On multiple occasions I have seen forms where it needs to be stated what the Country of Issue and what the Country of Citizenship is. What is the difference between the two, if your passport is issued by a consulate in a foreign country. Technically the soil of a consulate belongs to its own country. So both the country of issue and citizenship should be the same. At least that is what I would say. But if this is the case, why do some forms require to fill in both?
Although not common, some countries issue passports to non-citizens as well. As you may have noticed, the data page of a passport often states the nationality or citizenship of the holder in a separate field and the citizenship may actually differ from the issuing country.
One example is laissez-passer documents or emergency passports, which may be issued by foreign governments. For example, if you travel to a country without a diplomatic representation from your home country and lose your passport, your home country may have an agreement with a third country to help you with a temporary emergency passport.
Another example is the British Passport, which can be issued to all British nationals, even if they are not British citizens (British nationality law makes a clear difference between "nationals" and "citizens").
From the ESTA website (which I was reading just as you posted the question!):
However, it's worth noting that some forms word this differently, and ask for place of issue or authority who issued it. Then it could be different.
For example, my current New Zealand passport.
Country of citizenship: New Zealand, clearly.
But where it was issued? I was in London, UK, and the field in the passport says "DIA LON". (Department of Internal Affairs, London). This is the Identity Services Office in London - often referred to as the London Passport Office - and is responsible for the issuing and renewals of New Zealand Passports in the United Kingdom and Ireland.
So when it says place of issue, that's usually what gets put down for me, or when it asks for 'Authority' as that's the specified field in the passport as well.
Country of Issue, however, would still be New Zealand.
It's difficult to know precisely without context but there are few cases where this could be relevant, in particular:
On the other hand, if you have a regular passport, issued by your country's authorities, then I would tend to think that “country of issue” and “country of citizenship” are the same even if you got your passport through a consulate abroad (that's certainly the terminology used by the US authorities, as shown in the link provided by Mark).
Any country can emit a passport for any person regardless of its citizenship. Case in point, France does not recognize a passport as a proof of citizenship for its own citizen. (In BOLD here and here for french readers)
The passport is an official travel document stating to other countries that the holder is recognized as specified. Having a passport from a certain country entails some prerogatives, like being exempt of visa, or having a passport automatically purported to be valid 6 month after expiration etc....
But holding a passport and having a citizenship are in theory completely different notions. Although practically, 99.9% of the passport are issued by the country of citizenship, there are no international laws to my knowledge which prevent a country to issue a passport to non-citizen, (although some local legislation may prevent doing so.)
exemple : UK passport for Hong Kong, US passports, any diplomatic passport, which are issued on a mission basis for representation of the said State, who is sovereign in deciding who represents it....