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Americans in Europe who renounced citizenship sue US over 'capricious' fee

Americans in Europe who renounced citizenship sue US over 'capricious' fee
Former American citizens in Europe sue US over renunciation fee. Photo: Anna Moneymaker/Getty Images/AFP (Photo by Anna Moneymaker / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

Former American citizens based in Europe who renounced their nationality have launched a new lawsuit against the US over the huge fee they were required to pay to handover their passports.

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The class-action complaint was filed this week in the US District Court in Washington, DC, by four former American citizens currently residing in France and Germany as well as Singapore.

Since 2014 American citizens have been required to handover $2,350 to renounce their nationality. Previously the fee had been $450.

Earlier this week The Local reported that the US State Department had finally made a move to cut the fee back down to $450 after initially having promised to do so in January.

Those behind the new law suit are demanding refunds for the thousands of US citizens who renounced their nationality after the fee had been hiked by more than 80 percent to $2,350.

The lawsuit claims the steep fee, is “arbitrary, capricious and illegal because, among other things, it was used to fund governmental functions completely unrelated to renunciation services in violation of federal law”.

News of the new legal complaint was revealed on Wednesday in a statement by the Paris-based Association of Accidental Americans. 

Accidental Americans refer predominantly citizens of other countries who were born in the US to foreign parents, who have since moved abroad and have had little connection to the US during their adult lives. Many have renounced their US nationality at great cost.

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The association's founder Fabien Lehagre says the number of former US citizens who could be eligible for a refund on their fee is estimated to be around 30,000.

The United States is unusual in that it imposes tax responsibilities based on both residence and citizenship - so even citizens who have lived abroad for many years and have no economic activity in the US have to file an annual tax declaration.

There are also certain limitations on US citizens who live abroad such as the 2010 FATCA law that effectively made it hard for them to open European bank accounts and limitations on certain types of financial investments in Europe.

FATCA, which obliges non-US financial institutions to report to the US on their American clients, is widely acknowledged as having led so many more American expats to give up their citizenships every year.

However US authorities have suggested anyone hoping to get a refund on the $2,350 fee will not be able to.

In a statement to The Local on Monday, following news the fee would be reduced back down to $450, the State Department said: “Once implemented, the fee change will not be retroactive, and no refunds or partial refunds will be issued as a result of this fee change."

The State Department has not given clear date for when the fee would finally be reduced.

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