The substantial issue is “Special Permits” (“Beibehaltungsgenehmigung”) being required to retain German citizenship prior to naturalization in another country.
Yes, the basic political idea going back many decades is that citizenships is not about cherry picking the best of all options but to make a clear decision for one citizenship with all the good and bad it brings. Slowly they are moving away from this approach and as you say for immigrants it’s basically gone and for EU citizens as well. I know several Germans living in the US that got this special permit so I assume it’s not so special at all. However it sucks to be at the mercy of some government employee.
The other way around it’s totally different: if you’re born in the US to German parents, you hold US citizenship due to birth on US soil but you also automatically hold German citizenship because German is whose parents (until some years ago: father) are German. This is also why all those millions of Eastern Europeans immigrants kept their passports. Their ancestors emigrated from Germany to Eastern Europe some 300 years ago and the law merely said they are considered German citizens so they didn’t get citizenship (which would have meant giving up the previous passport) but were declared to have held it for the last 300 years…
Another weird thing is that a lot of holders of US and European citizenship who live in Europe are trying to give up US citizenship for the reason that the US are the only country in the world taxating all its citizens worldwide, no matter if they have ties to the country. A friend of mine has never lived outside Switzerland and was being harassed by IRS until he renounced his citizenship.
The really handy thing about US citizenship (or just the green card) is that you can own an N-reg directly and don’t need to pay a trustee 450 quid a year 
The really handy thing about US citizenship (or just the green card) is that you can own an N-reg directly and don’t need to pay a trustee 450 quid a year
But you’ll probably owe (but not necessarily pay) way more than that in US taxes on your income, as Achim correctly pointed out above.
Yes, but how the hell do they keep track of all the US citizens abroad? They might send you a tax return to fill in but if you ignore it or just miss stuff out, they will never know. Well, there are various theories that the US IRS has access to the various bank computers in Europe… but firstly they need to know where in the world you actually are!
IRS is a danger looming over all passport holders living in foreign countries. You never know when they catch you. The IRS is very inquisitive, a lot of their forms ask whether you hold US citizenship (required for simple things like getting paid by a US client). I think in my professional career I had to sign at least 10 times that I do not hold a US passport.
The way IRS does it is that whenever something is taxated at a lower level than in the US, the IRS asks for the difference. This is especially bad for company profits and inheritance tax which are both significantly higher in the US compared to most European countries.
I find it to be really awkward that the US think they can have worldwide jurisdiction with IRS whereas everybody else respects the country of residence as the sole taxation authority for personal income.
“Yes, but how the hell do they keep track of all the US citizens abroad? They might send you a tax return to fill in but if you ignore it or just miss stuff out, they will never know. Well, there are various theories that the US IRS has access to the various bank computers in Europe… but firstly they need to know where in the world you actually are!”
Actually it is quite easy. In the wake of the FATCA legislation, all financial institutions are under the obligation to report account information to the IRS. Nota bene it is actually not only applicable to US passport holders but to anyone subject to US taxation (e.g. green card etc).
Individuals who are both resident and domiciled in the United Kingdom are liable to taxation on their worldwide income and gains
Individuals who are both resident and domiciled in the United Kingdom are liable to taxation on their worldwide income and gains
That’s how every country in the world does it. Not the US though, they also tax everybody in possession of US citizenship, no matter if you have ever been to the US or have any ties.
US taxes not only US citizens but anyone having “significant ties” with the US – eg. green card holders, property owners etc.
Worldwide taxation applies to Canadian citizens too Link, and is generally on the rise worldwide. It’s not always a problem (for instance between the US and Germany) because tax treaties prevent double taxation: if you pay tax in Germany on German income despite being non-resident (which you do) then that is deducted directly from your US taxes. The issue then becomes the rate at which you are taxed.
Answering Peter’s question: it is difficult to impossible for any country taxing worldwide income on its citizens to detect many sources of that income. One tool is to require taxpayers to overseas report bank accounts, for the US tax filing you must report signature authority for any account with balance over $10K.
Nations have a very hard time with the idea that people can live simultaneously in multiple counties, and that they don’t necessarily have to be fabulously wealthy (and thereby worth chasing for money) to do so. Welcome to the 21st century.
PS what I find amusing about German situation is that they have no problem with Turks retaining their citizenship when moving to Germany and becoming German, but require require written justification and approval for their citizens to do the same thing when moving away from Germany.
