The historic numbers of Americans giving up their U.S. citizenship due to onerous and costly new U.S. tax laws are likely to subside over the coming years, forecasts the boss of one of the world’s largest independent financial advisory organizations.
The comments from Nigel Green, founder and chief executive of deVere Group, come as the Treasury Department reveals this week that a record number of people relinquished their U.S. citizenship in 2014.
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Last year’s figure, according to these official statistics, had jumped by 14 per cent on the 2013 figure – which was also a record year.
IRS given unprecedented access to U.S. citizens’ foreign bank accounts
The annual total reached 3,415 in 2014, from 3,000 in 2013, according to Federal Register numbers. The five highest totals have been documented since Congress passed a law in 2010 giving the Internal Revenue Service (IRS) unprecedented access to U.S. citizens’ foreign bank accounts.
Mr Green, a well-known and vocal critic of the highly controversial Foreign Account Tax Compliance Act (FATCA), affirms: “Treasury Department data shows that a steadily growing number of individuals have been giving up their U.S. citizenship over the last few years.
“It can be reasonably assumed that this trend is in direct response to complying with the onerous, expensive and privacy-infringing FATCA, which finally came into effect on July 1 last year.”
Relinquishing U.S. citizenship due to the impact of FATCA
Indeed, two weeks after FATCA’s introduction last July, deVere Group released findings of a poll that concluded that a staggering 79 per cent of respondents (who were namely deVere’s American expatriate clients) answered affirmatively when asked ‘Would you consider voluntarily relinquishing your U.S. citizenship due to the impact of FATCA?’
However, the deVere Group CEO believes this trend will not continue at its current rate.
He says: “The pace of U.S. citizenship relinquishments is likely to slow, and over time the historic numbers of people severing ties with the U.S. will probably subside.
“This is because more and more people are becoming aware of the various compliant ways they can mitigate the negative effects of FATCA, without having to take the drastic and often emotional step of giving up their American citizenship.
“In addition, as we’re now living the reality of the FATCA era, the financial services industry itself is providing an increasing number of FATCA solutions.”
One such FATCA solution, says deVere Group, is for qualifying U.S. taxpayers with assets abroad to create a tax-efficient, supplementary overseas pension contract.
Mr Green concludes: “For most Americans the very idea of giving up their citizenship because of the hassle and expense of complying with a controversial new tax law is unpalatable, to say the least.
“With this in mind, it should always be viewed as a ‘last resort’ option – and, moving forward, this will be the case for more and more people, thanks to growing awareness of the options available to them.”
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About deVere Group
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 more than 70 offices across the world, over 80,000 clients and $10bn under advisement.