Guest Post: A Primer For Those Considering Expatriation

Tyler Durden's picture

Submitted by Mark Nestmann via Chris Martenson of,


A growing number of Americans are frustrated with the way in which their economy has been managed and are becoming increasingly concerned about future measures the government may take to keep its coffers full.

A question that is arising with increasing frequency is: does expatriation offer a viable protection to those concerned about a more financially-intrusive US system?

The answer is 'yes', it does offer a completely legal solution for ending your obligation to pay US income, capital gains, and gift taxes on your worldwide income. But it is certainly not for everyone and should only be pursued after lengthy and diligent consideration.

And before you begin dreaming of a tax-free future, you should realize that the United States imposes taxes on a broader basis than any other country. The United States is one of two countries, and is the only major country, that imposes significant income, capital gains, gift, and estate taxes on its non-resident citizens.

In virtually all other countries, individuals end their liability to pay income tax after a sustained period of non-residence, generally one year or longer. But to legally and permanently end U.S. tax liability on their worldwide income, U.S. citizens must also give up their U.S. citizenship and passport. This process is called "expatriation."

Yes, it's a radical step. However, if you're a U.S. citizen, you can make nearly all of the preparations for a possible future expatriation without permanently leaving the United States. This is a four-step process: 

  • Phase 1. Relocate your assets from the United States to other jurisdictions, preferably where the assets won't be taxed.
  • Phase 2. Identify foreign countries where you would consider living,
  • Phase 3. Obtain a suitable second passport
  • Phase 4. Expatriate—give up your U.S. citizenship and passport

Once you've accomplished the first three phases, summarized here in Part I of this report, the final step—expatriation—is much easier than if you're starting from scratch. Part II of this report describes the expatriation process.

Are you a good candidate for expatriation? You are, if:

  • You are comfortable living outside the United States, or are already doing so
  • Your spouse and children are comfortable living outside the United States, or are already doing so; and
  • You have already or are capable of shifting the majority of your income and assets outside the United States.
Phase 1: Relocate Your Assets Outside the United States

With a few exceptions, the IRC imposes taxes on both U.S. source income and foreign source income of U.S. citizens. Non-resident, non-U.S. citizens (also known as "non-resident aliens") pay tax only on U.S. source income, although some U.S. sources of income (e.g., most capital gains) are tax-free.

To prepare for this more favorable tax treatment in anticipation of expatriation, begin moving liquid assets outside the United States to more tax-friendly jurisdictions. Begin selling assets that can't be relocated (e.g., real estate) so that you may reinvest the proceeds overseas.

Invest only in countries and investments with which you are comfortable. If you are accustomed to buying and selling U.S. securities, consider using offshore bank or brokerage accounts to target non-U.S. securities. If you are an experienced real estate investor, investigate real estate purchases outside the United States. Keep in mind that a targeted investment or real estate purchase may also qualify you for legal residence in some countries (Phase 2) or even a second passport (Phase 3). If you have substantial domestic investments in precious metals, consider moving the metals offshore.

The vast majority of foreign banks and brokerages now refuse to accept new U.S. citizen clients, especially U.S. citizens resident in the United States. However, banks and brokerages in a handful of countries still accept new U.S. citizen and resident clients and allow them to purchase non-U.S. securities. A few banks in Austria, the Bahamas, Hong Kong, Liechtenstein, Singapore, and Switzerland are suitable for this purpose. The minimum deposits in these banks start at $100,000. Minimum deposits in offshore brokerages start around $5,000. Fees are much higher for banking services and securities trading than in the United States.

Both the accounts you hold offshore and the income derived from them must be reported to U.S. authorities. The penalties for failing to make these disclosures are draconian. Consult with an expert familiar with the tax and reporting rules for international investments when you file your annual tax return.

Offshore real estate is a non-reportable asset for U.S. investors if owned individually or jointly with your spouse or other individuals. Income or gain from foreign real estate investment is reportable and taxable. Countries offering first-world infrastructure and where real estate is relatively affordable include Argentina, Australia, Canada, Chile, Ireland, Mexico, New Zealand, Panama, Spain, and Uruguay.

