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Is Renouncing US Citizenship The Only Way Expats Can Fight FATCA?
Published: | 19 Sep at 6 PM |
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It’s official – more than 20 per cent of American expats are planning on giving up their US citizenship and quoting FATCA as the reason.
The disclosure came as a result of an expat survey by a major USA tax consultancy firm and reaffirms what every American expat believes – double taxation is a burden which needs to be cancelled outright. Citizenship renunciation is a hard decision to make, but complying with FATCA’s onerous laws is even harder and certainly more expensive in the long run. Most believe change is necessary, but the changes now being mooted don’t solve the problem.
During this year’s first quarter, just over a thousand US expats living overseas renounced their citizenship, with 250 saying the hated rule was the main motivation for their decisions. Under FATCA’s double taxation scheme, US expats living overseas are forced to report their foreign earnings and other non-USA generated income to the US taxman along with their gift tax, estate and income returns. Information about efforts to change the bill hasn’t been well-publicised, even although a US congressman introduced his Tax Fairness for Americans Abroad act in 2018. According to the survey, 74 per cent of expats weren’t aware of its existence.
Other key findings of the study included the fact that 71 per cent of expat respondents believe they shouldn’t have to pay US income tax on monies earned overseas, with 89 per cent convinced their representation by the US government is unfair, to put it mildly. Some seven per cent admitted they didn’t file a tax return during the last tax year, and the number one item on the vast majority of US expats’ wish lists is a total repeal of citizenship-based taxation, with 49 per cent citing the move as the best way the government can help expat Americans. Protests against the unfairness of double taxation are now being started, with the France-based Accidental Americans group now mounting a lawsuit based on FATCA’s discriminatory impact on US citizens living and working overseas.
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