‘Imperialistic’ FATCA is here – and it’s a ‘dark day’ for U.S. expats and firms operating globally
Today, July 1 2014, is a ‘dark day for the 7 million Americans living overseas and for U.S. firms that operate globally’, according to the chief executive of one of the world’s largest independent financial advisory organizations.
The assessment from Nigel Green, founder and CEO of deVere Group, which has 80,000 mainly expat and international investor clients, comes on the day America’s controversial global tax law, FATCA, (Foreign Account Tax Compliance Act) is officially brought into effect after years of delays.
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Under FATCA, all non-U.S financial institutions are required to report the financial information of American clients who have accounts holding more than $50,000 directly to the IRS.
Mr Green comments: “It is claimed by its proponents that this new tax act is designed to catch tax evaders who illegally shelter money offshore. This is a noble aim. But FATCA cannot possibly tackle this important global issue effectively due to its dragnet, untargeted approach.
“Instead what it does – because of its plethora of serious unintended adverse consequences – is to brand Americans who choose to live and/or work overseas as financial pariahs. U.S. expats are now routinely rejected from foreign financial institutions (FFIs), such as banks in their country of residence, because FATCA’s costly and onerous regulations mean Americans are now typically deemed more trouble than they are worth.
“Similarly, American businesses working in international markets are now often branded with a leprosy-like status. Clearly, this can only be detrimental to their global competiveness and could, in turn, hit American jobs and the long-term growth of the U.S. economy – which would then, of course, have far-reaching consequences beyond the U.S.
“All this to ‘recover’ an estimated $1bn per year, which is enough to run the federal government for less than two hours.
“July 1 is indeed a dark day for the 7 million Americans living overseas and for U.S. firms that operate globally.
“Thankfully, there are ways qualifying U.S. expats can mitigate FATCA’s adverse effects. One such solution is for the U.S. taxpayer with assets abroad of more than $50,000 to create a tax-efficient, supplementary overseas pension contract.”
The deVere Group CEO adds: “There are other important questions to be asked too about the wholly imperialistic nature of FATCA. Countries and FFIs have been coerced into complying with FATCA’s expensive, burdensome, privacy-infringing, sovereignty-violating regulations by the U.S. – or have to face heavy penalties. In effect, these countries and FFIs are now working as de facto IRS agents.”
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. It has a network of 70 offices across the world, more than 1,200 staff, over 80,000 clients and $10bn under advisement.