Americans Give Up Passports as Asset-Disclosure Rules Start
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.
Some 1,577 people gave up their nationality at U.S. embassies in the six months through June, according to Federal Register data published yesterday. While that’s a 13 percent decline from the year-earlier period, it’s only the second time there’s been a reading of more than 1,500, according to Bloomberg News calculations based on records starting in 1998.
Tougher asset-disclosure rules effective as of July 1 under the Foreign Account Tax Compliance Act, or Fatca, prompted 576 of the estimated 6 million Americans living overseas to give up their passports in the second quarter. The appeal of U.S. citizenship for expatriates faded as more than 100 Swiss banks turn over data on American clients to avoid prosecution for helping tax evaders.
“Fatca and the Swiss bank disclosure program has intensified the search for U.S. nationals beyond all measure,” said Matthew Ledvina, a U.S. tax lawyer at Anaford AG in Zurich. “It’s shocking the levels of due diligence they are going through to ensure they have cleaned house.”
Photographer: Victor J. Blue/Bloomberg
The stamps in a U.S. passport are displayed for a photograph in New York.
Swiss banks are trawling through records going back to the 1990s to find clients with U.S. addresses and telephone numbers, and those who received schooling in the country, Ledvina said. Those identified as U.S. persons are either being asked to leave or placed in special U.S.-only sections of the institution, he said.
Imposing Tax
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 (UBSN) 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 looming, almost 9,000 Americans living overseas gave up their passports over the past five years.
