Dual Citizenship For US Citizens: Is It Legal?

dual citizenship US citizens

Is Dual Citizenship Legal For US Citizens?

Why are some people renouncing US Citizenship?  Is it legal?  Is Dual Citizenship permissible?  Why seek a second nationality?  Will you loose your current citizenship if you obtain another?  Are there in fact any benefits by having dual citizenship?

We put together some information for you in order to answer these and many other related questions.  The truth of the matter is, it is not a question of should you - but rather why you might need dual citizenship going forward. Possibly you have made up your mind to live in another country - to expatriate as it were.  Maybe you are just thinking about it.  Regardless, there certainly are some myths and falsehoods floating around - especially among Americans principally when it comes to matters related to Expatriation, Residency in your new country and Dual Citizenship as well.

First off, the topic of expatriation - The Merriam-Webster Dictionary defines it as follows: Medieval Latin expatriatus, past participle of expatriate to leave one's own country - 1: to withdraw (oneself) from residence in or allegiance to one's native country, 2: to leave one's native country to live elsewhere; also to renounce allegiance to one's native country.

In other words, the term expatriate could refer to someone that simply has decided to live in another country or it could refer to someone that has decided to renounce previous citizenship as well.  Both definitions apply.  So, for example, you are an expatriate if you are an American that decided to retire to say Ecuador, or where ever else for that matter, but of course maintain your existing citizenship as well.  Simply moving to another country does not mean you loose your existing citizenship, just as obtaining legal residency status in your new country does not jeopardize your existing nationality or citizenship either (more on this in a moment).  So, becoming an expatriate does not mean you are a criminal or some kind of anti-patriotic malcontent - nor does it mean that you have necessarily renounced or relinquished your previous citizenship either (although this is something you could do as well).  It simply could be that you decided to live in Thailand or the Dominican Republic, for example, because in such places you can live very well on your US$2,000 per month pension (whereas this is near impossible in many parts of the US or Europe).  Some people do of course take it a step further, and seek to become a citizen of their new country as well.  But again, dual citizenship is recognized and perfectly LEGAL in most countries, including the US.  However, choosing a country because of residency and or citizenship requirements can be just as important of a factor as climate, real estate prices, and so on.  Important because perhaps the requirements are too restrictive for you, too costly in terms of real estate purchase or other kinds of investment - or perhaps not - as the case may be.

Obtaining Residency First - Then Citizenship

So, let us discuss residency first and then move on to dual citizenship as the next progression thereafter.  It is important to note that in your new country, one should obey the local laws and adhere to whatever legal requirements might exist.  In terms of immigration or residency matters, each country of course has their own set of rules and requirements.  In fact, this alone may be an important point to decide where you wish to live as well.  For example, in places such as the Turks and Ciacos Islands, in order to qualify for residency status, one must demonstrate a fairly expensive home purchase and or investment.  This is true also for the Bahamas, and a number of other destinations as well.  So, as an illustration, if you are not prepared to spend say US$250,000 for a second home - then that may eliminate such jurisdictions from the list of consideration.  Also, keep in mind that in can be almost impossible to obtain naturalization (ability to become a citizen) in the Turks and Caicos, so you must remain with residency status alone (and are subject to the whims of local government if they want to renew your residency status or not, and if not - you have a problem, especially after spending a considerable amount of money on a home purchase).  This was the case in recent previous years in the Turks and Caicos, whereby many foreigners were forced to leave simply because the local political tide turned against them (and renewal of residency status refused).

In contrast, countries such as the Dominican Republic have a fairly straight-forward process for obtaining residency, and there is no investment requirement if the applicant is simply requesting ordinary residency status.  Of course the only down side to the ordinary residency status is that a 7 year wait is required before one can apply for naturalized citizenship.  IF however one wishes to apply for one of the qualified investor options in terms of residency, then in that case the wait is only 6 months in terms of being able to apply for citizenship.  Since there are actually a few different avenues to pursue, including applying as a retiree (which also falls under the investor - pensioner immigration law) we advice clients to contact us so we might suggest which of these routes is best for the person's individual circumstances.

