful nature of our situation. That shows contempt for me as a ‘US citizen’ – since even if he does not support my views, and will not assist me in any way, I am defined as a ‘constituent’ by US law if I am eligible to vote in his district – and worthy of at least a form reply.

    I am a law-abiding person. I pay all taxes I owe where I work and live. I am not safe from potential harm as a US citizen. My non-US family is not safe if I am a US citizen. There are no other options.

  19. @Victoria – I think it follows the same sort of logic as this saying “It’s not the strong who survives, it’s not the smartest that survives, it’s the most flexible who survives” – changing your sails.

    This is why I believe the public one-headed approach of the ACA solely concentrating on repealing FATCA isn’t enough. You need external pressure on the US as well to make people within the US to start complaining to Congress that FATCA is costing them REAL money and something needs to be done.

  20. @Watcher

    That’s very interesting! I have also come across restrictions on acquiring medical insurance (which is not valid in the US) at a subsidiary of my insurance company (previously posted in the FATCA discussion thread):

    “Check this out:

    This plan is not valid for coverage in the US (you can see this if you download the tables of benefits pdf at the bottom of the page), yet it is specifically is open to any nationality except Americans (and is aimed at those in typical expat countries like Singapore and the UAE). I’ve delved into the legal mumbo jumbo and they don’t explain why as far as I can see.”

  21. @watcher – As well as being treated equally with other EU / UK citizens with regards to opening an account, I expect my tax reporting to be treated equally the same as other EU resident citizens. I’m going to start with the Financial Ombudman and see what they have to say about the matter. It doesn’t stack up for me to openly discriminate against US dual nationals and get away with it.

  22. Under “Open an account”: “To open a trading account online with TD Direct Investing you will need to meet the following requirements: You are a private individual aged 18 or over; You are a UK resident; You are not a US national”. Also, later on: “Please note due to international tax reporting it is not possible to open an account for US nationals living in the UK.”

    ————— This is just absurd. So any other nationality who is resident of the UK can open an account!! I really wish someone would sue over this discrimination. It could probably get some sympathetic articles. I honestly can’t believe the UK is giving up the tax revenue. After all, the person lives there and not in the US.

  23. I’m really disappointed in the UK in this regard. Why doesn’t the US just add another star and call them the 51st state!!?

  24. They may be able to stop you trading US stocks, but the rationale for trading elsewhere in the world becomes murky. It’s only £100 to open an account maybe I’ll do that and see what happens.

  25. Hmm…in case someone failed the read the fine print on that TD investing website they might become frustrated/perplexed due to the fact that “USA” or “American” are not present on the nationality selection screen. To be fair though I don’t see several other nationalities either, like South Korean, , Belarusian, Argentinian or Chilean to name a few. There is no option for “other” on the nationality select screen. Isn’t this pretty clearly blatant discrimination. I only wonder why some of these other nationalities are not wanted either?

  26. @geeez

    Yeah, a lot of our insurance companies here in Belgium are French, German or pan-European subsidiaries or conglomerates. I think ASFE is connected to AXA (one of the biggest European insurance companies) because my local AXA insurance sent me to ASFE to get a plan once when I lived in Germany.

  27. I’ll go find the Junior ISA application forms in 2 ticks, but I have DH’s Jupiter adult ISA application form open right now:

    He had to confirm that: “B. I am not a restricted person (including a US person) (as defined in the Key
    Features (incorporating the Simplified Prospectus) OR from 30 June 2012 the
    Supplementary Information Document) nor am I applying for units on behalf
    of a restricted person (including a US person) nor am I applying for units in
    order to further offer, sell, assign, pledge or otherwise transfer such units
    directly or indirectly to (a) restricted person(s) (including (a) US Person(s))”

    Now, I know that as an adult, taking out a stocks and shares ISA is probably a pretty poor choice with the IRS reporting, it’s more the principle of being shut out that annoys me and most investment houses now have a variation of this wording on their application forms.

    Back in a tick with the Junior links….

  28. Here’s AllianceTrust’s Junior ISA form:

    You have to declare: “The child is not a US person. (Please tick)
    If you cannot give this declaration, please do not continue with this application. A financial adviser will be able to help you. For a definition of a ‘US’ person please see glossary on our website.”

