73 per cent of Americans who live outside the U.S. are tempted to give up their U.S. passports in response to the introduction of FATCA (Foreign Account Tax Compliance Act), reveals a new survey by one of the world’s largest independent financial advisory organizations.
The findings come as Federal Register data shows that the number of Americans renouncing U.S. citizenship increased by 39 per cent in the three months to September after the new global tax law came into force.
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In the global poll, deVere Group recently asked more than 400 of its American expatriate clients: ‘Would you consider voluntarily relinquishing your U.S. citizenship due to the impact of FATCA?’
Cumulatively, 73 per cent of respondents answered that they had ‘actively considered it’, ‘are thinking about it,’ or ‘have explored the options of it.’
16 per cent said they would not consider relinquishing their U.S. citizenship and 11 per cent did not know.
This is an increase of five percentage points from November when deVere Group, which has 80,000 mainly expatriate clients globally, conducted a similar survey.
Purportedly designed as a tool to counteract tax evasion, the Foreign Account Tax Compliance Act has resulted in additional reporting requirements for all U.S. citizens overseas. FATCA opponents argue that it will do little, if anything, to tackle the important international matter of tax evasion.
Nigel Green, founder and chief executive of deVere Group, comments: “It is alarming that nearly three quarters of Americans abroad said that they are going to or have thought about giving up their U.S. citizenship.
“Nationality, especially for an expatriate, is an incredibly important part of one’s identity and typically it’s a very emotional issue too. It is our experience that most Americans are extremely saddened at the prospect of giving up their U.S. citizenship to avoid the harsh implications of a new and utterly flawed tax law.
“However, it should come as little surprise that such a high number are prepared to do so because FATCA’s reporting requirements are excessively onerous, burdensome and expensive. Also many non-U.S. banks and other financial institutions will no longer work with Americans which can make living outside the U.S. achingly complicated.”
With most Americans telling deVere Group that they are loathed to give up their passports, Nigel Green urges them to speak to a financial advisor in the first instance.
He says: “Americans abroad who are being adversely affected by FATCA should explore all the available options to them to mitigate the absurd tax law’s effects with an independent financial advisor with cross border experience before renouncing their citizenship.
“This is especially important as there are certain established federal regulations aimed at discouraging Americans from renouncing their citizenship for tax reasons.
“There are now many vehicles that U.S. expatriates can use to significantly reduce the impact of FATCA, including supplementary overseas pension plans.”
There are an estimated 7.6 million Americans living overseas.
This latest deVere Group survey, carried out in September 2014, polled 416 Americans.