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SWEDISH CITIZENSHIP

United States set to reduce fee for renouncing American citizenship

Renouncing American citizenship could become less costly, after the US department of state announced that it intends to reduce the citizenship renunciation fee from the current eye-watering $2,350.

United States set to reduce fee for renouncing American citizenship
The Association des Americains Accidentels (AAA - Accidental Americans Association) demonstrate against certain aspects of US legislation of extraterritorial nature in Paris. (Photo by Zakaria ABDELKAFI / AFP)

Rina Bitter, the Assistant Secretary for Consular Affairs in the USA, wrote a declaration stating that “the Department intends to pursue rule-making to reduce the fee for processing CLN requests [renunciation of US citizenship] from the current amount of $2,350 to the previous fee of $450.”

Bitter also said that “the Department will consider any necessary changes to this fee, as appropriate, in future rule-making.” The Washington DC District Court was set to hear in-person oral arguments on January 9th.

The change has been particularly welcomed by ‘Accidental Americans’ – people born in the US who therefore have American citizenship but have little connection to the US during their adult lives – but applies to anyone who wants to renounce their US citizenship.

The usual reason for wanting to do this is the strict tax rules that continue to apply to Americans, even if they live outside the US for many years. 

The Accidental Americans group founder and president, Fabien Lehagre said: “By lowering the fee to $450, the US government is showing that the right of voluntary expatriation is not to be trifled with and deserves the utmost protection.”

Nevertheless – the change has not yet been put into practice, and the court case was still ongoing as of January 9th, a fact that Lehagre acknowledged, stating that “time will tell how the government will formulate and develop the new fee.”

However, even with lower fees, renouncing American citizenship remains a lengthy and complex process, that for most people will involve paying a lawyer or accountant.

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 to the IRS.

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

“Renouncing US citizenship is not as simple as scheduling an appointment at a US embassy or consulate, paying the applicable fee, and declaring that one does not want to be American,” explained international tax law specialist Alexander Marino. “There are many details to consider, and careful planning is essential.”

READ MORE: How to renounce American citizenship in France – and why you might want to

Set in 2010 to $450 to pay for the processing renunciation requests, the amount was later increased to $2,350 due to the need for “close and detailed case-by-case review,” according to Bloomberg Tax.  

The Accidental Americans group is made up of European citizens who also have American citizenship – often without even knowing it.

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WORKING IN FRANCE

URSSAF: What is it, how it works, and how it affects you

if you are working as a freelancer, contractor or have set up a business in France you will need to become familiar with the social security collections agency Urssaf. Here's what it is and how it works.

URSSAF: What is it, how it works, and how it affects you

Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales – more usually known, because that’s a mouthful, by the acronym Urssaf – are the administrators who collect social security contributions that fund a large part of France’s labyrinthine social security system, including, notably, health insurance.

It is responsible for collecting some €534.4 billion from 9.8 million users every year to help fund social security in France.

If you’re an employee in France, you will probably have nothing directly to do with Urssaf, because – for the most part – dealing with it will fall into the realms of Somebody Else’s Problem (ie your employer). 

But if you are freelance, a contractor or set up your own business you will almost definitely have to deal with Urssaf. 

Type of regime

Many people working for themselves in France use the simplified Micro Entrepreneur regime – often still referred to as auto entrepreneur – which sets up a basic sole trader-style business. 

Its advantage is (relative) simplicity but it has limits on earnings as well as other limitations like being able to write off business expenses.

Micro-entrepreneur: How to set up as a small business in France

Other options for freelancers or sole traders include the Entrepreneur individuel à responsabilité limitée (EIRL – basically a limited liability sole trader); Entreprise unipersonnelle à responsabilité limitée (EURL – another sole trader option), Société par Actions Simplifiée Unipersonnelle (SASU); or Société à Responsibilité Limitée (SARL).

These allow for higher earnings but are more complicated and may require an accountant to set up.

If you start off as a micro-entrepreneur but then your earnings go over the threshold you can switch to another regime without attracting a penalty.

How to register 

These days the whole registering a business thing can be done online. For a simple micro enterprise, you can create an account on autoentrepreneur.urssaf.fr, then give details of the business you intend to run, and your social security numbers. 

If you’re looking to set-up a more complex business structure such as a EURL, SARL, SASU, or SAS, you should start with the portail e-procédures at procedures.inpi.fr.

You must then send off the declaration, which is registered with the relevant Centre de formalités des entreprises;

  • For commercial businesses eg shops or bars, this is the Chambre de commerce et d’industrie;
  • For artisans, craftspeople, tradespeople and some other commercial businesses, it is with the chambre de métiers et de l’artisanat;
  • For professions libérales – including, for example, freelance journalists – it is with Urssaf.

