American expats should not feel forced to renounce citizenship due to FATCA
I’ve been strongly urging this week the estimated 8 million Americans overseas not to renounce their U.S. citizenship because of FATCA, before they have reviewed all the available options.
My comments, which have been picked up by International Adviser, International Investment and Value Walk, amongst others, come after latest Treasury data revealed that a record number of individuals renounced their American passports or green cards over the last year.
This data shows that more Americans than ever are severing official ties with the U.S. Over the last 12 months, the number of people who have handed back their American passports or green cards has risen by 20 per cent. And it is widely acknowledged that this increase is, in the main, due to the burden brought about by the Foreign Account Tax Compliance Act that came into effect in 2014.
This highly contentious legislation is, in effect, turning millions of hard-working Americans based overseas into financial pariahs, as foreign financial institutions are routinely refusing to deal with American clients as FATCA’s rules are too onerous and costly to comply with.
Naturally, the majority of Americans residing abroad consider their citizenship a fundamental part of their identity, and the idea of giving it up is a measure that would only be taken if they felt there was absolutely no alternative.
As such, I would strongly advise individuals not to do so, without seeking specialist advice and exploring all options.
Of course, Americans must ensure that they are FATCA-compliant, as the penalties are severe. That said, there are numerous ways that U.S. expats can mitigate the burden of FATCA.
One such course of action is to take out an additional overseas pension contract, specifically designed for U.S. taxpayers who hold assets in their adopted country of residence.
Going back to just over 16 months ago, soon after FATCA came into effect, deVere Group carried out a survey that revealed that 73 per cent of American expats were looking into giving up their passports as a direct result of FATCA. The results of this survey were featured by a whole host of publications, including Newsmax, Yahoo Finance, and Advisor.
As such, I urged U.S. presidential candidates to come clean on where they stand on the issue of FATCA, as covered by The Telegraph, Think Advisor and FTF News, amongst others. The legislation affects millions of Americans all over the world, as well as U.S. companies operating globally – therefore impacting American jobs and the economy.
Consequently, presidential candidates who support FATCA must justify their reasons why; and those who wish to see the law repealed need to stress to voters the reasons they believe it is fundamentally flawed, and what action they plan to take to confine it to the history books.