On January 1 2026 Germany activated a dormant provision that required men aged 17‑45 to obtain permission from a Bundeswehr career centre before leaving the country for more than three months. The rule, originally added to the Military Service Act in 1965, was quickly suspended by a general exemption decree in April 2026, but it remains on the books and could be re‑activated.
Governments have a limited set of tools they can use to keep people, their money, or both inside their borders. Understanding these mechanisms helps individuals assess the risks of concentrating citizenship, residency, or assets in a single jurisdiction.
1. Exit bans
An exit ban prevents a named individual from leaving the country and usually involves holding the passport. The trigger can be a crime, unpaid debts, tax disputes, pending investigations, or commercial litigation.
- China – has increasingly used exit bans against foreign executives and Chinese nationals linked to investigations.
- Russia – restricts exit for citizens who owe certain debts, hold security clearances, or fall under mobilization orders.
Because the ban attaches to physical presence and citizenship, a second passport offers little protection while the person remains inside the banning state.
2. Capital controls
Capital controls limit or freeze the movement of money out of a country. They can be imposed abruptly, often over a weekend when banks are closed.
- Cyprus (2013‑2015) – shut banks, imposed withdrawal and transfer limits, and converted uninsured deposits above €100 000 into equity, affecting roughly half of those balances.
- Argentina – has long rationed access to dollars; citizens cannot renounce nationality, leaving them exposed to recurring currency restrictions.
- Nigeria and Egypt – have experienced severe foreign‑currency shortages, making official outflows at the official rate nearly impossible.
- China – caps individual foreign‑exchange purchases at $50 000 per person per year, prompting work‑arounds that regulators repeatedly close.
Controls apply to assets located within the jurisdiction; funds already held abroad in a different currency and bloc are generally out of reach.
3. Exit taxes
An exit tax treats worldwide assets as if they were sold on the day before departure, taxing the unrealised gain.
- Japan – applies the tax when covered assets exceed ¥100 million.
- France – taxes shareholdings worth €800 000 or more, or at least 50 % of a company.
- Germany – imposes the “Wegzugsteuer” on holders of at least 1 % of a corporation.
- United States – ties the tax to citizenship. For 2026, an expatriate meeting any of the following triggers the tax: net worth ≥ $2 million, average annual net income tax liability > $211 000 over the prior five years, or failure to certify five years of full tax compliance. The first $910 000 of net unrealised gain is excluded; gains above that are taxed at capital‑gains rates.
The tax attaches to the tax residency or citizenship being surrendered; a second passport does not mitigate the liability once the trigger is met.
4. Conscription
Compulsory military service can be reinforced with exit controls that keep service‑age men from leaving.
- Approximately 60‑85 countries conscript at least part of their citizenry, and the number is rising.
- Latvia reinstated conscription in 2024; Croatia will do so from 2026; Germany approved a new service law in December 2025, extending the 17‑45‑year‑old travel‑permission rule.
- Ukraine (under martial law) bars men aged 18‑60 from leaving, with limited exemptions.
- South Korea can summon dual‑national men even during short visits; the case of singer Yoo Seung‑jun illustrates a 24‑year ban after he acquired U.S. citizenship.
- Israel, Greece, Turkey, Russia also assert service obligations on citizens abroad.
Conscription ties to the first citizenship; renouncing that citizenship is often the only way to fully escape the obligation, and many states make renunciation difficult or conditional on completing service.
5. Tax clearance certificates
Some jurisdictions require an explicit tax‑compliance certificate before allowing large transfers of money abroad.
- South Africa – after abolishing “financial emigration” in March 2021, the South African Revenue Service (SARS) requires a Tax Compliance Status and an Approval for International Transfer for sums up to 10 million rand per year, and a manual compliance letter plus Reserve Bank sign‑off for amounts above 12 million rand. The discretionary allowance is 1 million rand (raised to 2 million rand in 2026).
- United States – retains a dormant “sailing permit” requirement (Form 1040‑C or 2063) for departing resident and non‑resident aliens, confirming tax affairs are settled before exit. Enforcement is rare, but the rule remains on the books.
These requirements attach to the taxpayer’s status in the jurisdiction; holding a second residence does not eliminate the need for the home country’s clearance.
6. Passport revocation for unpaid tax
A government can cancel or refuse renewal of a passport when the holder owes certain debts.
- United States – the 2015 FAST Act allows the IRS to certify a “seriously delinquent” tax debt (≥ $66 000 for 2026, adjusted annually from a $50 000 base) to the State Department, which may deny a new passport, refuse renewal, or revoke an existing one. If the holder is abroad, the passport may be limited to a single return trip.
- In 2026 the State Department also began revoking passports of parents with large child‑support arrears, starting at $100 000 and moving toward a $2 500 threshold.
Revocation directly affects the travel document tied to citizenship; dual nationals can rely on a second passport, but single‑passport holders may be stranded.
Common thread and practical implications
All six mechanisms become most potent when citizenship, banking, and assets are concentrated in one jurisdiction. Diversifying—by obtaining a second citizenship, establishing a second tax residency, and spreading assets across multiple legal systems—removes single points of failure:
- A backup passport mitigates the risk of a revoked travel document.
- Accounts in a different monetary bloc protect against capital‑control freezes.
- Multiple tax residencies can reduce exposure to an exit tax, though they do not eliminate it.
- Having a primary residence outside the country of origin lessens the chance of being caught by an exit ban or conscription order.
While most individuals will never encounter an exit ban, frozen accounts, or a revoked passport, the growing number of tools governments can deploy makes diversification a prudent risk‑management strategy rather than a luxury.
Source article: www.imidaily.com
