If anecdotal evidence from International Adviser readers is anything to go by, the onerous requirements of the Foreign Account Tax Compliance Act (Fatca) and citizenship-based taxation are two of the key drivers behind the sharp rise in the numbers of Americans giving up their US citizenship or Green Card status.
The latest figures, reported within the Publication of Individuals Who Have Chosen to Expatriate document for Q2 2021, show that there were 734 individuals who renounced their US citizenship.
A rise of 200% compared with Q1 2021.
Lack of access
But international tax and immigration advisers Lesperance & Associates believe that the sharp increase is due to the events of the last 18-24 months.
It said that, since March 2020, the US State Department shut down nearly all consular services at US embassies and consulates, also known as missions, all over the globe.
They have cancelled or severely restricted all consular services to US citizens, including passports, registration of foreign-born children, and renunciation appointments.
David Lesperance, founder and principal at Lesperance & Associates, said: “Going forwards, we can expect the rates to drop off a cliff as we start to see the effect of the US missions closing for covid at the end of Q1 in 2020.”
Bone of contention
One big stumbling block for US citizens residing overseas to renouncing their citizenship is the cost.
In June, the Association of Accidental Americans, who have gained citizenship through a parent or by being born in the US, filed an opposition after the US Department of State put forward a motion to dismiss their lawsuit in April 2021.
They are looking to scrap the $2,350 (£1,670, €1,940) cost associated with giving up American citizenship, which they describe as “unconstitutional”.
If successful, it could see another increase in renunciations.