Naturalization in your new country, whether you decide to maintain dual citizenship (and thus two passports) or relinquish your previous one is often a natural progression for some people, but certainly not all.  However, in today's climate both in Europe and in the US, many people decide to obtain another citizenship out of investment necessity.  To explain further, any American that has attempted to open a banking or investment account in Switzerland and a host of other jurisdictions, will find the door closed to them simply because they are American.  Is it somehow illegal for an American to open a bank or investment account abroad?  Not at all, and neither is there any law or regulation prohibiting a bank in say Ireland, Switzerland, Liechtenstein, etc. to accept an American client either.  They simply will not do so, because they feel it is more hassle than worthwhile (hassle and aggravation from the American IRS to name just one).  It is interesting to note that for Americans, as just stated, a foreign account is perfectly legal - IF you can find a bank or broker to take you on as a customer.  And this is certainly one of many other reasons that US citizens would want to seek out another residency and another passport.

Europeans also have a problem in countries such as Switzerland now that the European Union has gone into full force, and has recently started pressuring tax reporting (and tax collection) when a citizen from one EU nation has an account in another.  Switzerland is not a member of the EU, but they have certainly been feeling the heat.  So, many Europeans as well are interested to become a citizen of Brazil, Costa Rica, Dominican Republic, where ever - simply for banking purposes also.  In fact, we already have a number of European clients that have successfully used their Dominican Residency documents for this purpose.  But banking or investing is not the only reason one might consider a dual nationality.  Travel is another concern, all depending upon what former country you come from.  To be sure, I know of many people that would prefer to travel as a Dominican, or a Guatemalan, etc. rather than their previous nation of citizenship (always better to be from some peaceful country not involved in politics or war elsewhere).  Of course the reasons for seeking dual nationality or dual citizenship do not stop there.  Some countries for example have more favorable tax legislation when it comes to inheritance matters.  Many others do NOT tax its citizens on interest or earnings from outside the country as well, so there are indeed many reasons on a personal level for someone to have an interest in this topic.

One of the most troublesome things about the topic of dual citizenship (and residency also) is the lack of knowledge most people have.  Which is to say, they often rely upon rumor, innuendo or simply bad information to formulate an opinion.  Many Americans especially are ill informed.  For example, if you visit the following US State Department Web Site, you will find the information reprinted below:

Dual Nationality For US Citizens

Loss of Citizenship and Nationality excerpt from the following: http://travel.state.gov/content/travel/english/legal-considerations/us-citizenship-laws-policies.html

A U.S. citizen by birth or naturalization INA 301 (8 U.S.C. 1401), INA 310 (8 U.S.C. 1421) or a U.S. non citizen national INA 308 (8 U.S.C. 1408), INA 101(29) (8 U.S.C. 1101(29)) will lose U.S. nationality (“expatriate”) her or himself by committing a statutory act of expatriation as defined in INA 349 (8 U.S.C. 1481), or predecessor statute, but only if the act is performed (1) voluntarily and (2) with the intention of relinquishing U.S. citizenship. The U.S. Supreme Court has spoken (Afroyim v. Rusk, 387 U.S. 253 (1967) and Vance v. Terrazas, 444 U.S. 252 (1980)):  a person cannot lose U.S. nationality unless he or she voluntarily relinquishes that status.

Dual Nationality excerpt from the following: http://travel.state.gov/content/travel/english/legal-considerations/us-citizenship-laws-policies/citizenship-and-dual-nationality/dual-nationality.html

Section 101(a)(22) of the Immigration and Nationality Act (INA) states that “the term ‘national of the United States’ means (A) a citizen of the United States, or (B) a person who, though not a citizen of the United States, owes permanent allegiance to the United States.” Therefore, U.S. citizens are also U.S. nationals. Non-citizen nationality status refers only individuals who were born either in American Samoa or on Swains Island to parents who are not citizens of the United States.  The concept of dual nationality means that a person is a national of two countries at the same time. Each country has its own nationality laws based on its own policy. Persons may have dual nationality by automatic operation of different laws rather than by choice. For example, a child born in a foreign country to U.S. national parents may be both a U.S. national and a national of the country of birth.

