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SWISS CITIZENSHIP

EXPLAINED: Why do US citizens in Switzerland give up their American passports?

As the US election is only days away, it is interesting to look at the reasons that push many American citizens living abroad — including in Switzerland — to take a drastic and irrevocable step of renouncing their US citizenships.

EXPLAINED: Why do US citizens in Switzerland give up their American passports?
Giving up US citizenship is irrevocable- Photo by AFP

How many US citizens live in Switzerland and how many have given up their American passports?

There about 7 million Americans living outside of the United States, but the real number is likely higher, as some may not be registered with consular services in their country of residence.

In Switzerland alone, the number of US citizens is estimated, roughly, at 30,000. However, dual nationals — those who retain their US citizenship in addition to the Swiss one — are not counted in the official statistics as Americans, but only as Swiss.

Globally, more than 5,800 Americans gave up their citizenship in the first six months of 2020, compared to the 2,072 in all of 2019, according to Bambridge Accountants, a New York-based firm specializing in US expat tax issues.

The US government is not releasing the number of renunciations by country, so exact figures for Switzerland are hard to come by.

The Local has knowledge of hundreds of Americans who have either renounced their citizenship at the US Embassy in Bern, or have already filed their applications there but are waiting for an appointment.

The number of renunciations is not high if viewed on annual basis. But if taken collectively over several years, it is proportionally significant.

Why do US nationals give up their passports?

The main reason is taxes and other financial constraints.

Not only are Americans abroad required to report to the US government their assets held in foreign banks – for instance savings accounts and mortgages – but also to declare the income they earn in their countries of residence.

Even though their income is generated in a foreign country — where they already pay taxes — expatriates must also file tax returns in the United States, the only industrialised nation that taxes its citizens on worldwide earnings.

Even if a US citizen living overseas doesn’t owe any money to Uncle Sam, they have to deal with complex and confusing filing rules that change frequently.

And the penalty for even unintentional errors is steep. US government can impose a fine of $10,000 a year for undisclosed foreign accounts, even if they don’t generate any taxable income in the United States.

The rules concern not only US expatriates, many of whom eventually do return to the United States. They apply also to the so-called ‘accidental Americans’— those born abroad to US parents, but who have never lived in the US themselves.

This is what some Americans in Switzerland who had given up their US passports told The Local:

“Having to divulge my foreign accounts to the US and to pay taxes on income that wasn’t earned in the United States did not seem fair, and it was a huge financial burden”. (William B., Geneva)

“I already pay taxes in Switzerland. Why should I also pay in the US? I will never go back to live there, so will draw zero benefits from all the taxes I’ve paid”. (R.L. Zug).

“I was born in Switzerland and never lived in the US. I got my citizenship through my American dad. Why am I supposed to be financially obligated to a country to which I have no ties?” (Carole D., Lausanne).

And a contributor to Switzerland’s expat forum wrote that she had given up her US passport “and never regretted it. Finding out that I was supposed to be filing in US tax returns over 40 years after I'd left the country was just ridiculous to me”.

How do Americans go about renouncing their passports in Switzerland?

The process is explained on the website of the US Embassy in Bern. 

“If you decide that this is the course of action you wish to pursue, there are several steps you need to take. including an interview at the U.S. Embassy in Bern”.

“At the in-person interview you must demonstrate to the consular officer that you fully understand the nature and consequences of the oath of renunciation, that you are not subject to duress or undue influence, and that you are voluntarily and intentionally seeking to renounce your U.S. citizenship.”

Citizens can give up their passport only if they are tax-compliant, that is, if they have filed their declarations each year and don’t owe any US tax. Otherwise, they must pay up what they owe before they are allowed to proceed with the process of renunciation.

Also, they must pay a $2,350 fee. The whole process takes between several weeks to months, depending on how many applicants the embassy has at any given moment.

Currently, due to the pandemic, the embassy in Bern is handling only a limited number of cases.

An important thing to remember is that only people who have dual nationality can give up their US passports.

What are the disadvantages of renouncing US citizenship?

This act is irrevocable — once a person is stripped of his or her citizenship, they can never get it back.

By giving up their passports, they also renounce their rights as citizens, including permanent residence, work, and voting.

Ex-Americans can still visit the United States, but only under the same conditions as any other foreigner, which may include visa requirements and limits on the time they can remain in the country.

 

 

 

 

Member comments

  1. I have both. But currently live in the US. I tend to be less critical than some sideline commentators of US policy but worldwide taxation–I have to admit–is as dumb and as unfair as it gets. Were I to move back to CH I dump my US passport like my morning constitutional.

