An expatriation tax, also known as an exit tax or an emmigration tax, is a tax levied on someone who permanently moves to another country or renounces their citizenship.

The United States levies an expatriation tax to prevent the super-rich from simply renouncing US citizenship and moving to a country with a more favorable tax regime. Previously, US expatriates were required to pay normal US tax rates for 10 years following their expatriation. However following a change in the law in 2008, expatriates now have to immediately pay an exit tax as if they had sold or cashed in all of their assets, including real estate, retirement plans, pensions, and stock options, at whatever the going market rate was the day before their official renunciation of citizenship. Renunciants get an exclusion, indexed to inflation and currently $651,000, after which they pay taxes on all the rest of their assets at currently prevailing tax rates.

The expatriation tax not only applies to US citizens, but also to green card holders who renounce their permanent residency.

In short, unless you are prepared to immediately liquidate a large chunk of your fortune and turn it over to the IRS, you are better off remaining a US citizen or resident.

Log in or register to write something here or to contact authors.