    And here’s Legal & General’s:

    The declaration includes: “• I am not aware that this child is a US person”

    Some companies don’t have the statement yet, but I’m guessing it’s only a matter of time before they update their literature.

  29. Sorry, me again! Here’s Alliance Trust’s definition of a “US Person” which refers to FATCA:

    “US Person has the meanings set out in Regulation S of the United States Securities Act 1933 (as amended) and under Foreign Account Tax Compliance Act (the ‘Acts’) and is understood to include any resident of the United States and/or a partnership or corporation organised under the laws of the United States or deemed to be so organised or a person or entity that is entitled to or actually works or does business in the US or (where ‘United States’ means the United States of America, its territories and possessions, all areas subject to its jurisdiction or any political sub-division thereof, any state of the United States of America and the District of Columbia). For full detail of what constitutes a US Person, please consult the Acts, or seek independent legal and/or other professional advice.”

    It’s the bit that says “or a person or entity that is entitled to or actually works or does business in the US.” that is worrisome.

    If I am misunderstanding, someone please let me know!

  30. @Victoria, nice job and thank you. I believe that you’ve been ruminating of this subject for quite some time. Conclusion: for US citizens living abroad, our future is like walking on shifting sands in a mine field in an earthquake zone.

  31. @bubblebustin; re ‘walking on shfting sands in a mine field in an earthquake zone’ and for me I’d add – ‘trying not to be eaten by zombies’….

  32. @Scotgirl: There’s a bunch of different conflicting definitions of US Person in different laws and regulations.

    Rule 902(k) says absolutely nothing about “entitled to work” in the definition of “US Person”. Rule 902(k) only applies for purposes of securities law (i.e. what financial products an advisor can recommend to me). When you sign up to purchase stocks in a non-US IPO for example and they ask you to declare that you are not a US person, usually they are only asking under the Rule 902(k) definition. I have heard of US expats saying “no” on these forms and then going to a Commissioner of Oaths with the form and executing a secondary declaration that they’re signing the form with the understanding that it only refers to securities regulation. I always thought this was overkill, but now I’m not so sure.

    There’s the Qualified Intermediary/Kill Your Customer rules which are different in every country. They’re used by financial institutions both to check customer identity for anti-money laundering purposes when opening an account, and I believe also to determine US Person status for tax purposes (to make sure a US person doesn’t pretend to be a foreigner when investing in the US through a foreign institution). Here’s the UK version:

    In practice these were not adhered to very strictly. E.g. I have opened a bank account in Hong Kong by showing a non-permanent ID card (i.e. an ID card issued to a resident who needs a visa to remain, as contrasted with a permanent ID card issued to a permanent resident) after 2001, which according to the rules shouldn’t have been done

    Every US expat is a US person for tax purposes but not a US person for securities regulation purposes. In practise it is not always easy to convince brokerages of this 🙂 FATCA does not change the definition of US Person for tax purposes (that’s been the same in the law all the time: 26 USC 7701(a)(30)). What FATCA is doing is changing brokerages’ reactions to US persons: they are taking the most restrictive position possible in order to avoid any potential future problems with the IRS.

  33. Now I understand the stars and stripes. The stars are what you see when they hit you over the head with a 2×4 Fu Bar and the stripes adorn the new clothes they issue you when they haul you off to the zombie holding pen.

  34. Ahh.. I’m wanting less and less to deal with that place (the US) — all traces, even my name:

    Today was nice and sunny so I said “I’ll take the motorcycle.” On my way, I get pulled over by the cops at a checkpoint. As soon as I handed the cop my documentation, he looked at my name and then started asking if my drivers license was from a different state… how do you say my name? Was my drivers license from a different country? No, it was issued in this city!! How long have you been here for? They were nice about it, but it took twice as long to verify my information. At least it wasn’t the US where I would be tasered if I sneezed 🙂

    My wife doesn’t want me to, but I’m going to “aportuguesar” my name, pick some Portuguese-sounding name and then be that. But I’m sure that will probably break some sort of US law…

  35. This is a comment that I once made on another thread about the cost benefit analysis. To renounce or retain. It is based mainly on the monetary considerations. Regardless of the money, I don’t see how anybody can live this way. Renunciation is necessary for a happy state of mind.