  2. This article does not mention how the US taxes American citizens living abroad on their 2nd pilar pensions as well. All contributions, including the employer match are considered income and therefore taxed. Donald Trump can get away with years of tax fraud but us average working citizens are supposed to be penalized for our foreign pensions. It truly is an outrage!

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For members

SWISS CITIZENSHIP

EXPLAINED: Everything you need to know about Swiss language tests for residency

The language standards for permanent residency is different than that for citizenship. Here's what you need to know.

EXPLAINED: Everything you need to know about Swiss language tests for residency

Whether granting permanent residency or citizenship, whether you are ‘successfully integrated’ is the major question for Swiss authorities. 

Being successfully integrated means that they “should participate in the economic, social and cultural life of society”, according to the State Secretariat for Migration.

Reader question: What does being ‘successfully integrated’ in Switzerland mean?

Speaking a Swiss language is crucial. While you will not need to speak a Swiss language when you arrive, you will need to demonstrate a certain degree of language proficiency in order to stay long term. 

However, the level of language proficiency differs depending on the type of residency permission you want: residency permit, permanent residency or Swiss citizenship. 

This is outlined in the following table.

Image: Swiss State Secretariat for Migration

Image: Swiss State Secretariat for Migration

What does proficiency in a Swiss language mean?

Proficiency in a Swiss language refers to any of the major Swiss languages: Italian, German, French and Romansh. While Romansh is also a Swiss language, it is not spoken elsewhere and is only spoken by a handful of people in the canton of Graubünden. 

There are certain exceptions to these requirements for citizens of countries where these languages are spoken, as has been outlined here

English, while widely spoken in Switzerland, is not an official language of Switzerland and English proficiency will not grant you Swiss citizenship. 

Moving to Switzerland, it may appear you have three world languages to choose from, although by and large this is not the case. 

As the tests are done at a communal level, the language in the commune in question is the one you need to speak

Therefore, if you have flawless French and live in the German-speaking canton of Schwyz, you need to improve your German in order to make sure you pass the test. 

While some Swiss cantons are bilingual, this is comparatively rare at a municipal level. 

A Swiss Federal Supreme Court case from 2022 held that a person is required to demonstrate language proficiency in the administrative language of the municipality in which they apply, even if they are a native speaker of a different Swiss language. 

What Swiss language standards are required for a residency permit?

Fortunately for new arrivals, you do not need to show Swiss language proficiency. 

Generally speaking, those on short-term residency permits – such as B Permits and L Permits – are not required to show proficiency in a national language. 

There are some exceptions – for instance people on family reunification permits – however by and large people who have just arrived in Switzerland for work do not need to demonstrate language proficiency. 

What Swiss language standards are required for permanent residency?

While ‘permanent residency’ might sound like ‘residency permit’, it grants a far greater set of rights for the holder – and with it a more extensive array of responsibilities. 

EXPLAINED: What’s the difference between permanent residence and Swiss citizenship?

One of these obligations is Swiss language proficiency. 

For ordinary permanent residency – which is granted after an uninterrupted stay of five years or ten years in total – you need to demonstrate A2 level of a spoken Swiss language and A1 written. 

Citizens of Austria, Belgium, Denmark, France, Germany, Greece, Italy, Liechtenstein, Netherlands, Portugal and Spain are exempt from these language requirements. 

For fast-tracked permanent residency, the language level is a little higher. 

You must demonstrate A1 written but B1 spoken. 

There are also exceptions for people who can demonstrate they have a Swiss language as their mother tongue, or that they have attended compulsory schooling for a minimum of three years in a Swiss language. 

Demonstrating language proficiency must be done through an accredited test centre. The accreditation process is handled at a cantonal level. More information is available here

What Swiss language standard is required for citizenship?

The standard is slightly higher for citizenship than for permanent residency. 

Candidates must demonstrate A2 level writing ability and B1 spoken skills. This is the level set out in the Common European Framework of Reference for Languages.

These rules, which came into effect on January 1st, 2019, set up a uniform minimum level of language proficiency required on a federal basis. 

Previously, there was no consistency in language testing, with many cantons in the French-language region making a judgment based on the candidate’s oral skills.

Cantons are free to set a higher bar if they wish, as Thurgau has done by requiring citizenship candidates to have B1-level written German and B2 (upper intermediate) spoken German. The rules are also stricter in St Gallen and Schwyz. 

More information is available at the following link. 

Naturalisation: How well must I speak a Swiss language for citizenship?

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