Trends in Expats Renouncing Citizenship: How Many Expats Renounce US Citizenship—& Why?

Expats Renouncing Citizenship: 3rd Quarter 2019

Each quarter, Greenback tracks the number of expats renouncing citizenship. Why? Citizenship renunciation is something that affects Americans living abroad exclusively, and it’s often a decision based primarily on the continued tax reporting requirements all American citizens have. The Federal Register recently released the final count for the end of 2019. Let’s see how this tracks with the rest of the year’s numbers, and the reasons behind this momentous, definitive decision!

Why Expats Renounce US Citizenship

Every American citizen retains the right to renounce their citizenship, but this decision is a big one because it is a final decision. Greenback’s 2019 expat survey revealed that one in five expats are seriously considering citizenship renunciation. Of those considering, 40% of expats said they would renounce US citizenship due to the continued burden of filing taxes each year. However, giving up citizenship isn’t an option for all American expats, especially those planning on eventually returning to America or with family still living stateside. For those expats, tax filing requirements – and sometimes, payable amounts due – are an annual reality.

Becoming tax compliant is more important now than ever, for expats. The IRS can revoke the passports of anyone with seriously delinquent tax debt, or tax debt that surpasses $52,000. Meeting this threshold is easier than you might think. For expats who didn’t know about the tax-filing requirement, fees and penalties can be daunting and quickly rack up to the level of $52,000 and beyond.

How Many Expats Renounce US Citizenship?

The total number of expats renouncing citizenship in the second half of 2019 was shocking. In quarter three, just 183 US expats renounced. In quarter four, 261 Americans gave up their citizenship. These numbers are quite low in comparison to previous years. This is pre-FATCA (Foreign Account Tax Compliance Act) – or as many expats view it, when American tax requirements started to get seriously problematic – low. Before FATCA, a few hundred citizens would renounce each quarter. Since FATCA, and especially around the time of the last American presidential election, numbers had skyrocketed.

For background, let’s look at the quarterly numbers of expats renouncing US citizenship from 2017 through 2019.

Expats Renouncing Citizenship in 2017:

Q1: 1,313

Q2: 1,758

Q3: 1,376

Q4: 685

Expats Renouncing Citizenship in 2018:

Q1: 1,168

Q2: 1,093

Q3: 1,104

Q4: 685

Expats Renouncing Citizenship in 2019:

Q1: 1,018

Q2: 609

Q3: 183

Q4: 261

What’s the Reason for the Recent Renunciation Slowdown?

These low numbers lead to several questions. The first is: why the slowdown? In all likelihood, since FATCA was introduced in 2010, the majority of the Americans living abroad who did not want to continue to face the problems FATCA causes have likely finished renouncing. FATCA is no longer a shock, and with its near-decade of existence, many of those living abroad have either gotten used to working around it or renounced already.

It will be interesting to examine the numbers in 2020 to see if previous spike in renunciations has finally slowed to a trickle. With 40% of expats still considering the idea of renouncing, it also would not be surprising to see an uptick depending on what the future election holds for international taxation. Only time will tell, and we’ll be back with a report once the 2020 figures released.

Want to Get Tax Compliant Now?

Even expats renouncing citizenship must be tax compliant before they can relinquish their citizenship. We can make the process easy, no matter what your plans are. Get started with Greenback today, and let the expat experts handle your taxes!