'Never slept better': Why Americans in Switzerland renounced their US passport
Giving up one’s citizenship is a drastic and irrevocable step, but one that thousands of Switzerland-based Americans have taken in recent years. Do they regret it?
Of the approximately 30,000 Americans living in Switzerland, thousands have given up their US passports in recent years.
Though the exact figure is not known — the US government is not releasing the number of renunciations by country — scores of Americans have renounced their citizenship at the US Embassy in Bern, with more contemplating this action as well.
While giving up one’s birthright and national identity may seem extreme — and it is — many Americans living abroad, including in Switzerland, see this as a necessary step.
It is not driven by lack of love towards their country, but rather by financial burdens that the US government places on its citizens living abroad.
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.
READ ALSO: Why do US citizens in Switzerland give up their American passports?
Being financially obligated to the country where they no longer live and to which they don’t plan to return, has other disadvantages as well.
For instance, each year, foreign banks must report to the US tax authorities (IRS) all assets of American citizens. And the investment opportunities that expatriate Americans have in Swiss banks are also restricted by the IRS.
All the logistics and procedures involved in providing their clients’ financial information to the IRS have made Swiss banks reluctant to open accounts for US clients.
This means an American living in Switzerland is likely to face difficulties not only in opening an account, but also in being able to save money for retirement.
READ ALSO: Why Americans in Switzerland struggle to save for retirement
All these hurdles have prompted many Americans to ditch their US passports, which they see as a major liability for all the reasons mentioned above.
(Of course, only those who also have a Swiss nationality in addition to the American one can relinquish their US passports. People who are not dual citizens can’t do so, as that would leave them stateless.)
‘Sad but also relieved’
How do the ex-Americans feel once they give up their US passports?
The Local interviewed a number of people in Switzerland who have taken this step.
“There was some regret because I felt that my ties with my country were cut off forever,” said Jane, a Geneva resident originally from New Jersey, who renounced her US passport in 2016.
“But on the other hand, I also felt like a huge weight fell off my shoulders. I was finally able to have a normal life here because the IRS was no longer breathing down my neck.”
Ellen, from California, who gave up her US citizenship in 2021, said she was “sad at first, but then relieved.”
“I felt like I was ‘divorcing’ my country, but this was a necessary step because having to file taxes [in the US] every year and not being able to have a proper bank account here, was turning into a nightmare.”
Another Vaud resident, Carol, said her life “is much less complicated” since she renounced her US passport in 2018.
“I haven’t lived in America since the late 1990s and don’t plan on going back, so this was a logical step, one allowing me to have a better life here,” the former New York resident said.
Her husband, Dan, whom she met and married in Switzerland, is now in the process of renouncing as well. “From the practical, and certainly from financial point of view, it makes a lot of sense,” he said. “I no longer have any ties with America, so it has been easy for me.”
“The financial burden of my American citizenship was really weighing down on me,” said Mark, who was born to American parents in Boston, but has been living in the Zurich area since the age of 11.
“I grew up here, my life is here, so I don’t see why I should be financially obliged to America for the rest of my life” he said.
Now that he is no longer a US citizen, he says he's "never slept better".
Anne’s feelings about relinquishing her US passport in 2022 are mixed.
On one hand, the Geneva resident acknowledges that “not having to deal with the IRS any longer is a huge relief.”
But on the other, her family in Chicago “is angry that I turned my back on America to ‘save a few bucks’.”
“They call me a traitor and it hurts, but my life in Switzerland is much easier now.”
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Of the approximately 30,000 Americans living in Switzerland, thousands have given up their US passports in recent years.
Though the exact figure is not known — the US government is not releasing the number of renunciations by country — scores of Americans have renounced their citizenship at the US Embassy in Bern, with more contemplating this action as well.
While giving up one’s birthright and national identity may seem extreme — and it is — many Americans living abroad, including in Switzerland, see this as a necessary step.
It is not driven by lack of love towards their country, but rather by financial burdens that the US government places on its citizens living abroad.
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.
READ ALSO: Why do US citizens in Switzerland give up their American passports?
Being financially obligated to the country where they no longer live and to which they don’t plan to return, has other disadvantages as well.
For instance, each year, foreign banks must report to the US tax authorities (IRS) all assets of American citizens. And the investment opportunities that expatriate Americans have in Swiss banks are also restricted by the IRS.
All the logistics and procedures involved in providing their clients’ financial information to the IRS have made Swiss banks reluctant to open accounts for US clients.
This means an American living in Switzerland is likely to face difficulties not only in opening an account, but also in being able to save money for retirement.
READ ALSO: Why Americans in Switzerland struggle to save for retirement
All these hurdles have prompted many Americans to ditch their US passports, which they see as a major liability for all the reasons mentioned above.
(Of course, only those who also have a Swiss nationality in addition to the American one can relinquish their US passports. People who are not dual citizens can’t do so, as that would leave them stateless.)
‘Sad but also relieved’
How do the ex-Americans feel once they give up their US passports?
The Local interviewed a number of people in Switzerland who have taken this step.
“There was some regret because I felt that my ties with my country were cut off forever,” said Jane, a Geneva resident originally from New Jersey, who renounced her US passport in 2016.
“But on the other hand, I also felt like a huge weight fell off my shoulders. I was finally able to have a normal life here because the IRS was no longer breathing down my neck.”
Ellen, from California, who gave up her US citizenship in 2021, said she was “sad at first, but then relieved.”
“I felt like I was ‘divorcing’ my country, but this was a necessary step because having to file taxes [in the US] every year and not being able to have a proper bank account here, was turning into a nightmare.”
Another Vaud resident, Carol, said her life “is much less complicated” since she renounced her US passport in 2018.
“I haven’t lived in America since the late 1990s and don’t plan on going back, so this was a logical step, one allowing me to have a better life here,” the former New York resident said.
Her husband, Dan, whom she met and married in Switzerland, is now in the process of renouncing as well. “From the practical, and certainly from financial point of view, it makes a lot of sense,” he said. “I no longer have any ties with America, so it has been easy for me.”
“The financial burden of my American citizenship was really weighing down on me,” said Mark, who was born to American parents in Boston, but has been living in the Zurich area since the age of 11.
“I grew up here, my life is here, so I don’t see why I should be financially obliged to America for the rest of my life” he said.
Now that he is no longer a US citizen, he says he's "never slept better".
Anne’s feelings about relinquishing her US passport in 2022 are mixed.
On one hand, the Geneva resident acknowledges that “not having to deal with the IRS any longer is a huge relief.”
But on the other, her family in Chicago “is angry that I turned my back on America to ‘save a few bucks’.”
“They call me a traitor and it hurts, but my life in Switzerland is much easier now.”
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