Numerous potential "land mines" exist in offshore real estate investments. Among them are the lack of a multiple listing service in many countries, difficulty in establishing good title, and legal provisions giving squatters the right to live on your property. Retain a knowledgeable real estate attorney in the country in which you purchase real estate to avoid problems.

You may transport precious metals you own in the United States to another country and store the metals in a safety deposit box, bank vault, or private vault. One option for doing so is to use a secure shipping service. Make certain the service not only promises secure transport but also assists with completing non-U.S. customs and tax declarations. Another option to transport precious metals out of the United States is a like-kind exchange under Sec. 1031 of the IRC. If you move the metals yourself, the best option can be to hire an import agent in the country to which you're taking them to handle the import formalities. You will generally post a bond through the agent covering taxes due (if any) plus the agent’s fee.

Phase 2: Identify Foreign Countries Where You Would Consider Living

Once you give up U.S. citizenship and passport, you no longer have the right to live in the United States. You may generally make brief visits, but in most cases, you won't be able to stay more than approximately four months annually without becoming subject to U.S. tax on your worldwide income based on the IRC's "deemed residence" rules discussed in Part II of this report. Finding another country to live in is therefore an essential part of any expatriation exit strategy.

Even if you have no plan currently to leave the United States permanently, finding a country that you may wish to relocate to in the future is a prudent safeguard. If economic or political conditions deteriorate in the United States and reach your personal breaking point, having legal residence in a suitable offshore jurisdiction provides a valuable "insurance policy."

If you merely want the right to live in another country in the form of a residence permit, but don't necessary want to be physically resident there, a number of countries can accommodate your needs. These include Belize, Costa Rica, Malta, Mexico, the Dutch Caribbean territories, and Panama. In most cases, you can qualify for residence (although not the right to work in the country) by either making an investment or demonstrating a minimum guaranteed pension payment. Residence rights may be purchased in some countries by making an investment of $80,000 or more in real estate or other assets. A guaranteed pension payment of $1,000 or more may also qualify you for residence. In other countries, you may need to qualify on a points system. Some countries have multiple programs to consider. 

Phase 3: Obtain a Suitable Second Passport

To end your responsibility to comply with U.S. tax and reporting obligations, you must give up your U.S. citizenship and passport. Without a second nationality in place and passport in hand, however, giving up your U.S. passport would render you a "stateless person." Avoid this status, as it makes it difficult or impossible to legally live or travel internationally.

A second passport also conveys numerous other benefits:

  • It gives you the right to reside in the country that issued the passport, and possibly other countries. For instance, a passport from a member of the European Union conveys the right to live and work in any other EU country. 
  • It gives you a way to travel internationally if your primary passport is lost or stolen, or if the issuing government confiscates or refuses to renew it.
  • It provides you with the opportunity to travel to countries blacklisted by the government that issued your primary passport. For U.S. citizens, this includes countries such as Cuba, North Korea, etc.
  • It avoids disclosing your primary nationality, should you ever need to keep that a secret. This can be useful if you're ever confronted by militants who oppose the government that issued your primary passport.  

You may qualify for a second citizenship and passport by ancestry, marriage, religion, or extended residence in another country. If not, a handful of countries offer “instant” citizenship in return for an investment or contribution. The Commonwealth of Dominica and the Federation of St. Kitts & Nevis are the only countries with an official, legally mandated, economic citizenship. (Note: Dominica and the Dominican Republic are different countries.)

Dominica is the least expensive option. The nationality law of Dominica authorizes the government to waive the normal requirement of seven years of legal residence to acquire citizenship in exchange for a cash contribution. Total costs including all fees for a single applicant come to about $105,000. Add $25,000 for your spouse and up to two children under 18. The Dominican passport holders can travel without a visa, or obtain a visa upon entry, to nearly 90 countries and territories.

