Expatriation Examples: What It’s Really Like

What It’s Really Like to Expatriate from the U.S.

Expatriation means giving up your US citizenship and passport. In other words, you give up your right to live and work in the United States.

Expatriation is a major decision. It means, for instance, that you no longer have the automatic right to enter or live in the United States. You’ll need to get a visa to do so unless your non-US passport qualifies you for visa-free entry.

But the actual process of expatriation isn’t as arduous as you might think.

You’re likely to encounter bureaucratic incompetence and unexplained delays. But giving up your US nationality is a legal right.

Real-Life Expatriation Example #1:

Here’s one account my colleague “John” (not his real name) recently received from a now-former US citizen on how the expatriation process really works:

As you wrote, the first step is to find alternative citizenship. After attending an offshore investment conference, I decided that my best bet was to gain citizenship in St. Kitts & Nevis by purchasing a property there for an amount over $350,000. Then, I paid another $50,000 for two additional family members to apply for citizenship. This whole process, including closing on the property, application, review of paperwork, citizenship, then waiting for issuance of the passport, took about nine months.

After moving all of my assets whose title I could change or move offshore, I purchased a home and moved to Panama. Then it came time to surrender my citizenship. From everything I could find online or in any books, I was expecting the surrender process to be rather grueling, including meeting one on one with a consular official sitting me under a bright light, interrogating me about reasons and taxes, then almost beating me with a rubber hose. We are all aware of the onerous threats of what IRS can do if we have the nerve to try to escape the plantation.

John, I was absolutely dumbfounded at how EASY it really was.

No problems, no questions about anything, they were simply willing to cut me free. I had thought I wanted an attorney with me, so I would have some idea which questions I legally had to answer and which I could refuse to answer. It was just not necessary. I believe IRS and the State Department tries to scare the hell out of us so we won’t even try to surrender citizenship, but the process is far different than I envisioned.

There are a total of five forms needed. All are available on-line on the State Department Web site. The numbers for these forms are DS-4079 through DS-4083. You complete these forms, and then take them along with your US passport, birth certificate, Social Security card and new passport to the embassy. If you are smart, you will also bring a typed letter explaining your reason for wanting to expatriate.

Do not say ANYTHING about taxes. My reasons were that I abhorred socialism, loved the Constitution, but was unbelievably sorry that we no longer followed it. Then a clerk will re-type all the forms. This took about two hours because of numerous typographical errors. It is important to proofread every answer and every single line. It took something like 10-12 different efforts to get all five forms finally completed correctly.

A consular representative then came to the window, asked for my US passport, asked me if I was really the person who wanted to expatriate, and whether I understood the consequences. Then he signed a few papers, took my passport and said good-bye. That was it! Oh, he also told me I should contact the IRS to inform them of what I had done. He said I would receive my certificate of loss of nationality in about four months. He never asked me ANYTHING about taxes or finances.

After a follow-up call to the embassy four months later, I was told I could return and pick up my official certificate of loss of nationality. They returned my US passport with holes punched in it. The next day I returned to the embassy to apply for a 10-year, unlimited visit VISA to come to the United States. It was approved the same day. I also applied for Social Security because I was now old enough to receive it. You do NOT surrender your right to Social Security benefits by expatriating.

I thought it might be helpful for you to know what they ACTUALLY do to those who wish to surrender citizenship. Regardless of how intimidating they want you to believe this process can be, at least in my case, NOTHING happened.

I am now a free, sovereign citizen of the world. St. Kitts & Nevis charges me zero income tax, zero capital gains tax, and zero death tax. I don’t even have to file a tax return any longer for ANYONE. Panama leaves me alone, so long as I pay my property tax and sales tax, and the US no longer “owns” me.

My St. Kitts & Nevis passport gets me almost anywhere in the world that I could have gone with my former US passport. With my 10-year visa, I can come back to visit the US whenever I want. Believe me, I don’t want or need to come back very often, and there are lots of nice other places to see in this world. And, if we are both on the same plane hijacked by terrorists, they’ll kill you long before me.

I have the very best of all worlds. I live virtually tax-free in a beautiful country. I actually have more freedom and liberty as a guest resident of Panama than I did as a citizen of the United States.

