Monthly Archives: April 2025

Belgian DPA Decision – April 2025 – French and (Unofficial) English Versions

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What follows are the both the official decision in French and the (obviously) Unofficial version in English.

Congratulations to the Accidental Americans in the Netherlands!

The only way this nightmare ends is for the world to stop allowing the United States to claim the tax residents of other countries as U.S. tax residents. This means that citizenship taxation must come to a complete end!!

No carveouts! No optouts! Just a complete separate of citizenship and tax residency!

Here you go …

Belgian DPA decision April 2025 French original

Belgian DPA decision April 2025 unofficial translation FR_to_en-US

John Richardson – Follow me on X @Expatriationlaw

Toward An Argument That US Citizenship Taxation Violates International Law

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Introduction – Why FATCA Litigation Fails …

(Well, most of the time!)*

In September of 2024, I wrote a blog post about FATCA litigation.

Q. Why Does FATCA Litigation Fail? A. Because, It Focuses On The Symptom And Not The Cause

That post was discussed on an IRS Medic podcast here:

In that post, I suggested that FATCA litigation fails because it has to date focused on certain results of FATCA (privacy breaches, discrimination, etc.) No FATCA litigation (to date) has focused on the reality that U.S. “citizenship taxation” is the reason for FATCA and therefore the cause of all the FATCA related problems. The effect of FATCA and the FATCA IGAs is to enforce U.S. citizenship taxation on the world (including and PRIMARILY on individuals who are tax residents of other countries). A principal purpose of FATCA is to export U.S. tax laws into other countries. By signing the FATCA IGAs, these countries agree to assist the United States in identifying which of their country’s residents (and often citizens) are also U.S. citizens and should therefore be subject to U.S taxation. Put another way: the purpose of the FATCA IGAs is to expand the U.S. tax base into other countries.

For background on the issue of the United States claiming the residents of other countries as U.S. tax residents see:

The Issue Is Not @CitizenshipTax. The Issue Is Whether The US Can Claim The Tax Residents Of Other Countries As US Tax Residents!

The conclusion of the September 2024 post was that:

Future FATCA litigation should focus on whether it is a violation of international law for the United States to impose citizenship taxation (the reason for FATCA) on the residents of other countries (who suffer the effects of FATCA).

The purpose of this post is to continue the analysis and to explore the specific question:

Is U.S. citizenship taxation – the process of claiming nonresidents as U.S. tax residents – a violation of international law?

Is it a violation of international law for the United States to:

1. Claim the residents of other countries as U.S. tax residents; and

2. Impose U.S. taxation on the non-U.S. source income of those individuals who do NOT live in the United States?

(I am introducing and developing the argument cannot impose U.S. citizenship taxation on the tax residents of OTHER countries. The United States, has of course the sovereign right, to impose citizenship taxation on U.S. residents.)

If U.S. citizenship taxation, as applied to the residents of OTHER countries, conflicts with the norms of international law, then the foundation for FATCA (as applied to non-U.S. residents) crumbles. In theory, this would provide courts and tribunals a justification for refusing to apply FATCA obligations in relation to individuals who are tax residents of other countries and are not residents of the United States. In addition, it might cause countries to give careful consideration to the effects of the “saving clause” which is part of all U.S. tax treaties.

How U.S. Citizenship Tax, The Treaty “Saving Clause” and FATCA Create A Fiscal Prison For Dual Tax Residents

It is my hope that this post will analyze this question by identifying and outlining “some” of the relevant issues. Perhaps, this post will “begin’ a discussion about this important issue. Should U.S. citizens, because and only because of their citizenship, become “dual tax residents” simply by moving from the United States?

For each issue I will suggest an answer and provide a backup source(s) for further inquiry.