The Federation of St. Kitts & Nevis offers two options to obtain economic citizenship. One option is to make a direct contribution to a charitable foundation set up to support displaced sugar workers: the Sugar Industry Diversification Foundation (SIDF). Total costs including all fees for a single applicant under this option come to about $285,000 or $335,000 for an applicant with up to three dependents.

The second option is to purchase "qualifying property" with a minimum investment of $400,000. Fees and closing costs add a minimum of $100,000. Total costs for a single applicant come to at least $500,000 and close to $600,000 for a family of four. The St. Kitts & Nevis passport provides visa-free entry, or visa upon entry, to more than 120 countries, including nearly all of the 27 member countries of the European Union.

In all cases, applicants must pass a strict vetting process that includes a comprehensive criminal background check.

Bogus second citizenship offerings abound. In recent years, I have received offers to purchase passports from Costa Rica, Nicaragua, the Dominican Republic, Ireland, and Lithuania, among other countries. Some of these offers are outright scams. Others involve illegally purchased or stolen documents. Even if you succeed in obtaining a passport on this basis, it may be revoked at any time and you could be subject to arrest and/or deportation.


Once you've completed Phases 1, 2, and 3 of your four-step plan to disconnect from the United States, you're ready for Phase 4: expatriation. While you may never take the final step of giving up your U.S. citizenship and passport, taking the preparations summarized so far at least gives you that option.

In Part II: Important Consequences of Expatriation, we explore:

  • The nuts and bolts of expatriation, including the legal process of expatriation
  • The tax consequences of expatriation
  • The immigration consequences of expatriation
  • The pros and cons of U.S. investments once you expatriate
  • The tax consequences should you choose to spend more than a few months each year in the United States after expatriation

Click here to read Part II of this report (free executive summary; enrollment required to access).

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Waffen's picture

pussies fled and founded our country

pussies fled to conquer the west

sometimes a fight is unwinnable

i have my eye on Uruguay, if I had more capital that is


More realistically I am hoping my fellow Texans have freedom blood still flowing in their veins.

adr's picture

Do Texas have enough Freedom Blood to kill 75 million blacks and hispanics? That is about what it will take.

Buck Johnson's picture

Nice avatar who are the girls?

Harlequin001's picture

This is total fucking drivel. If you're going to post a link kindly make it worth reading.

Xkwisetly Paneful's picture

So it is right up your alley.

Want drivel read 90% of below.

Delusional fucking imbeciles to the 10th degree.

1100-TACTICAL-12's picture

plenty of freedomblood, just not enough ammo. Let's hope it dose'nt come to that,

GMadScientist's picture

Thank you for the lasting image of a fat Texan attempting to chase down everyone at the u-haul corner.

Also: Joe Arpaio is a fascist fag.


anarchitect's picture

The problem with Texas is immigrants diluting the historical attitude of independence. And no, this isn't a swipe at Hispanics, but rather at immigrants from other states. Same thing in New Hampshire. The "Live Free or Die" state, with its low taxes, is being invaded by people from Massachussetts.  The problem is that they don't leave their stupid political views behind, the kind that fucked up the places that they left.

LasVegasDave's picture

Same thing with Nevada.

Californians have brough their tort lawyers, govt. dependancy and love of regulation to what was once a libertarian paradise.

Once they get an income tax on the ballot bye bye Nevada

How do you think Harry Reid keeps getting elected?

GMadScientist's picture

"How do you think Harry Reid keeps getting elected?"

Repugnicant opponents.

Xkwisetly Paneful's picture

WOW real close.

Unionized casino workers and repugnicant candidates are very. very close,

if one inhabits imbecileville.

But thanks for playing.


seek's picture

Same in Arizona, but interestingly getting Californicated triggered a republican backlash. The state is actually pretty libertarian and in my opinion has become more so, but the influx of Cali immigrants definitely polarized things. I can't remember any time in my history (which goes back through the 70s) things having been as polarized -- but at the same time, I can't remember the state being more free on many levels (constitutional carry, medical MJ, etc.) than today.

Xkwisetly Paneful's picture

Barry is rolling over in his grave.

What the OP posted is right on the money in both AZ and NV.

