Some US-citizen athletes and athletes who hold Green Cards choose to permanently relocate to Canada. These individuals often want to know whether they should give up their citizenship or Green Card when relocating to Canada.
Giving up your US citizenship or Green Card can be a difficult decision; by doing so, you lose the right to live and work in the US. However, there are several tax benefits to consider when assessing the pros and cons of surrendering your Green Card or relinquishing citizenship.
The most attractive reason to give up your status as a US citizen or permanent resident is that you will no longer be a US person subject to the US tax regime. You will gain many freedoms; for example, you will be free to benefit from investing in TFSAs and Canadian mutual funds and ETFs. You will be free of the US estate and gift tax regime, and you will no longer have to comply with the IRS’s often onerous and expensive tax reporting and tax filing obligations.
From a practical immigration perspective, it is challenging to retain a US Green Card once a Green Card holder moves to Canada. One of the requirements of Green Card holders is that they spend at least half of the year in the US. Generally, Green Card holders moving to Canada who do not plan to spend at least six months of each year in the US lose their permanent residency status. Also, obtaining permanent residency in Canada makes it difficult to retain your Green Card as it is hard to comply with the permanent residency rules of both countries at the same time.
Note that in some limited circumstances, high net worth individuals who relinquish their citizenship or Green Cards may trigger the US expatriation tax rules. When analyzing whether or not to relinquish your citizenship or Green Card, it is ideal to review your options from both a tax and immigration perspective with the help of a cross-border financial planner.