I simply don’t understand why there are not MILLIONS of Americans giving up their citizenship. If only they knew how EASY it is, how practical it is and how much better for their financial health, there would be lines around the block at every US embassy from those who realize there are better choices than remaining a US citizen.

Real-Life Expatriation Example #2:

Why I Gave Up My US Citizenship 

 [By P.T. Freeman — a pseudonym for one of Mark’s friends and business associates who is a former US citizen. This is his story of how he reached the breaking point of giving up US citizenship.]

Have you ever been to Key West, Florida?

A landmark in Key West is a marker at the corner of Whitehead and South Streets that says in big letters: “Southernmost Point Continental United States.” Above it reads in smaller letters: “90 miles to Cuba.” Visiting this concrete marker recently made me pause and reflect upon a major decision that I made a few years earlier: the choice to give up my US citizenship.

This process started when I found that there were many restrictions on my ability to travel or do business outside the United States because of my US citizenship. For instance, I had long desired to visit the Republic of Cuba, but because of my US citizenship, I could not do so. Canadians, Mexicans, Europeans and every other nationality may travel and do business there, but with limited exceptions, US citizens have not been excluded from Cuba for nearly 50 years.

As I thought about this prohibition and the many others established by statute or executive order, I became outraged. Finally, in 1994, I read a story that galvanized me to take action. The story was about a group called the “Freedom to Travel Campaign” that sought to end these travel restrictions. This group had challenged Treasury Department regulations prohibiting such travel. However, the Clinton Justice Department, perhaps fearing that juries would side with these “tourist lawbreakers,” declined to prosecute the cases.

In reaction to the failure of the Justice Department to prosecute these tourists, the Treasury Department amended the regulations to make it possible to fine persons violating travel restrictions administratively, without going to court. The US Treasury Department administers these and other sanctions programs through the Office of Foreign Assets Control.

Despite the risks, I decided to secretly visited Cuba. I flew to Nassau, the Bahamas, and embarked upon the daily direct flight to Havana on Cubana de Aviacion, Cuba’s national air carrier.

While in Cuba, I discovered a wealth of business opportunities. This was the height of the “Special Period in Peace” when, due to the collapse of the Soviet Union and the end of Soviet aid, the Cuban economy was in a tailspin.

There was a serious need for outside investment on favorable terms. I decided that I wanted to participate in those investments. Returning a few days later to Nassau, I passed through US Customs pre-flight inspection without revealing that I had visited Cuba. (The customs inspector did not ask me if I had done so, and the customs forms in those days did not ask, “countries visited on this trip prior to US arrival,” as they do now.)

Upon my return to the United States, I began to read the US Treasury regulations regarding Cuba. I learned that they prohibited virtually all contact with Cuba by any person “subject to US jurisdiction.” This included: “all US citizens and permanent residents wherever they are located, all people and organizations physically in the United States or its territories, and all branches and subsidiaries of US organizations throughout the world, corporations, wherever they are located throughout the world.”

Criminal penalties for violating the regulations range up to 10 years in prison, $1,000,000 in corporate fines, and $250,000 in individual fines. Civil penalties up to $65,000 per violation may also be imposed.

The only way to legally travel to or do business with Cuba, or any other sanctioned country, was (and still is) to obtain a license issued by OFAC. Only journalists and a few other classifications of individuals may obtain a license to travel to sanctioned countries. For businesses, it is almost impossible to obtain a license.

Exploring Expatriation 

The only other option was not to be a US citizen. At that moment, I was not prepared to take that step. Instead, I decided to explore the possibility of living outside the United States. However, I quickly discovered that doing so did not exempt me from OFAC regulations. I also learned that there was no escape from the obligation of US citizens to pay tax on their worldwide income, even if they physically resided outside the United States. I began to seriously wonder if my “little blue book” (my US passport) was really worth keeping.

After making the decision to give up my US citizenship, I began looking into ways of obtaining an alternative citizenship and passport. I conducted some research on the Internet, but then, as now, many of the companies offering passports were thinly disguised scams offering unofficial or even stolen documents.