How's that monster libertarian sales tax working out?

lincolnsteffens's picture

Sorry, but NH isn't that cheap unless you own a shack. There is no sales tax but they make it up on real estate taxes.

Gully Foyle's picture


Depends on the area.

Property taxes are comparable to where I live now and in some areas far lower.

anarchitect's picture

Sure. Property taxes in TX are high too.  But it's easier to fix something at the local, rather than the state, level.  And let's not even talk federal.

Lednbrass's picture

The entire south is being overrun with northern scum. They turned their former states into sewers then relocate elsewhere and begin the process of destroying wherever they go to.

They are the socio-political equivalent of bubonic plague carrying rats.

RafterManFMJ's picture



You just have to seek value, and to do that you need timing. For instance, it is said that one ounce of gold could buy you an entire block in Berlin during their inflationary experiment.  Right now, property in Ireland is VERY cheap, and they even speak a dialect of English.  

hedgeless_horseman's picture



Irish property is not very cheap...yet.  

bank guy in Brussels's picture

It seems that the great goldbug guru Jim Sinclair, is himself announcing his own international expatriation plans (He currently lives in Connecticut). Jim posted the below on his Mineset site today, repeating the classic 'three flags' advice of the grand-dad of investment newsletter writers, Harry Schultz (in his 80s, and living now in Europe in tax-free Monaco):

« According to Dean Harry Schultz, the way to live your life involves the following:

- Money in one country
- Citizenship in a different country
- Body in another country where neither your citizenship nor money resides.

I have resisted this sage advice from Harry for many years knowing that the day might come when his genius proves true.

That day has come.

Seriously consider this advice.

Jim »

neidermeyer's picture Plenty of options ,,, pretty ladies , they have a stable currency that is not debt burdened ,, lifes a beach... English is widely spoken... last time I was there you could buy Gold cheaply at the pawn shops (they mine a bunch there). Also as of 2004 the Philippine code no longer requires that you renounce your US citizenship when you gain Philippine citizenship.

And perhaps best of all , The Phillipines is the only country in the world where drinking and driving is perfectly legal.

The Real Fake Economy's picture

you fail to see the point then.  US is 1 of only 2 countries in the world that will tax you on any income you earn, no matter where on the planet you live.  by expatrioting, you can tell uncle sam to take a hike.  

Davalicious's picture

> The Phillipines is the only country in the world where drinking and driving is perfectly legal.

I live elsewhere in Asia. Drinking and driving isn't recognised or tested here. There are a lot of developing countries with the same situation.

I love the Philippines. But they are in a nose dive at the moment. Politically, who knows what is going to happen there. Some of my Filipino friends have shifted to New Zealand.

Tompooz's picture

Philippine residence: recommended.

Philippine citizenship: consider that many Philippine laws are copied from the US, including taxation on worldwide income.

Jim Cramer's picture

Yes we do. I talk to more and more Texans who want our freedom and to deny responsibility for other states irresponsibility.

I do believe the populace of this state harbor enough ammunition to take care of business if we had to.

Plus we have Rick Perry........./sarc

e-recep's picture

me thinks you work for IRS.

rodocostarica's picture

Count me as one Happy frickin pussy then. Second passport is on the way soon. And speaking of pussy plenty of good stuff down here.

Catch-22's picture

THEY LEFT OUT A BIG DETAIL: if you have some money/assets (I believe 2 million is the threshold) YOU HAVE TO LEAVE 30% of everything at the door before leaving.

You think they will let you go before you pay your “fair share” of the debt???


smiler03's picture

I believe that is specifically on property only.

thedrickster's picture

All unrealized capital gains @ ordinary rate...the exit tax.

Curt W's picture

when they left europe for the americas, they were fleeing government oppression and taxes, not sure where to go now.

Buck Johnson's picture

Do you really believe that the US will be the same in a hundred years or less.  I will tell you what will happen.  We will break up or balkanize into 5 to 7 regions and those areas will become their own country.  In a sense the grand experiment would have failed and whats left is a broken country that fooled itself into thinking that you can be intolerant and still be unbiased, BS. 