A U.S. national may acquire foreign nationality by marriage, or a person naturalized as a U.S. national may not lose the nationality of the country of birth. U.S. law does not mention dual nationality or require a person to choose one nationality or another. Also, a person who is automatically granted another nationality does not risk losing U.S. nationality. However, a person who acquires a foreign nationality by applying for it may lose U.S. nationality. In order to lose U.S. nationality, the law requires that the person must apply for the foreign nationality voluntarily, by free choice, and with the intention to give up U.S. nationality.

As already noted, the actions listed above can cause loss of U.S. citizenship only if performed voluntarily and with the intention of relinquishing U.S. citizenship. The Department has a uniform administrative standard of evidence based on the premise that U.S. citizens intend to retain United States citizenship when they obtain naturalization in a foreign state, subscribe to routine declarations of allegiance to a foreign state, or accept non-policy level employment with a foreign government.  In light of the administrative premise discussed above, a person who: (1) is naturalized in a foreign country; (2) takes a routine oath of allegiance or(3) accepts non-policy level employment with a foreign government and in so doing wishes to retain U.S. citizenship need not submit prior to the commission of a potentially expatriating act a statement or evidence of his or her intent to retain U.S. citizenship since such an intent will be presumed.

When, as the result of an individual's inquiry or an individual's application for registration or a passport it comes to the attention of a U.S. consular officer that a U.S. citizen has performed an act made potentially expatriating by Sections 349(a)(1), 349(a)(2), 349(a)(3) or 349(a)(4), the consular officer will simply ask the applicant if there was intent to relinquish U.S. citizenship when performing the act. If the answer is no, the consular officer will certify that it was not the person's intent to relinquish U.S. citizenship and, consequently, find that the person has retained U.S. citizenship.

In other words, for current US Citizens, obtaining a passport and citizenship does not actually mean it was assumed you wanted to renounce or relinquish US Citizenship, and in fact if you are asked and reply that you did not wish to renounce, then that will suffice.  In addition, it will be assumed that is was your intent to relinquish or renounce US Citizenship unless you formally declare otherwise.  Of course with all that said, US Citizens have been renouncing US Citizenship in record numbers over the past few years.  In fact, the number of people doing so has gone up by 2000 percent (that is not a type, it does in deed say two thousand percent) over previous years (as of 2015) and those numbers appear to be still going up.  2015 was yet another record year for US citizenship renouncements as well, confirming this trend.

Why Become A Dual Citizen or Renounce Citizenship?

Many people will decide to become dual citizens, which is to say seek out a second citizenship - second passport, for a variety of reasons.  In conjunction, many people might also to take the further step of renouncing previous citizenship as well.  The question of course is why?  Well, for some it just might be a matter of convenience.  Meaning, perhaps you may wish to seek out another travel document that might offer easier or more visa free travel options than the passport you currently carry.  For others it may be a question of safety.  Many Americans for example, would often prefer to travel as a national of some other country depending upon the part of the world they are going to.  Last, but not least, we come to the issue of banking and investing.

Americans especially will often find it very difficult to bank or invest outside of the US, as a US Citizen.  This is not because it is in any way illegal for US Citizens to have banking or investment accounts abroad, and neither is it illegal in the country where the person is trying to establish an account.  The problem has to do with reporting, at least from the perspective of the US Tax Authorities.   Stated more clearly, many countries have laws in place prohibiting the release of account holder information to anyone (other than by local court order) or bank - investment account interest may simply be tax-free in that jurisdiction. As a result there may not be any reporting to the local government (since there is no tax and thus no reason to report), never mind a foreign government no less.  However, this has not stopped the US Tax Authorities from pressuring foreign governments and foreign financial institutions to turn over account information regarding US citizens who may be banking or investing (for tax related purposes).  Because of these pressures, many financial institutions view the annoyance not worth the bother and will often not accept US citizens as account holders for this reason (and for none other).  However, being able to provide proof of residency outside of the US, and even better, non US citizenship - may make the difference of being welcomed or not.

About The Author: This article was written by John Schroder of Ascot Advisory Services.  John's firm has been helping clients in the Dominican Republic for the last 17 years with residency application services, naturalized citizenship filing, banking assistance and legal services pertaining to real estate (title transfers, legal representation at closing, sales contract review).  You can contact him by telephone at 809-756-1917 or click the about the author link above to reach a contact page to send an email directly.

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