US plans to drop fee from $2,350 to $450 as expats say they are ‘forced against their will’ to maintain citizenship.
The US could soon fulfil its promise to drop the fee for expats who wish to renounce their citizenship from $2,350 (€2,242) to $450 (€429).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 an eye-watering 422 per cent hike to the current $2,350.Plans to reverse the increase were originally announced in January, when the Association of Accidental Americans (AAA) filed a court complaint against the fees.They argued that the right to renounce US nationality is fundamental under the US Constitution and said the fee is “essentially forcing US citizens to remain US citizens against their will”.Why does the US charge a citizenship renunciation fee?The renunciation fee is in place to cover administration costs. Applicants must take an oath of renunciation before a US diplomatic or consular office abroad and will then receive a Certificate of Loss of Nationality of the United States (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, no matter where they live.FACTA targeted non-compliance by US taxpayers with foreign accounts and was expected to lead more Americans to give up their citizenship.Many other countries charge a fee to renounce citizenship but it is typically far lower.For example, the UK charges £372 (€429), in Italy it is €200, while in Germany it is free of charge. Canada charges C$100 (€70) and Singapore charges S$35 (€24).Most other countries also give citizens the option to become a tax non-resident rather than renouncing their citizenship.When could the US citizenship renunciation fee be reduced?In a notice posted on the government’s Federal Register on 2 October, the US Department of State proposed to amend the fee for renunciation of citizenship to $450.It says it is accepting public comments until 1 November. These will then be addressed and a conclusion announced as quickly as possible.The Department of State says that the $450 fee is far lower than the administrative costs associated with renunciation of citizenship. It says the fee was raised to cost price in 2015 due to a surge in demand for the service.However, it received complaints that the higher fee acted as a deterrent to renunciation. It also acknowledges difficulties relating to FACTA as a potential motivation for some renunciations.Dropping the fee back to below cost would alleviate the cost burden and bring it in line with fees for other services provided to citizens abroad, such as a Consular Report of Birth Abroad, it concludes.
Source: euronews.com