Lednbrass's picture

I certainly hope so, its the only alternative left to war and the sooner the better.

hedgeless_horseman's picture



I have either lived in, visited, and/or worked in more than 40 states and more than 10 countries.  The grass is always greener on the otherside of the fence.  Why do our minds work that way?  I do not know.

Here in Texas we elect men like Ron Paul.  We grow money managers like Kyle Bass.  We know how to get oil from a turnip.  We are a net food exporter.  We have a history of sacrifice for independence.  We accept risk taking and failure as natural.  We may just have a chance.

Lednbrass's picture

True enough- but you also elect people like W, Perry, and Hutchinson and a congressional delegation that folded like lawn chairs on the debt ceiling and NDAA.

Send more steers please. ;-)

marathonman's picture

As a fellow Texan this comment is incredibly painful but true.  The truth sucks sometimes.

EmileLargo's picture

Emigrating is a hell of a lot harder than people think it is. 

bank guy in Brussels's picture

Living and settling in other countries can be quite easy ... We Europeans do not think of it as difficult at all, even when we prefer 'home' here.

Of course it can be hard if you are totally broke, and have no starting seed money, especially if you have to make arrangements for family and children with you.

But with modest capital, it is very doable. There are actually large numbers of Americans who have escaped over here to Europe, very quietly. You run into them every now and then, it seems another of those 'hidden' stories. No doubt US media does not want to cover how many people have picked up their marbles and happily hit the exit door.

Chinese people who have saved money are arriving in the old Communist Eastern Europe ('everything for sale'), meeting a 'friendly' immigration lawyer who knows some 'friendly' government officials, and quickly becoming EU citizens, giving them the right to live and work anywhere in Europe. - This is true in much of the world. You go there, make connections and friends, you find a way to stay there. - If the Chinese can do it, so can people from America etc.

For Americans with modest capital, you have the 'Dutch-American friendship treaty', you pop around 10k into a Dutch bank account, start some 'business' ... 4 years later you are a Dutch EU citizen. Of course this takes 50K or so to support yourself for 4 years, more with family. - Nearly everyone in the Netherlands speaks good English, to make it easy for you.

For most European-type languages, it takes about 500-1000 hours of work to speak and read it with some halfway competence. Most basic vocabulary is around 2000 words. Once again, doable if you are not lazy.

Beyond that, what is needed is flexibility, a lack of arrogance, a willingness to get along with your neighbours, an open mind.

People from the far corners of the world with little education and capital are emigrating and making a great life for themselves, at times very quickly ... people sometimes who have little education or resources.

Start-up emigrating seed money for yourself and family, is your main hurdle. Aside from that, emigrating is not hard at all.

Xkwisetly Paneful's picture

Def need that lack of arrogance!

Going from 950SQ ft to 450 SQ FT,

and relying on mass transit instead of one's own car,

def requires putting that arrogance on the back burners.

Afterall get free substandard medical care, oh wait it is superior to US care it is just that Euros fly to the US daily for advanced care while the inverse never, ever happens.

BTW can get free medical care in  the US too, just move into a home half the size, sell one car and use the proceeds to fund a medical account.

If only, if only all the idiotic moronic wannabee Euro, American trash would just move there instead of turning the US into yet another euro liberal socialist shithole characterized by massive governance stifling anything and everything.

GMadScientist's picture

Highly variable; completely dependent on where you want to go and how much loot you have on hand.


TeMpTeK's picture


Technically any one of the 50 states of the union are foreign and outside of the "United States"....... Now good Luck getting the judiciary to pay attention to this fact... it is a convienient trillion Dollar taxing oversight .( source cited below)

These are the Definitions taken directly from the US Code which of course makes the theft  legal... Not their fault if 300+ million americans dont know where they live. 

 § 927. Other definitions and special rules

(d) Other definitions

(3) United States defined

The term "United States" includes the Commonwealth of Puerto Rico.


§ 993. Definitions

(g) United States defined

For purposes of this part, the term "United States" includes the Commonwealth of Puerto Rico and the possessions of

the United States.


