Certificate of Loss of Nationality
A certificate of loss of nationality is a document which is demanded by the US state department as part of the process for expatriating yourself from the US, permanently, once you’ve been a US born or naturalized citizen.
While the certificate of loss of nationality or CLN is not part of the expatriation process itself, it is critical to most expats in that it gives them two very important rights.
1.) Ability to Re-enter the U.S.
Once the former citizen has received their CLN they can go about the process of applying for an entry-Visa to the United States. While to some, this might seem like the furthest thing from their mind, there are quite a few other former citizens that still have friends, family, investments, or other reasons for wanting to, or needing to, enter the U.S. on occasion. For those that have relinquished their citizenship, they must wait until they’ve been granted the all important certificate before they can apply to legally enter the US again on a visitor’s visa.
2.) Treatment as a Foreigner for Tax Purposes
For former citizens or expats who have an income or other taxable event this is perhaps the most important consideration. Expats who have left the US, or even those which have gone through the formal steps of renouncing their US citizenship are still liable for US taxes. This means for every dollar earned after the 80,000 USD annual exemption and for dollar one of interest and capital gains taxes, expats, even those with no intention of entering the US ever again owe Uncle Sam some tax money.
The US is somewhat unique among first world countries in that you are taxed on worldwide income regardless of your residency status. Those expatriates with philosophical differences with the US governmental policies or the treasury department’s tax regime, are among those most interested in renouncing citizenship for good. However, one should be careful that they do not fall into one of the US gov’s ’special circumstances’ before renouncing. Certain people, especially those with large unrealized gains assets they own or control could find themselves on the wrong side of a new law which demands that those wishing to expatriate pay a portion of those as yet unrealized gains, and/or find themselves on the hook for an additional 10 years *after* expatriation.
For more information on expatriation, second passports, and changing your residency, check out the rest of the articles on this website or checkout international living or the sovereign society.
