deVere Group poll: 73% of U.S. expats consider renouncing citizenship due to FATCA
deVere Group recently carried out a survey following the introduction of FATCA (Foreign Account Tax Compliance Act), which reveals that 73 per cent of American expatriates are considering relinquishing their U.S. passports as a direct result of this highly controversial law – a law of which I have been a vocal opponent.
Our findings correlate with official data from the U.S. Government, which shows that since FATCA came into effect on 1st July, the number of Americans renouncing their U.S. citizenship has reached new heights. Figures have increased by 39 per cent in just three months, according to information on the Federal Register.
In the deVere Group poll, covered by CNBC and Forbes amongst others media outlets, we asked over 400 of our American clients: ‘Would you consider voluntarily relinquishing your U.S. citizenship due to the impact of FATCA?’
The results showed that a massive 73 per cent of these individuals had ‘actively considered it’, ‘are thinking about it,’ or ‘have explored the options of it.’ 16 per cent of those questioned said they would not give up their U.S. citizenship, and 11 per cent did not know.
Since the last deVere Group survey was undertaken in November 2013, the number of American expatriates looking at renouncing their citizenship has risen by 5 per cent.
This highly-controversial law, described by critics as ‘the worst law most Americans have never heard of’, requires every foreign financial institution in the world to report their American clients’ financial activities to the IRS, and supposedly aims to catch tax evaders who may have concealed undeclared income in foreign banks. Yet challengers to this law – who include senators, banking groups and senior Treasury officials – argue that it will do little, if anything at all, to resolve the global problem of tax evasion.
I am not surprised that our poll finds that nearly three quarters of Americans living overseas said that they are going to or have thought about giving up their U.S. citizenship because the reporting rules are so burdensome and costly.
Yet expatriates typically consider their nationality extremely important, and the majority of those who have considered giving up their citizenship are very much loathed to do so.
As such, in my view it is imperative that Americans overseas explore all the options available to them with an independent financial adviser with relative cross-border experience, in order to abate FATCA’s financial blow.