However, there were, at that time, a few Caribbean countries that offered legitimate “economic citizenship” programs. With the aid of an attorney, I began to conduct research into which program would best suit me. I looked at cost, the availability of visa free travel, credibility, and the desirability of that country as a residence.

Citizenship by Investment

After considerable research, I chose the Commonwealth of Dominica and visited it. While Dominica lacks some of the amenities of the United States, I liked the country and decided to possibly settle there, or at least maintain a residence or business presence. I paid the necessary fees to obtain economic citizenship and met with some government officials. Several weeks later, after an extensive background check, I swore an oath of allegiance to this country, was granted citizenship and subsequently obtained my passport.

A major concern was whether persons who had obtained economic citizenship from this country would be subject to discrimination, either from its residents or at border crossings. I found that there were no real problems in either case. Indeed, my passport was identical to those issued native-born Dominica citizens. While I ultimately made to decision to settle elsewhere, I lived in Dominica for several months and still invest there.

After obtaining this second passport, at the advice of my attorney, I decided to take the biggest step of all: giving up my US citizenship. Walking up to the US embassy, my heart was pounding. I feared that I was going to be called a traitor. I had also been advised that individuals who gave up their US citizenship for tax reasons could be permanently excluded from ever returning to the United States. (Note: This provision is part of the 1996 immigration bill, but has never been enforced due to questions about its constitutionality.

As I entered the US consulate to give up my US citizenship, my mind was whirling. Was I doing the right thing? Would the momentous step of expatriating come back to haunt me in some way later in my life? Despite these misgivings, I was determined to see this process through to the end.

However, I was surprised how smoothly the process went. The US consular officer I met with was completely non-judgmental. He gave me some official government forms to complete and asked me if I understood the consequences of giving up US citizenship. The forms required me to state that I wasn’t expatriating under compulsion, that I was of sound mind, and that that expatriation was, in fact, irrevocable.

After I completed the forms, the official took my US passport, as well as the forms. He also made a copy my new passport to demonstrate to the State Department that I would not be a “stateless person” upon giving up US citizenship. While the United States (unlike most nations) doesn’t prohibit its citizens from becoming “stateless,” State Department policy is to discourage them from doing so. He also informed me that in a few weeks, I would receive an official document called a “Certificate of Loss of Nationality” or CLN. The entire process took less than 30 minutes, most of which were waiting for copies to be made and other administrative processes.

About two months later, I received my CLN. This was my official notification that I was no longer a US citizen. Attached was a letter explaining that I could appeal my loss of nationality, if I chose to do so, directly to the Attorney General. Occasionally, I’m asked to show a copy of the CLN to prove my ex-citizen status when doing business or banking internationally. This is due to the many restrictions offshore institutions place on doing business with US citizens.

Since I still have family and business interests in the United States, my next step was to take my Dominica passport and CLN back to the US consulate and apply for a multiple-entry visa to visit the United States. In a short meeting with a consular officer, I was asked whether I intended to permanently settle in the United States. Of course, I had no intention of once again becoming subject to the jurisdiction of OFAC and the IRS! Once I assured the officer I had no such intention, the visa was issued within a few hours. This visa gives me the right to visit the United States for up to 90 days at a time, although not to reside there.

While I completed these steps only a few years ago, I have already experienced enormous benefits both personally and in business. I can travel anywhere in the world with my new passport. And I now have extensive business interests in Cuba and other countries subject to US sanctions.

I started this article at the marker in Key West, looking over the Straits of Florida. I will end there as well. In a recent visit to Key West, I turned around and saw a group of tourists who had disembarked from a trolley tour and were snapping pictures of the marker. None of those tourists who are US citizens or residents can visit Cuba. I can. Those who are US citizens or residents also have to file an annual tax return with the IRS. I don’t.

That’s what you call true liberation—or if you prefer, being a “sovereign individual.”

Need Help?

We can assist in every phase of giving up your US citizenship or long-term residence. This includes helping you get a second passport before giving up US citizenship.

And if you’re not ready to expatriate, we can help you take advantage of tax breaks in the Tax Code that apply to U.S. citizens and permanent residents living overseas.

Schedule a free no-obligation consultation with a Nestmann Associate to see if expatriation is right for you.