§ 3121. Definitions

(e) State, United States, and citizen

For purposes of this chapter -

(1) State  

The term "State" includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.

(2) United States

The term "United States" when used in a geographical sense includes the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa. An individual who is a citizen of the Commonwealth of Puerto Rico (but not otherwise a citizen of the United States) shall be considered, for purposes of this section, as a citizen of the United States.


§ 3306. Definitions

(j) State, United States, and American employer

For purposes of this chapter -

(1) State

The term "State" includes the District of Columbia, the Commonwealth of Puerto Rico, and the Virgin Islands.

(2) United States

The term "United States" when used in a geographical sense includes the States, the District of Columbia, the Commonwealth of Puerto Rico, and the Virgin Islands.


§ 4121. Imposition of tax

(d) Definitions

(3) United States

The term "United States" has the meaning given to it by paragraph (1) of section 638.


§ 4132. Definitions and special rules

  1. Definitions relating to taxable vaccines

(7) United States

The term "United States" has the meaning given such term by section 4612(a)(4).

§ 4612. Definitions and special rules

(a) Definitions

(4) United States

(A) In general

 The term "United States" means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands.

(B) United States includes continental shelf areas

The principles of section 638 shall apply for purposes of the term "United States".

(C) United States includes foreign trade zones  

The term "United States" includes any foreign trade zone of the United States.

§ 4662. Definitions and special rules

  1. Definitions

(2) United States

The term "United States" has the meaning given such term by section 4612(a)(4).

§ 4672. Definitions and special rules

(b) Other definitions

(2) Taxable chemicals; United States

The terms "taxable chemical" and "United States" have the respective meanings given such terms by section


§ 7651. Administration and collection of taxes in possessions

(2) Tax imposed in possession

(B) Applicable laws

All provisions of the laws of the United States applicable to the administration, collection, and enforcement of such tax (including penalties) shall, in respect of such tax, extend to and be applicable in such possession of the United States in the same manner and to the same extent as if such possession were a State, and as if the term "United States" when used in a geographical sense included such possession.

§ 7701. Definitions

  1. When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof -

(9) United States

The term "United States" when used in a geographical sense includes only the States and the District of Columbia.

(10) State

The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.

[Code of Federal Regulations]



Sec. 1.911-2 Qualified individuals.

(g) United States. The term ``United States'' when used in a geographical sense includes any territory under the sovereignty of the United States. It includes the states, the District of Columbia, the possessions and territories of the United States, the territorial waters of the United States, the air space over the United States, and the seabed and subsoil of those submarine areas which are adjacent to the territorial waters of the United States and over which the United States has exclusive rights, in accordance with international law, with respect to theexploration and exploitation of natural resources.








bank guy in Brussels's picture

US people often get attached to these internet memes of 'magic legal words' that somehow give you 'rights'.

As the lawyers in America laugh and sometimes tell you, the law in the USA, in practice and reality, is not what you see in the text ... American 'law' is whatever the US judges (bribed and corrupted) say it is ... which can be directly the opposite of the words in the US Constitution, or any law on the books.

Xkwisetly Paneful's picture

Hilarious, gun ownership is a right all the while the union makes sure everyone knows it is a priviledge.

Great guffaws reading your material here, can live like king or deluded yourself and suck hind teat.

Not debatable in the slightest. The US poor are in the top  1% of the world, nowhere else are obese people who own homes and cars considered "poverty stricken" but keep believing/posting otherwise and pretend the Americans are the brash arrogant ones.

People are not dying immigrating to Europe on a daily basis for a reason.

oddly enough they do die daily coming to the US with lint in their pockets barely speaking english and yet somehow they find opportunity and become tax paying citizens, small business owners etc.........that not happening anywhere else in anything remotely close to the numbers it happens in the US for the sole reason of lack of opportunity but you just keep pretending otherwise.

A non German speaker landing in the middle of Berlin has about as much chance of making it  as a snowball does in hell, not one teeny bit different in any other Euro including Norway.