Suggested conclusion:

This post is a “thought experiment”. I believe that a credible argument can be developed that U.S. citizenship taxation – as applied to those who are tax residents of other countries – is a violation of CIL (“Customary International Law”). What follows are the “individual components” of the argument, along with commentary on each. The individual components are organized in the following outline:

Outline

Part A – Some Theoretical Concepts

1. What is US citizenship taxation? U.S. citizenship taxation defined

2. What is meant by international law?

Part B – Tax Residency And International Law

3. Is the concept of “tax residency” generally subject to the rules of international law?

4. Concepts of tax residency as expressed through tax treaties including treaty tie breakers

Part C – Can The Method Of Taxation Violate Individual Rights As Expressed In Human Rights Documents?

5. Professor William Thomas Worster – Taxation and Human Rights

6. Barriers To Emigration Under International Law

Part D – U.S. Citizenship Taxation And the Tax Sovereignty Of Other Nations

7. U.S. Citizenship Taxation As A Method To Siphon Capital From Other Nations

8. The Common Law Revenue Rule As An Expression Of Tax and Territorial Sovereignty

Part E – U.S. Tax Treaties And The “Saving Clause” – Contracting Out Of The Principles Of International Law?

9. Taxation Perspective: Is the “saving clause” an agreed upon override to the “revenue rule” and other international norms?

10. Information Perspective: Can FATCA information extraction generally be used to refuse to provide information about a country’s tax residents?

11. Enforcement Perspective: Should exemptions from cooperation on enforcement of tax debts extend to the disclosure of FATCA information? The cases of Canada, Netherlands, France, Sweden …

Part F – Possible Conclusions …

For those who don’t want to read the rest:

The purpose of this post has been to develop a general theory of why U.S. citizenship taxation – to the extent that it claims the tax residents of other countries as U.S. tax residents – is a violation of international law. Theory aside, there is no other country in the world that uses an attribute (citizenship), that is often an immutable characteristic (place of birth), that bears no presumptive relevance to a physical or economic connection to a country, as a sufficient condition for tax residency. In so doing, the United States is defining tax residency in terms of the “circumstances of birth”, rather than the “circumstances of life”. The only effect is to claim the residents of other countries as tax residents of the United States (even when they are residents and often citizens of those other countries).

It is respectfully submitted that, for these reasons, that citizenship taxation is a violation of CIL (“Customary International Law” and should NOT be tolerated by the international community.

In developing my argument, I have included links to previous posts. The linked posts are NOT part of this post, but are supplied for further reading on each topic.

Continue reading →

Robert T. Kudrie: Citizenship Taxation, Globalization and Inequality

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I came across a 2023 article published in the Florida Tax Review by Robert T. Kudrie of the University of Minnesota. The article is available here.

The title of the article is:

“Citizenship Taxation, Globalization and Inequality”

https://scholarship.law.ufl.edu/cgi/viewcontent.cgi?article=1410&context=ftr

Impressions based on a fairly quick read …

Despite its title the article seems to focus more on the importance and enhancement of tax enforcement on U.S. residents with “offshore income and assets” than on Americans abroad with income and assets in their country of residence. Put another way, I understand the article to more of an attempt to argue for enhanced enforcement of “resident-based taxation” and less of an argument for “citizenship-based taxation”. (The thesis seems to be more about ensuring that residents are taxed on their complete worldwide (offshore) income, rather than an argument that citizens living outside the United States should be taxed on their non-U.S. source income.) By confusing this issue, the article becomes one more of a series of articles that claims to justify “citizenship-based taxation” because U.S. residents are not paying tax on their non-U.S. source income.

There is very little analysis on the question of why the United States should be imposing its worldwide tax regime on nonresidents.

The author argues that Americans abroad living in select countries (those with tax systems similar to the U.S. system) should be subject to the tax system of their country of residence (residence-based taxation).

Generally the article replicates the U.S. tax academics’complete misunderstanding of how the U.S. extra-territorial tax regime affects Americans abroad. (He lives in the “echo chamber” of Avi-Yonah, Kirsch, Zelinsky, etc.) He makes not the slightest mention that the U.S. (citizenship based) extra-territorial tax regime is really about the application of U.S. taxation to the non-U.S. source income received by people who do not live in the United States.

