Canada: Expatriation From The United States

As the U.S. has the ugliest tax and litigation environment in the world, most of my clients are U.S. citizens. Let me apologize in advance to those of you who are not citizens of the United States because I am going to focus mainly on issues for Americans. However, if you read this material, you will probably find some useful advice for yourselves.

You’ve probably heard bits and pieces about becoming non-resident, expatriation, and economic citizenship's/second passports. Well these are the topics within this material. I’m going to expose the realities, blow apart some of the myths, and look at possible benefits to you. I have attached article that will cover everything I will be reporting in exhaustive detail. With this material, I hope to open your eyes to some new possibilities.

If you think you have read something in this material that may be worth exploring, then please read the materials I have attached. After that, if you are still interested, contact me at my office in Canada. My e-mail address and phone numbers are included on the materials.


Let’s start with a quick overview of the two ways that an American can move out of the U.S. and gain significant tax and asset protection benefits.

  1. Remain a U.S. citizen but establish a foreign tax home.
  2. Expatriation.

The article "Leaving on a Jet Plane" is a complete guide to the benefits and implementation of these two strategies.

In short, a U.S. citizen who moves offshore and establishes a foreign tax home can save income tax on about the first 75 to 80 thousand dollars in income. This may be all they need to do if they can deal with their additional income, capital gains, gift and estate tax liabilities in other ways. It may also be a stepping stone to the second strategy - expatriation.

In a tax sense, an Expatriate is someone who not only establishes a home outside the United States, but who also gives up U.S. citizenship.

At first blush, giving up American citizenship seems like an extreme measure that’s unthinkable. If the financial benefits in tax savings are significant, however, it is an extremely viable strategy. After all, most people in the world appear to get along quite nicely without American citizenship. They also do without the almost unique U.S. rule of taxing individuals simply because they are citizens. Every other major country has tax rules that say, "If you reside here, then we start talking about taxation". The U.S. says "Even if you haven't even visited the U.S. in years, we will still tax you and your estate, because you have the original tax sin of being an American citizen".

In the article "H. Alger sets himself free" I have mapped out a possible expatriation strategy that some of you in this room may want to consider.

Generally, expatriation is worth a serious look if you have more than $350,000 in annual income or, if you are married and have an estate of greater than $3,000, 000 or $1,500,000 if you are single.

To explode a common myth - expatriates are generally not trust fund babies, athletes or movie stars - although I have a few of them as clients. They are, for the most part, people who built up their own wealth one dollar at a time, and have the radical notion that they would like control over how it is spent.

You may have read in Forbes or the Wall Street Journal that the U.S. government passed a rule, barring expatriates from ever visiting the U.S. again. It is a complete sham. Although I am an avid reader of those publications, I wish they would be a little more vigilant and avoid being part of the propaganda machine.

My article "Can U.S. Expatriates be Barred from the U.S." outlines a way to legally avoid any problems in this area.

This strategy has been acknowledged, in writing, by both the State Department and the INS as being an absolutely accurate interpretation of this toothless law. My clients also have the comfort of an opinion letter from the largest U.S. immigration law firm on this issue.

So , whether you are simply establishing a foreign tax home or expatriating - your new residence must be one that fits your personal and business lifestyle. For some people, Bermuda or other traditional tax havens are the right answer. However, a booming part of my practice is bringing people to non-traditional destinations like Canada, the U.K. or New Zealand. These places are generally thought of as high tax jurisdictions, but they can be low tax jurisdictions with some proper tax planning.

The article entitled "Canada: A Non-Traditional Tax Haven" gives you more information on this topic.

Second Country Passports And/Or Economic Citizenships

Second Country Passports and/or Economic Citizenship programs do carry a price tag, but in the right situation, a second citizenship may pay for itself many times over. My clients are purchasing economic citizenships for tax, privacy and security reasons.

The article "Economic Citizenships/Passports: Myths and Reality" will help you decide if they are right for you.

If you read nothing else in my materials package, read the article "Your Passport Portfolio". It is a paradigm shift for most people. It looks at citizenships and residences, not through the rose-colored glasses of patriotism, but through the clear clinical analysis of business.

In considering economic citizenships, a simple but critical point to understand is that passports are the travel documents issued by a country to its citizens. First you become a citizen, then you get the passport. Some enterprising "consultants" are actually trying to sell "pass-ports for non-citizens". This is an oxymoron, but I suspect that they have managed to separate some people from their money.

"Economic Citizenships/ Passports: Myths and Reality " gives you a step-by-step guide to becoming an informed consumer.

I have included a handy comparison chart of the most common legal economic citizenship programs which includes some of the bogus programs. Also enclosed are some materials on the economic citizenship program offered by the country of Grenada, which I believe is the best value on the market today. I am, however, always on the lookout for even better programs and, if and when they come on stream, I'll offer them to my clients.

History Of Economic Migration

I’d make an educated guess that most of you can trace your ancestors to another country. They probably left for some of the same reasons you’re sitting in this room today - conditions in their country of origin were becoming intolerable and they wanted to live a better life.

So, this really isn’t a new story, although the 20th century has made life easier for travelers and immigrants. Planes are a big improvement on weeks at sea in over-crowded leaky ships.

Purchasing an economic citizenship is much more pleasant than buying tracts of land that have to be cleared and planted. But in the end, it amounts to the same thing - people are in search of the freedom to conduct their own affairs in line with their values, without undo outside interference.

The decisions your ancestors made - to look beyond their homeland - have had a profound effect on your life. They had the courage to ignore the dire warnings, sneers and guilt of neighbors, landlords and rulers. They acted in the best interest of themselves and their families.

Your ability to have this same courage will have just as strong an impact on your heirs.

Do you have the courage to look beyond the U.S.?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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