We previously posted US Expatriation Increase At a Record Pace in 2014! where we discussed that the number of Americans renouncing U.S. citizenship stayed near an all-time high in the first half of the year before rules that make it harder to hide assets from tax authorities came into force (FATCA – Effective Date July 1, 2014).
A record 3,415 individuals renounced their U.S. citizenship or long-term residency in 2014, according to a list released by the Treasury Department on Tuesday. Each quarter the U.S. Treasury publishes the names of the Americans who officially expatriated during that period.
3,415 Americans Renounced their Citizenship in 2014. Eclipsing the Previous All-Time High Set in 2013. This 3,415 people expatriating into 2014 is a 114% increase over the 2,999 people who expatriated in 2013. The 2013amount of 2,999 represented a 221% increase over the 932 total in 2012 and “shatters” the previous record of 1,781 set in 2011.
The number of Americans renouncing U.S. citizenship increased in 2014 after rules that make it harder to hide assets from tax authorities came into force.
Tougher asset-disclosure rules that started July 1 under the Foreign Account Tax Compliance Act, or FATCA, prompted more of the estimated 6 million Americans living overseas to give up their passports. The appeal of U.S. citizenship for expatriates faded further as more than 100 Swiss banks began to turn over data on American clients to avoid prosecution for helping tax evaders.
The U.S., the only Organization for Economic Cooperation and Development nation that taxes citizens wherever they reside, stepped up the search for tax dodgers after UBS AG paid a $780 million penalty in 2009 and handed over data on about 4,700 accounts. Shunned by Swiss and German banks and with FATCA starting, more than 9,000 Americans living overseas gave up their passports over the past five years.
FATCA requires U.S. financial institutions to impose a 30 percent withholding tax on payments made to foreign banks that don’t agree to identify and provide information on U.S. account holders. It allows the U.S. to scoop up data from more than 77,000 institutions and 80 governments about its citizens’ overseas financial activities.
Furthermore, according to a new survey by deVere Group, 73% of Americans living abroad consider giving up their US citizenship in the wake of FATCA.
There are an estimated 7.6 million Americans living overseas. At 73%, that’s approximately 5,548,000 Americans considering to hand back their US passports.
If all those considering renouncing followed through, it would be the biggest spike ever in renunciations. Already, Federal Register data reveals renunciations spiked by 39% shortly after FATCA-the Foreign Account Tax Compliance Act-came into effect. FATCA is the culprit, says the survey, which is based on 400 expatriates.
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Original Post By: Ronald Marini