    March 11, 2012 at 8:37 pm


    Interesting thread. Let’s focus on M’s:

    “You want to save money? Do nothing.

    A citizenship (and residency) is an asset, no matter the country. What you are a citizen of is your business, and only your business, that you need not tell anyone, just like your money and assets.

    Giving up an asset because of a potential liability should be studied and measured very carefully.

    I am seeing (pop culture) romantic analogies and medical analogies. I am not seeing legal or financial analysis.”


    Renunciation is a personal decision. The issue is not whether U.S. citizenship is an “asset”. Let’s imagine that it is. The value of that “asset” must be measured against the costs. This should be “measured very carefully” with “legal or financial analysis”.

    Okay, let’s do that.

    Financial Aspects of The Cost of Retaining U.S. citizenship

    Everybody has a different situation. But, remember that if you renounce you will have to have five years of tax compliance. That may or may not come at a cost (depending on whether you have been filing US tax returns). I have the impression (but have no actual knowledge) that some are to date with their filings and others not. Furthermore, some of you are worried about filing U.S. taxes when you may not be U.S. citizens.

    For those up-to-date on the filings, and have no impediment to renouncing, then the issue becomes the possibility of the exit tax. It is important to consider the exit tax may or may not end up being a cost. It may end up being a prepayment of the estate tax (we don’t know which way the estate tax is going).

    Those who are subject to the exit tax (who don’t see it as a prepayment of the estate tax) may have a financial reason to NOT renounce.

    But, those who are NOT subject to the exit tax (remember we are talking finanical analysis) have a very sound financial (if this were the only consideration, but of course nobody would renounce for purely tax reasons) to renounce. Why? Through inflation it won’t take long for you be a “convered expatriate”. Owning a house in Vancouver would do the trick. Remember again that the U.S. has an estate tax to deal with eventually. Now, I don’t know how the U.S./Canada tax treaty affects that.

    Those are “some” of the possible financial considerations and one part of the cost.

    Non-Financial Aspects of the Cost of Retaining U.S. Citizenship

    Simple you are treated like a criminal and with the advent of FATCA you are required to live under supervision. You can’t live a normal and productive live. Plus you have to continue to think and worry about this.

    Sure U.S. citizenship can be viewed as an “asset” (in limited circumstances). The question is whether the costs outweigh the value of this asset in any signigicant way. This is for you to decide.

    Finally, unless I am missing something, there is no way to renounce without being in tax (and probabaly FBAR) compliance.

    The very existence of discussion about renouncing U.S. citizenship assumes that people want to be in compliance. Many of you seem to be worried that you are not in compliance because you became Canadian in the 70s or early 80s and have not been filing tax returns. This has been the subject of numerous discussions. I suggest:

    If you have committed an expatriating Act (becoming a Cdn citizen for example or being a justice of the peace) prior to 1986, a clear reading of s. 349 gives you ample grounds to argue that you are not a U.S. citizen. If you are in this situtation your time would be much better spent working on the “state of your U.S. citizenship” (no pun intended) instead of filing tax returns. If you are not a U.S. citizen, then you should not be filing U.S. tax returns.. Furthermore, unless you can find something in s. 349 of the INA that says that loss of citizenship is conditional on the issuance of a CLN then …

    So, there is a logical and financial analysis to this issue.

    As Phil Hodgen says: “U.S. citizenship is a problem to be solved”. That may be a way to view the solution.

    I offer this as non-emtional logical analysis. But, it is of course not legal (or any other kind of advice).

  36. @ Victoria, this a great read, and not only so, I think a useful meditation on the question of whether an expat can remain a US citizen. I’ve therefore made a link to it on the side bar under “Our Resources”. Hopefully, you will get the readership that you deserve.

  37. @Petros, Thanks so much. I hope it makes people stop and think – just for a moment – about how complex a decision like this one really is.



  38. @badger, poor woman, but my eyes are tearing up thinking about how funny it would be to see a border agent and an IRS agent in the same room together conducting a similar interview??? I’d be slamming my head against the table. Oh wait, I already am!

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