Americans are Choosing to Abandon U.S. Citizenship in Favor of 'Plan B' Passports in 2025
A significant number of Americans are considering a move abroad, driven by political uncertainty and economic concerns, among other factors. Recent research by Harris Polls suggests that over 40% of Americans, particularly younger generations, are thinking about living overseas.
Estimates suggest that around 6.8 million US citizens currently reside overseas, and this number could potentially grow. Key drivers for this trend include lower living costs, better quality of life, escaping the US political climate, and new international business or investment opportunities.
Following the US elections and President Donald Trump's return to the White House, searches and formal requests for information on dual nationality skyrocketed, doubling or tripling almost overnight. Over half of America's millionaires were already exploring pathways on how to leave the country before the latest election cycle concluded.
For those seeking a more permanent solution, there are various routes to consider. The most popular countries for American expats include Portugal, Mexico, and Panama. Strategic planning can potentially reduce an individual's overall tax burden, with some countries having no capital gains tax, no corporate or personal income tax, or territorial tax systems.
One avenue for acquiring a second passport is through citizenship by investment programs, offered by nations such as Dominica and St Kitts and Nevis. These programs grant expedited citizenship in return for an investment. Another option is Portugal's Golden Visa program, which requires a minimum donation of €250,000 and could grant a fast-tracked EU passport.
Dual citizenship grants all the rights and privileges of a citizen, including the ability to travel freely to many countries, live and work freely in multiple countries, a deeper level of security and belonging, and access to more markets and investment opportunities. However, it's important to note that dual citizenship is generally permissible for Americans, although some countries don't favour dual citizenship.
For those who prefer to maintain their US citizenship but still seek a second residency, options include residency by investment, skilled migration programs, retirement programs, and entrepreneurship. Spain and Panama offer accessible residency options for proof of reliable income or savings. Creating a business in the UK can also grant residency.
Residency grants the right to live in a particular country with certain conditions attached, such as minimum annual stays, proof of financial self-sufficiency, or investments. Advantages of residency include the ability to spend a long time in the chosen country, potentially benefit from its tax system, travel freely to the new residency, and gain citizenship in roughly four to ten years.
The Nomad Capitalist team is seeing a large number of US citizens actively acquiring second residences and citizenships. A strategic shift is underway for a growing number of US entrepreneurs, business owners, and wealthy citizens, with many concluding that a second residency or citizenship is one of the most important steps.
Countries such as Portugal, Spain, and several Caribbean nations have experienced a strong increase in US citizens acquiring second residencies or citizenships in recent years, driven by investment immigration programs and favourable tax regimes. Canada and Australia are known for their points-based skilled migration systems.
In practical terms, a "Plan B" for Americans refers to two main avenues: residency and citizenship. Citizenship by descent is a direct route for those with ancestral ties to certain nations. Dual residency gives options without the commitment of citizenship and is usually a fraction of the cost of a second passport.
It's important to note that renouncing US citizenship can eliminate US tax and reporting obligations on worldwide income once the renunciation is complete. However, the US State Department assumes you want to keep your US citizenship when you do things like become a citizen of another country, take a standard oath, or accept a regular job with a foreign government.
As political division and economic uncertainty persist, it's likely that the trend of Americans seeking a "Plan B" will continue. For those considering this move, it's crucial to research the various options available and seek professional advice to make an informed decision.