That said, he does seem to recognize that as a matter of lack of connection to the United States, certain U.S. citizens abroad (those with less than three years of U.S. residence after the age of 18) ought to be able to cease being taxed under the U.S. tax rules and be allowed to live solely under the tax regimes of their country of residence (a good thing).

The author concludes with:

Vii. summinG up

Human mobility across states is increasing even as skepticism about some aspects of globalization grows. Concern about material inequality within states is also high and growing.

The policy proposals presented here attempt to increase the fiscal grip of the U.S. government on high income and wealth citizens who have benefited from the U.S. national environment while reducing tax interference with most Americans who choose to live abroad. The suggested policies also change the rules for those relinquishing citizenship to recover more fully tax revenue that should have gone to the U.S. Treasury. Revised policies should allow those below the top ten percent of the U.S. citizenry in income and wealth to live and pay taxes as locals in foreign countries with personal tax systems similar to that of the U.S. The very well off and those who reside in low tax jurisdictions should stay in the U.S. system. Any shift to a foreign system should entail mark-to-market capital gains taxation. Relinquishing U.S. citizenship should require the payment of both deemed capital gains and deemed estate taxation without step-up. None of this will be possible unless administration is tightened and enforcement is greatly increased. Truly effective enforcement will require greater international cooperation, but U.S. initiatives should meet success among states striving to reduce tax escape.

Generally good news for Americans abroad …

John Richardson – Follow me on X.com @Expatriationlaw

Mistakes In Renouncing In U.S. Citizenship: Not Knowing Your Net Worth At The Time Of Renunciation

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In the last week I have had discussions with two people who reached out to me AFTER renouncing U.S. citizenship. In both cases they went to their renunciation appointment and renounced U.S. WITHOUT understanding their net worth. Specifically, they never considered whether their net worth was above or below 2 million USD. Unless they were able to avail themselves of the “dual citizenship from birth” exemption from “covered expatriate status”, knowing their net worth on the date of renunciation was critical. In fact, this is the single biggest mistake one can make.

In both cases their net worth was well above two million USD making them:

1. Subject to the 877A Exit Tax; and

2. Subject to the Internal Revenue Code 2801 “Covered Gift” rules

In both cases they claim that they were advised that they should first renounce U.S. citizenship and then deal with the tax situation (the worst possible advice imaginable)!

In both cases the consequences were “life altering” (sorry no exagerration).

As Benjamin Franklin is reported to have said:

“Those who fail to plan, plan to fail.”

John Richardson – Follow me on X.com @ExpatriationLaw

Part 6 – What Would A Ban On Dual Citizenship Mean For U.S. Citizens?

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The Little Red Dual Citizenship Book

See the Appendix for a list of posts making up the “Little Red Dual Citizenship Book”

Whether or not it’s “fake news” …

It started with what purported to be a post by President Trump on “Truth Social” that he was going to attempt to end dual citizenship. This was immediately exposed as a “Fake Post”. Nevertheless, I came across an interesting video of what it would mean if Americans were somehow banned from being dual citizens. Without regard to the “fakeness” of the claim that President Trump was interested in ending dual citizenship, the video is interesting.

John Richardson – Follow me on X.com @ExpatriationLaw

Appendix – Posts That Make Up The “Little Red Dual Citizenship Book”

Part 1 – Dual Citizenship Reporting

Part 1 – Citizenship-based reporting: Russia’s "citizenship reporting" requirements – will the United States be next?

Part 2 – Under What Circumstances Is Citizenship By Ancestry Justified?

