'I feel trapped': Hundreds of US citizens in Switzerland waiting to renounce citizenship

Helena Bachmann in Geneva
Helena Bachmann in Geneva - [email protected] • 20 Jun, 2022 Updated Mon 20 Jun 2022 15:02 CEST
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Giving up Us passports is not a simple process. Photo by Levi Ventura on Unsplash

Hundreds of Americans living in Switzerland have been waiting many months for an appointment at the US Embassy — a necessary step in the process of renouncing their US passports. Why does it take so long?

Giving up one’s nationality is a drastic and irrevocable step and it is also a painstakingly lengthy one.

In Switzerland there are reportedly around 600 US citizens currently waiting in line to renounce their citizenship.

It can take up to a year to get an appointment with the US Embassy in Bern in order to carry out the process. This lengthy waiting time is of course not unique to Switzerland with Americans around Europe struggling to renounce their citizenships.

One American reader named Sean told The Local he had received a letter from the US embassy in Bern saying hundreds of fellow citizens were waiting to renounce their citizenship and that they were currently processing those who had applied back in spring 2021.

The letter read: “Please note that we have a waiting list of well over 600 customers and are scheduling appointments in the order in which we received the requests.  At the moment we are scheduling customers who contacted us in May 2021. It may yet be some time until we will be able to offer an appointment to you, we anticipate a waiting time of roughly 12 months”.

Having to endure a one-year wait to be able to renounce citizenship is nerve-wracking said Sean.

"I feel like I’m trapped now given the ridiculous wait for an appointment at the embassy and will need to pay another year of US taxes. It is very frustrating", he told The Local. 

Sean, who lived in canton Zurich from 2009 to 2021, when he moved to Aargau, received his Swiss citizenship in January of 2021, and plans to remain here.

Like tens of thousands of US citizens worldwide, including hundreds in Switzerland, Sean decided to give up his passport because of the burden of filing US taxes.  

READ ALSO: How Americans in Europe are struggling to renounce US citizenship

The United States is the only country in the world (besides Eritrea) that taxes its citizens on worldwide income, which involves filing and paying taxes in two nations — the country of residence and the US.

This is the case even for those who have no plans to ever return to the US (and therefore will not benefit from the tax money they’ve paid over the years) and the so-called “accidental Americans” — US citizens who were born in the US but hardly lived there or got US nationality via their parents. 

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

Those who earn less than $100,000 a year are mostly exempted from paying US taxes, but salaries of many professionals in Switzerland exceed that limit.

"I am renouncing in order to stop paying US taxes. I’m paying a very large amount of money to the US every year", Sean said.

Also, every American must, regardless of how much they earn, declare their income to the American tax authorities (IRS), and provide various documents, including a list of all their assets held in foreign banks.

If a US citizen has a joint account with a foreign spouse, those assets must be declared to the IRS as well, even if they were earned mostly by the latter.

Getting all the documents and figures together is often complex, but the penalty for even inadvertent errors is steep: up to $10,000 in fines, in some cases.

Why is there such a long wait?

The US Embassy hasn’t answered The Local’s request for a comment on the waiting times or to confirm the figure of "over 600 on the waiting list".

However, Sean believes that delaying appointments is a tactic to get more taxes, an opinion shared by another American, Cynthia who lives in Vaud.

“They don’t want to lose income from high-earners, which Americans abroad usually are. The longer they make us wait, the more [tax] money they can get out of us”, she said.

Cynthia renounced her passport in 2018, but her 19-year-old son — the aforementioned “accidental  American” who was born in Switzerland and visited the US briefly only once — is on the waiting list.

While this may or may not be one of the reasons for the delay, there are others as well.

Due to the pandemic many US embassies and consulates were either closed for non-urgent business or operated on limited schedules, according to Axios news platform.

This could have contributed to the backlog of applications which were left untreated and are now finally being processed. 

'Tax compliance'

Even if the US government will lose future tax income from well-heeled expatriates, it will still get its "due" in other ways.

For instance, you can only renounce your citizenship if you are tax-compliant — that is, if you have filed your declarations each year while living abroad — and paid when required. If you have not been up to date in this regard, you have to go through a process of filing and paying your back taxes (and possibly some fines as well) before your request can be considered.

Also, before the US embassy in Bern will strip you of your passport, you will have to pay a 2,500-franc fee for the administrative procedures.

How many Americans have renounced their citizenships so far?

In 2020, before the pandemic shut down consular services, 6,707 US citizens gave up their passports around the world. This may not seem like a lot, considering that about 7 million Americans live outside of the United States.

However, the 2020 figure was 237 percent higher than the previous year and much higher than a decade ago, when only about 1,500 Americans expatriated.

The reasons may vary from not having a dual nationality (which is a perquisite for giving up a passport) or personal reasons such as living abroad temporarily and planning to return to the US eventually.

The number of US citizens living in Switzerland is estimated, roughly, at 30,000. However, the real number is higher as some some Americans are not registered with consular services, and a large number are dual US / Swiss nationals and are not counted in the official statistics as Americans, but only as Swiss.

The US government is not releasing the number of renunciations by country, so exact figures for Switzerland are hard to come by. However, the IRS publishes a quarterly list of the names of people who have renounced their citizenship or given up their green cards (permanent residence status) globally.

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.

If a recent poll is something to go by, more overseas Americans may be renouncing their passports in the near future.

Roughly one in four American expatriates is “seriously considering” or “planning” to give up their U.S. citizenship, according to a survey released on June 15th by Greenback Expat Tax Services.

The survey doesn’t provide country-by-country data so numbers from Switzerland are not available.

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Helena Bachmann in Geneva 2022/06/20 15:02

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