American citizens who live outside the United States are increasingly considering renouncing their US citizenship as Washington prepares to roll out FATCA (Foreign Account Tax Compliance Act) on January 1, 2013, says the boss of the world’s largest independent financial advisory firm.
From that date, under the FATCA legislation, the US will require all of its citizens to report their worldwide assets and earnings to the Internal Revenue Service (IRS), regardless of where they live, how long they have lived there, or whether any money is owed. Similarly, foreign financial institutions will also be required to disclose such information of any American clients that they may have.
Nigel Green, chief executive of the deVere Group, affirms: “Over the last six months, we have received a 22 per cent increase in the number of enquiries from American expatriates around the world who tell us that they are considering the drastic step of switching their homeland citizenship to that of their adopted countries.
“The majority of these US expats are being prompted to consider this due to the complexity of the reporting process to the IRS, plus the threats of heavy penalties, including for previous, inadvertent non-compliance.
“This sense of anxiety is compounded by the fact that a growing number of Americans are being left stranded by their foreign financial institutions as all banks and wealth management firms will also have to declare the assets of their American clients - and this process is perceived as too costly and burdensome, meaning many are refusing to deal with US citizens.”
In addition, he adds, some Americans are being turned down by foreign firms for jobs in which will require signatory authority as those accounts would be subject to FATCA too.
Mr Green concludes: “Renouncing one’s citizenship is, understandably, a hard and often painful decision, so I would urge Americans who may be looking into this to contact an independent financial advisor with experience in expat wealth management. There is a raft of robust, FATCA-compliant options available.”
Officially, almost 1,800 Americans renounced their US citizenship in 2011 – six times more than in 2008. But experts suggest that this figure could be considerably higher as many of those who have renounced do not feature on the US Treasury Department’s lists.