Part 2 – Citizenship Matters With @RonanMcCrea: Citizenship By Descent Can Be High Risk For A Country In A Less Global World

Part 3 – Could U.S./Canada Dual Citizens Residing In Canada Determine The Outcome Of A U.S. Election? (The Democrats Hope So)

Part 3 – Could The November 3, 2020 US Election Be Decided By Canadian Residents With US/CDN Dual Citizenship?


Part 4 – A Change In Canadian Law Increase Canadian “Citizenship Through Ancestry” Options For Americans

Part 4 – Canada Bill – C71 Will Increase Citizenship By Descent Options For US Citizens Seeking Canada/US Dual Citizenship

Part 5 – When Dual Citizenship For The Individual, Becomes “Duel Citizenship” For The State

Part 5 – The Clash Of Citizenships: When Dual Citizenship For The Individual Becomes Duel Citizenship For The State

Part 6 – What Would Ending Dual Citizenship Look Like For U.S. Citizens?

Part 6 – What Would A Ban On Dual Citizenship Mean For U.S. Citizens?

Part 5 – The Clash Of Citizenships: When Dual Citizenship For The Individual Becomes Duel Citizenship For The State

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Introduction And Summary

This is Part 5 in my “Little Red Dual Citizenship Book” Series. For parts 1 to 4, see the Appendix.

The proliferation of “dual citizenship” in the 21st century is a benefit for individuals. As Boston Globe Correspondent journalist David Shribman explains, dual citizenship may be a critical part of an individual’s identity. That said, “dual citizenship” may not be a benefit (and may be a danger) for countries in certain circumstances. The purpose of this post is (in part) to question whether dual citizens of a country should have the same class of rights as those who are ONLY citizens of the country. Should Canada/US dual citizens living in Canada have the same rights of citizenship as those who are ONLY Canadian citizens living in Canada. For example, should dual citizens be permitted to vote in Canadian elections? Should dual citizens be permitted to run for public office?

This recent article in the Toronto Globe and Mail reinforces the validity of this question.

Continue reading →

My Submission To Senate Finance: Discussion Draft – Taxpayer Assistance and Service Act

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Introduction and purpose

On January 30, 2025, The Senate Finance Committee released a proposed a Discussion Draft of the “Taxpayer Assistance And Service Act”

The text of the bill is here:

https://www.finance.senate.gov/imo/media/doc/tax_admin_bill.pdf

The Committee’s commentary on the bill is here:

https://www.finance.senate.gov/imo/media/doc/tas_act_discussion_draft_section_by_section.pdf

The deadline for submissions is/was March 31, 2025. During the evening of March 31, 2025. I drafted this “quick and dirty” submission to make it clear that:

Americans abroad need citizenship-taxation abolished. They do not need improvements to and the retention of citizenship-taxation.

I am including this submission as a blog post so that I don’t forget that I wrote it.
_________________________________________________________________________
Submitted via email to “discussiondraft@finance.senate.gov”

March 31, 2025

Dear Senator Crapo:

Re: Discussion Draft of” Taxpayer Assistance and Service Act”

https://www.finance.senate.gov/imo/media/doc/tax_admin_bill.pdf

I write (briefly and quickly) to comment on the Draft “Taxpayer Assistance and Service Act”.

My comments are restricted to Sections 201 to 206 of the draft bill which purport to address the concerns of U.S. citizens living outside the United States. I emphasize that I am writing in my personal capacity and this letter is separate from the submission from “SEAT” (an organization of which I am part.) While fully supporting SEAT’s submission, upon further reflection, I believe that an additional and more direct submission would be prudent.
In summary, I believe that the draft bill fails to acknowledge, much less address, the injustices inflicted on Americans abroad by the U.S. extra-territorial tax system. The U.S. extra-territorial tax system is generally referred to as “citizenship taxation”. The term “citizenship taxation” obscures what it really is and suggests that it is consistent with the meaning of U.S. citizenship. (I use the terms “citizenship taxation” and “extra-territorial taxation” interchangeably.)

