More Americans Giving Up Citizenship As Tax Rules Bite

Tom Burroughes

8 August 2017

The number of US citizens giving up this status reached 1,759 in the second quarter of this year, the second-highest level ever, official data showed.

The numbers of taxpayers renouncing their US citizenship grew by over a third from the previous quarter. The current record quarter – the fourth quarter of 2016 – saw 2,365 US citizens renounce their passports or green cards. The total figure for the first half of 2017 has already exceeded the total for 2013 .

As has been noted before – expatriations by US citizens has grown in recent years amid a rising worry about the compliance costs that non-resident Americans face when they are abroad. The enactment in 2010 of the US Foreign Account Tax Compliance Act, or FATCA, has tightened the obligations on foreign financial firms to report on assets held by US citizens. This situation has prompted some such organizations to cease providing financial services, as in the case of HSBC and Deutsche Bank.

On a brighter note, however, there are a number of firms, such as London & Capital, Maseco and Schroders that cater to US expats. Also, bodies such as American Citizens Abroad have pushed to unblock access by Americans to financial services .

At the root of the issue is that unlike most nations, the US taxes citizens regardless of whether they live in the US or abroad, requiring them to file an annual return to the Internal Revenue Service even if they haven’t lived in the country since adulthood. In practice, double-taxation treaties and other provisions mean that the actual burden may not be large, but the administrative issues can still be vexatious.