I have been hearing here (and elsewhere) that the American IRS has said that it might be inclined to treat dual US/Canadian citizens a bit more leniently. I imagine this is in response to the concerns that have been publicly raised by the Canadian government in response to the FATCA and the FBAR requirement.
I do not begrudge one whit this good news (if it is indeed true) but it does raise questions for us overseas Americans who are not residents of Canada and who are (or wish to be) dual-citizens (or who have family members who already are dual citizens) of another nation-state.
As I was researching citizenship issues for the Flophouse blog I came across a very intriguing idea: the principle of “master nationality.” (I’ve also seen this called “effective” or “dominant” nationality). Now I am not a lawyer and my interpretation of this might be incorrect but here is what I understand: A dual citizen living in one of his states of citizenship does not have the right to ask the other state (of which he is not a resident) for aid and protection against the state in which he resides. So a dual French/US citizen living in France, who one day has an issue with the French government, cannot go to the US Embassy in Paris and plead for American protection and help. The French government will not acknowledge that the other government has sovereignty over that citizen as long as he or she is on French soil. This person is French. Period. This principle is stated very clearly in the Charter of the Rights and Responsibilities of a French citizen which says:
En acquérant la nationalité française, vous bénéficierez de tous les droits et serez tenu à toutes les obligations attachées à la qualité de citoyen français à dater du jour de cette acquisition. En devenant Français, vous ne pourrez plus vous réclamer d’une autre nationalité sur le territoire français.
I think that is entirely fair. A dual should not be able to have the “beurre et l’argent du beurre.” However this does raise an interesting question: if I become a French citizen and can no longer claim the rights, benefits and protection of American citizenship on French soil (the “butter and the money from the butter”) how should the French government react to an attempt by the “other” government to impose its sovereignty on me in France? Or for that matter on my children who are dual nationals by birth?
Now the United States seems to have a slightly different take on it. The U.S. State Department says here that “However, dual nationals owe allegiance to both the United States and the foreign country. They are required to obey the laws of both countries. Either country has the right to enforce its laws, particularly if the person later travels there..” Now that just seems downright unworkable. In a situation where French (or EU) law conflicts with American law, the French are saying that I would be required to obey French and EU law as a French citizen residing in France but the American government seems to be insisting that I must obey American law when I am in France. Or, for another example closer to the U.S., does this mean the United States of America recognizes the sovereignty of the Mexican state over, and the application of Mexican law to, dual US/Mexican citizens residing in the United States? Would they recognize the sovereignty of the French state over me if I were a dual, travelled to the US and then requested the aid of the French embassy while I am on American soil? How would the French embassy respond to such a situation? (I imagine that they would quite sensibly apply the principle of “master nationality” in such a case.)
I find that I am unable to answer these questions (as I said, I am not a lawyer) however may I suggest that, from a purely practical standpoint (and as events in Canada in response to FATCA prove), there are real benefits to becoming a dual US/Other citizen since the U.S. government does seem to recognize that the other state does have sovereignty over that citizen and some say in how he or she is treated whether that person is living in the U.S. or not. The behaviour of the US IRS concerning Canadians and the FBAR regulations seems to confirm this since their leniency seems directly related to the Canadian government’s efforts on their behalf.
So for those of us who have been living outside the U.S. for many years, have come to love our host countries, but who have always been a bit fearful of the U.S. government reaction to our becoming citizens of our host countries (I was told in the strongest terms at the US Embassy in Paris years back that this was a *terrible* idea and I risked losing my American citizenship if I became a French citizen) that we effectively have nothing to lose and everything to gain by pledging allegiance to another state.
There are undoubtedly weaknesses and even outright errors in my analysis so please feel free to challenge me or give your take on it. It would be good to get some clarity on this.