The draft bill is written in a way that assumes that the issue is in the difficulty of compliance. It neither acknowledges nor suggests that the problem is with the substance of citizenship taxation instead of the process of compliance. Because of the sole focus on compliance (while ignoring substance), I believe that the bill is actually dangerous to achieving the tax reform that is needed to achieve fairness, equality and justice for Americans abroad.

Making it easier to comply with a system that is inherently wrong and does not serve the interests of the United States or its citizens is no improvement at all!

I urge the Committee to view this as an opportunity to recognize and address the fundamental injustice of citizenship taxation and NOT simply find ways to make compliance with an unjust system easier. To be clear, citizenship taxation is a system where:

1. The United States imposes taxation on the non-U.S. source income of individuals who do NOT live in the United States. (Example an individual who lives in France is subject to U.S. taxation on his income earned/source in France or even any other non-U.S. country.)

2. The basis of the U.S. claimed right to tax non-U.S. source income is mostly because the individual was born in the United States (regardless of how long or whether that person actually lived in the United States ). Therefore, a person born in the United States who moved permanently from the United States at the age of 10, is somehow supposed to pay the United States tax on non-U.S. source income for the rest of his life? What about a U.S. citizen born outside the United States who never lived in the USA?

3. Citizenship taxation results in double taxation (taxation by two countries on the same income). This is because (1) the country of residence claims the right to tax that income because the person actually lives there AND (2) the U.S. claims the right to tax that same income because the person was born in the United States. (What could go wrong?)

4. The double taxation of Americans abroad is NOT eliminated in all cases by foreign tax credits or the foreign earned income exclusion (contrary to the nonsense that the tax compliance industry and academic community spew).

5. Like resident Americans, Americans abroad may not actually owe money to the IRS every year. But unlike, resident Americans, the compliance burden (the forms and special rules resulting from the non-U.S. source income and assets) for Americans abroad far exceeds that of resident Americans. (It is not uncommon for Americans abroad to pay thousands of dollars a year in tax compliance fees.)

6. As has been noted by the Taxpayer Advocate for many years, Americans abroad are subject to threats of enormous penalties which bear absolutely no relation to the noncompliance.

The cumulative effect of 1 – 6 is that U.S. citizens residing outside the United States suffer:

– extraordinary out of pocket compliance expenses (many pay thousands per year)

– Uncertainty over what the laws mean and how they apply to them

– tremendous anxiety related to fear of penalties (certain penalty for uncertainty conduct)

– the huge opportunity cost of not being to meet the financial planning responsibilities to themselves, their families and their country of residence (the cost is incalculable)

To add insult to injury, the compliance burden is so complex that it takes many Americans abroad months to meet their U.S. tax compliance obligations. For these reasons (coupled with the fear of penalties – the word “foreign” in the Internal Revenue Code is generally followed by the world “penalty”) more and more Americans abroad are renouncing their citizenship. They are NOT renouncing because they don’t want to be U.S. citizens. They are renouncing because of fear of penalties. They are renouncing because they find it impossible to comply with a nonsensical system that is, unique to America, reflects the worst of America and has rules that make compliance very difficult. How would you like to live “life in the penalty box”?


Americans abroad have been begging for relief for many years!

in 2015 the Senate Finance Committee asked for comments and in July of 2015 issued a report on International Tax Reform. On the last page of the report (if anybody got to the last page) appeared the following:

“ F. Overseas Americans
According to working group submissions, there are currently 7.6 million American citizens living outside of the United States. Of the 347 submissions made to the international working group, nearly three-quarters dealt with the international taxation of individuals, mainly focusing on citizenship-based taxation, the Foreign Account Tax Compliance Act (FATCA), and the Report of Foreign Bank and Financial Accounts (FBAR).

While the co-chairs were not able to produce a comprehensive plan to overhaul the taxation of individual Americans living overseas within the time-constraints placed on the working group, the co-chairs urge the Chairman and Ranking Member to carefully consider the concerns articulated in the submissions moving forward.”
Notice that suggestion to “carefully consider the concerns articulated in the submissions moving forward”!

