Most Expat Americans Say US Tax Net Hurts Them Professionally VS The Locals - Study

Tom Burroughes Group Editor January 12, 2016

Most Expat Americans Say US Tax Net Hurts Them Professionally VS The Locals - Study

A survey of expat Americans shows widespread concern about how they suffer professionally versus local citizens because of extra-territorial US tax rules.

A survey of US persons living abroad finds most respondents (78 per cent) say complying with US tax laws is a drag on their professional lives compared with citizens in countries where they reside, and expats also complain that the Internal Revenue Service falls short in informing them about tax laws.

The chore of dealing with US taxes, which are levied on a worldwide basis, rather than based on place of residence as is the case with most countries, puts expats at a disadvantage professionally, the survey says.

The report comes out at a time when laws such as the Foreign Account Tax Compliance Act, or FATCA, continues to affect expats’ access to financial services – a source of regular complaint as noted by this news service and other media since FATCA was signed into law in 2010. A number of major banks, such as Deutsche Bank and HSBC, have shut their doors to US expats. Some firms, such as Royal Bank of Canada and London-headquartered London & Capital and Maseco, however, have made a virtue out of catering to expat US persons. Recent years have also seen a rise in the number of US national seeking to give up their nationality to get out of the US’s worldwide tax net.

The study of expats’ views was produced by Americans Abroad Global Foundation along with the University of Nevada in Reno. The survey was conducted between June 16 and August 15, taking in 684 responses from adults ages 18 and older, living in more than 60 countries. Data on where expats lived showed Canada, the UK and Switzerland were in the top three for places of residence.

Among the findings was the result that 64 per cent of respondents voted in the 2012 Presidential Elections, which is significantly higher than the turnout rate of the average American voting in the US; 86 per cent of respondents said FATCA needs to be reworked to open access to financial services for Americans abroad, including the creation of “Same Country exemption” provision - no reporting requirement for accounts held in the same country of residence. 

“The consensus from this sample of Americans abroad feels that the US government does not recognize how the FATCA legislation is negatively impacting them, limiting their ability to maintain legitimate banking and financial relationships and, that in many respects, simply does not care how the legislation is affecting a community of law-abiding citizens who have chosen to live overseas for work or personal reasons,” Sonja Pippin, associate professor in accounting at the university, said.

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