Within 15 days of registration, you should receive your business registration number, known as the SIRET number.

Notice that you have been signed up to the relevant social security regime should follow in a few weeks. 

Since 2020, all independent workers belong to the Assurance Maladie health regime, and a few professionnels libéraux are signed up to the standard Assurance retraite for their pensions. 

How much does it cost to set up a business?

That depends on your business. Setting up as a micro entrepreneur (auto entrepreneur) costs nothing administratively and is the simplest way for freelancers to set up for themselves. 

Technically speaking it is a tax status rather than a business structure. 

Then what?

Once you’re up and running, the most regular contact with Urssaf should be when you file your earnings online, which – for micro entrepreneurs – can be done monthly or quarterly using the auto entrepreneur website.

You will then be informed how much you owe in cotisations, (social security contributions) which will be taken out of your bank account around a month later.

 If you have a French-incorporated business, such as EURL, SARL, SAS or SASU, you will use URSSAF’s main website www.urssaf.fr, or get your accountant to do so. Some business set-ups in France require you to use an accountant.

READ ALSO Ten tips for working as a freelancer in France

Banks

Note that you will need to set up a dedicated bank account for your business. As a micro entrepreneur, despite claims from banks, it does not have to be a business account (which attract larger fees). But it should be separate from your personal bank account, and just used to pay your charges, for any business expenses (which you cannot claim for, if you’re a micro entrepreneur). 

Other business regimes, such as the Entrepreneur individuel à responsabilité limitée (EIRL – basically a limited liability sole trader); Entreprise unipersonnelle à responsabilité limitée (EURL – another sole trader option), Société par Actions Simplifiée Unipersonnelle (SASU); or Société à Responsibilité Limitée (SARL), have certain advantages on allowable earnings, compared to the very basic micro-entrepreneur regime – but will incur a sliding scale of charges on set-up, and require different book-keeping and accounting systems. Some will also require you to be registered for VAT.

Do I need an accountant?

This is really a personal choice – the micro-entrepreneur regime is designed to be simple and to be used by individuals, but some people still prefer to use an accountant.

The business structures for higher earners are a little more complicated and may require an accountant to set up. Most people use accountants if they are within these structures, unless they are confident in both their French and their book-keeping abailities.

If you have an accountant you can nominate them to be your representative in any dealings with Urssaf, although note that you are still responsible for any fees and charges, even if they are incurred by your accountant making a mistake.

Okay — how much do you pay in charges?

For micro-entrepreneurs, social charges can be paid monthly or quarterly. They are calculated as a fixed percentage of your earnings, depending on the type of work.

Rates are 12.8 percent for the sale of goods, 22 percent for artisanal and commercial services, 22 percent for professions libérales attached to the standard Assurance Retraite for retirement, and 22.2 percent for a small number of professions libérales attached to Cipav. 

A levy of 0.1 percent to 0.3 percent is also charged. It goes to the CPF fund giving all workers the right to a financial contribution for training.

Note, micro-entrepreneurs are limited in the amount they can earn: for business activities and the supply of accommodation (hotels, bed and breakfasts, rural cottages classified as furnished apartments, furnished apartments), the threshold is €188,700.

For service and professional activities, the threshold is €77,700.

Micro entrepreneurs will be obliged to step up to another business regime if they break these earnings thresholds.

For other business types, these maximum earnings thresholds do not exist, but bosses will have other requirements, for example, they may need to use the services of an accountant, and will have to be audited once they cross a certain earnings threshold.

Taxes

It’s important to note that Urssaf deductions are only part of the story – there are also other taxes to consider.

Personal income tax is covered in the annual income tax declaration, while businesses taxes fall under a range of tax regimes, depending on your type of business.

Commercial, industrial, or manual/trades/crafts businesses fall under the Bénéfices Industriels et Commerciaux (BIC) system. Professional businesses fall under the Bénéfices non Commerciaux (BNC) system. Agricultural businesses use the Bénéfices Agricole (BA) system.

Don’t forget, either, the Contribution Fonciere des Entreprises (CFE) property levy, a local tax payable by any company or self-employed person earning more than €5,000 per year, even if they conduct their business at home, at the kitchen table. This one is due every December.

What if I have a problem?

You can contact Urssaf staff online via the website, or arrange an appointment for a face to face meeting at their offices, if you prefer. Contrary to popular opinion, they’re there to help you.

Urssaf, in the past, had a poor reputation. But, as with all French bureaucracy, it’s better to work with it rather than try to fight or resent it.

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