You can read the full report here:

https://adcsovereignty.wordpress.com/wp-content/uploads/2015/07/the-international-tax-bipartisan-tax-working-group-report.pdf

https://theinternationaltaxbipartisantaxworkinggroupreport.tiiny.site/

And if you are interested in some of those submissions from individual Americans abroad you can find them here:
https://www.box.com/citizenshiptaxation

It’s now 2025 (time flies). Another decade has passed. The time has come to consider the problems of citizenship taxation in a “substantive sense”. The time has come to abolish citizenship taxation altogether. The draft bill under consideration perpetuates the injustice.

No! it’s NOT radical to consider ending citizenship taxation.

Senator Crapo, you are a Republican.

You are certainly aware that our Republican President Donald J. Trump pledged to end the “double taxation” of Americans abroad during his campaign.

You are certainly aware that Republican Congressman LaHood, in support of President Trump’s pledge to end the “double taxation” of Americans abroad, introduced a Bill to end the double taxation of Americans abroad (by allowing them to opt to be taxed as though they were nonresident aliens).

There is clear momentum toward ending citizenship taxation. Ending citizenship taxation means that U.S. citizens living outside the United States would be taxable by the United States on ONLY their U.S. source income. (By the way, this is NOT radical. This is the international standard. This is how the rest of the world operates.)
The Draft “Taxpayer Assistance and Service Act” does “not much” for Americans abroad. Yes, compliance with U.S. citizenship taxation is a problem. But, the real problem is the unjust system of citizenship taxation to begin with. You don’t solve a problem by alleviating the symptoms of the problem You solve the problem by – well, getting rid of the problem.

U.S. citizenship taxation is an issue for more than individuals living outside the United States. It’s an issue for America as a country. It’s an issue for U.S. corporations. As it stands, U.S. citizenship taxation:

– Provides disincentives for U.S. multinationals to hire U.S. citizens abroad

– Provides huge disincentives for U.S. entrepreneurs to create businesses abroad

– Even makes it difficult for Americans to even open bank accounts outside the United States

U.S. citizenship taxation does not serve the interests of America as a whole!

The time has come to bring the injustice of U.S. citizenship-based taxation to an end.

Q. How can ending U.S. citizenship taxation be achieved?

A. To change U.S. tax rules so that U.S. citizens abroad are taxed as though they are nonresident aliens (only on their U.S. source income)

Senator Crapo, I urge you to join with President Trump and Congressman LaHood to bring the U.S. practice of citizenship taxation to an end! It’s time for the U.S. to stop imposing U.S. taxation on the non-U.S. source income of nonresident citizens!

You will be on the right side of history! You will participate in ending a great injustice rather than playing a role in perpetuating that injustice!

John Richardson

Toronto, Canada

John Richardson – Follow me on X.com @ExpatriationLaw

____________________________________________________________________________

Appendix A:

A PDF version of the letter is here (feel free to share if you like:

Discussion Draft of Taxpayer Assistance and Service Act

Appendix B:

A post that I wrote announcing the 2015 Senate Finance Report is here:

https://adcsovereignty.wordpress.com/2015/07/08/cbtlawsuit-first-report-of-senate-finance-committee-brings-citizenship-taxation-lawsuit-one-step-closer/

Appendix C:

The 2015 Senate Finance Report is here:

https://adcsovereignty.wordpress.com/wp-content/uploads/2015/07/the-international-tax-bipartisan-tax-working-group-report.pdf

Appendix D:

John Richardson, et al additional submission to the Senate Finance Committee in 2014:

https://citizenshipsolutions.ca/2014/01/24/submission-to-the-senate-finance-committee-on-citizenship-based-taxation/

Submission to the Senate Finance Committee on Citizenship-based taxation