The deVere Group recently conducted a survey of 414 American expatriate clients, and 79% of the group said they had ‘actively considered’, ‘are thinking about,’ or ‘have explored the options of’ renouncing their US passport due to the implications of the Foreign Account Tax Compliance Act (FATCA), which came into effect on July 1. This number is up by 11% over the same poll carried out last November, in which 68% answered in the affirmative. While official figures from the Treasury Department show passport relinquishments up 220% in 2013, compared with the previous year.
This phenomenon highlights the scope of FATCA’s adverse effects on US citizens resident overseas. Some of FATCA’s adverse effects on expatriate’s include not being able to open bank accounts in their countries of residence, having existing bank accounts closed by banks, the expense and red-tape involved with complying with FATCA, and being placed under suspicion by the IRS absent evidence of wrongdoing or taxes owing. Therefore, U.S citizens resident abroad should explore all available options to mitigate the effects of FATCA with the assistance of an independent financial advisor with cross-border expertise before undertaking renunciation of citizenship and incurring exit taxes.
See Nigel Green, “Four out of Five American expats thinking of giving up passport due to FATCA,” devere-group.com (July 15, 2014).
Posted by Chuba Abaelu,
Associate Editor, Wealth Strategies Journal