The number of American expatriates who are tempted to give up their U.S. citizenship as a direct result of America’s new global tax law (FATCA) has increased by 11 per cent, reveals a new poll by one of the world’s largest independent financial advisory organizations.
FATCA: American expats renouncing their U.S. passport
In the survey carried out this month by deVere Group of 414 American expat clients, 79 per cent said they had ‘actively considered’, ‘are thinking about,’ or ‘have explored the options of’ renouncing their U.S. passport due to the implications of the Foreign Account Tax Compliance Act (FATCA), which came into effect on July 1.
14 per cent said they would not consider relinquishing their U.S. citizenship and 7 per cent did not know.
In November last year, deVere Group, which has 80,000 mainly expatriate clients globally, undertook the same poll – which asked ‘Would you consider voluntarily relinquishing your U.S. citizenship due to the impact of FATCA?’ with the same sample of respondents. At that time, cumulatively 68 per cent answered affirmatively.
Nigel Green on FATCA
Of the findings, deVere Group’s founder and chief executive, Nigel Green, comments: “The 11 per cent jump in the number of Americans who are tempted to sever official ties with the United States highlights how the true scope of FATCA’s adverse effects is now really hitting U.S. citizens who live and/or work overseas.
“In this latest survey significantly more respondents flagged up specific problems, such as not being able to open bank accounts in their countries of residence, or having existing ones shut down by banks, or the costs and lengthy processes of complying with FATCA, amongst other problems. This could probably explain the increase. Some told us that they felt they were now under suspicion by the IRS, even though there was no question of any wrongdoing or having any taxes owing.
“It seems that the burden of FATCA is becoming more ‘real’ and one way to avoid the negative effects of this highly controversial law is to relinquish citizenship.”
Official figures from the Treasury Department show that passport relinquishments were up 220 per cent in 2013, compared with the previous year.
Mr Green continues: “It’s our experience that most American expats are proud patriots and are loathed to give up their U.S. citizenship. With this in mind, and taking into account other potential considerations, including ‘exit taxes’, it is recommended that expats explore all the available options to them about how to mitigate the effects of FATCA with an independent financial advisor with cross-border expertise before citizenship is renounced.”
There are a reported 7.6 million U.S. expatriates worldwide.
About deVere Group
The deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients, through a network of 70 offices across the world and more than 1,200 staff. It has in excess of 80,000 clients and $10bn under advisement.