Tax Changes Drive Surge In Americans Renouncing Citizenship

Tyler Durden's picture

We are well aware of the infamous French dramatics as the wealthy flee the country over the changing tax structure but few know that Americans renouncing citizenship has tripled in the last few years. As The Telegraph reports, many decide to give up citizenship after tiring of the lengthy US tax return process. Since US tax laws changed in 2008 (all American citizens are required to file a tax return on their world-wide income - even if they have not visited the US for decades), the number of 'renunciations' has risen from 231 per year to 1,781. The process of immigration can be costly (due to the actual tax and legal preparation) but "actually giving up your citizenship is dead easy - once you have an appointment with a consular official, it takes a matter of minutes." One London-based lawyer (where it appears a lot of Americans are immigrating - the 2011 census found 177,185 people living in England and Wales were born in the US) adds that the "US Embassy in London has responded to that demand by streamlining the process."

 

Via The Telegraph,

London-based American lawyers, who specialize in tax and immigration, report a threefold increase over the last five years in the number of American citizens who are giving up their citizenship - a process known as “renunciation”.

 

Across the world 1,781 Americans renounced their citizenship in 2011 compared with just 231 in 2008, when US tax laws changed, although it remains unknown how many are adopting British rather than any other nationality.

 

Many decide to give up their American citizenship after tiring of the lengthy US tax return process, which requires them to pay tax on their total income regardless of where they live.

 

“There’s no question that the number of people renouncing their US citizenship is increasing,” said Diane Gelon, a US tax and immigration lawyer based in London.

 

...

 

The process can be costly. Applicants must complete five years’ of US tax returns, which can cost £1,000 a year if professional help is obtained, plus another £2,500 for legal assistance with the immigration process, excluding VAT.

 

Even if a US citizen earns all their income in Britain they are liable for tax in their home country which can lead to unusual tax situations arising, said Ms Gelon.

 

For example, US citizens are expected to pay capital gains tax to the US government if they sell a property in Britain which is their main residence, even though a similar tax is not imposed by the British Inland Revenue.

 

The US rules make concessions for tax paid overseas but there is still a risk that their citizens will be hit with a large tax bill, she added.

 

“Actually giving up your citizenship is dead easy - once you have an appointment with a consular official it takes a matter of minutes.

 

...

 

“It can be an emotional thing, to give up one’s citizenship.

 

...

 

The US Embassy in London has responded to that demand - and quite a long queue for renunciation appointments - by streamlining the process.

 

...

 

The 2011 census found 177,185 people living in England and Wales were born in the US.

 

All American citizens are required to file a tax return on their world-wide income. The rule applies even if they have not visited the US for decades.

 

The US Internal Revenue Service is likely to discover tax returns have been missed in a number of different scenarios.

 

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Tinky's picture

Typo – title should read "Renouncing"

true brain's picture

Going from US citizen to British citizen is similar to going from level 7 of hell to level 8 of hell; only the most discerning can tell the difference.

JustObserving's picture

You get the privilege of curtsying to the queen and supporting the royal moochers for life.  And horsemeat in your lasagna. But you avoid Piers Morgan who has been exported to America.

ThirdWorldDude's picture

Terrible weather, terrible food and most of the time the scenery is so exotic it looks just like you're in Pakistan... What's not to like?

 

[Just go Galt, location is irrelevant!]

AustriAnnie's picture

[Just go Galt, location is irrelevant!]

+1

One can reduce a tax burden a lot more through movement within the U.S., and by reducing one's dependence on the system as much as possible.  Live outside of city limits in many cases reduces your property tax burden.  Growing food, barter, buying used tools or goods from garage sales.  Foregoing spending on things you never needed.  Many ways to reduce sales tax burden by not setting foot in retail store in the first place.  (So many focus on income taxes when there are other taxes that can be avoided as well).

You have to be in the top .1% for renouncing citizenship to really pay off.  And the risks are high, being a foreigner with money to steal, at a time when nations are looking for wealth to steal from its subjects, and at a time when nationalist attitudes are growing.  Wouldn't want to be a foreigner on the wrong side of a border when wars start breaking out.

Texas Ginslinger's picture

Dead easy..??

Sure, if you have no assets;

"The Heroes act tightens the expatriation rules. U.S. citizens and long-term U.S. residents are subject to tax on their worldwide income. Taxpayers can avoid taxes by renouncing their U.S. citizenship or terminating their residence. The Act tightens the expatriation rules to ensure that certain high net-worth taxpayers can't renounce their U.S. citizenship or terminate their U.S. residency in order to avoid U.S. taxes. Under this provision, high net-worth individuals are treated as if they sold all of their property for its fair market value on the day before they expatriate or terminate their residency. Gain is recognized to the extent that the aggregate gain recognized exceeds $600,000 (which will be adjusted for cost of living in the future). The provision, which applies for those who relinquish U.S. citizenship or terminate their U.S. residency on or after the enactment date, is estimated to raise $411 million over 10 years. "

http://blog.myirstaxrelief.com/2008/06/heroes-earnings-assistance-and.html

 

 

 

krispkritter's picture

I'm thinking of renouncing my 'citizenship' and then just staying in the country 'illegally' like millions of others.  I'll OD on the spray on tan, take some Spanish courses, dye my hair black, etc. If I ever have the need, I can take advantage of all the 'freebies' like healthcare, EBT, etc., etc., and if I do have to pay taxes, pay it into a 'dead' SS account.  I'll never get deported, never worry about being audited, and just say 'No habla' if every questioned by the 3-letter cartels...Andele!

akak's picture

While we're all talking about renouncing citizenship here, I wish we could convince AnAnonymystic to renounce his self-created "US 'american' Citizenism" already.

krispkritter's picture

Amen Ak, I have enough problems with the neighbors dogs shitting on the side of my driveway...

akak's picture

At least your dog is the one doing the shitting .... not the thing being shat out!

philipat's picture

"Going from US citizen to British citizen is similar to going from level 7 of hell to level 8 of hell; only the most discerning can tell the difference."

Not really. Part of the problem is that The US alone taxes its citizens even if they are non-resident, so making no demands upon the services those taxes pay. For all other major Nations, including The UK, it is possible to become "Non-resident" for the purposes of taxation, a process which typically takes 1-2 years.

And whilst the process of surrendering US Nationality may be easy, it can also be costly. I understand that upon surrendering US citizenship, the "Exit Tax" levied is extremely onerous. The IRS firstly assesses the equivalent of a Capital Gains Tax on all assets as if they had been sold at the time of surrendering Nationality. Then, it also assesses an Estate Tax on the balance, treating the surrender of Nationality the same as "Death".

batz's picture

 

 

Just in case you are thinking of renouncing and returning illegally, brush up on DHS immigration checkpoint refusals here. 

From reddit.com/r/privacy these are Americans being stopped 20-50mi from the border by random DHS checkpoints:

http://www.youtube.com/watch?v=u4Ku17CqdZg&feature=player_embedded

 

W74's picture

I have no problem with horsemeat as long as I know about it, but the demographic shifts and economic mooching (they correlate) are troubling signs.

Freddie's picture

Obummer's Amerika is ***cked-ed. It is done - stick a fork in it.

If Americans renounced then there are better countries in Europe than the UK.  I feel sorry for good Americans but the retards love being brainwashed and contrlled by TV and Hollywood.

Crusader79's picture

If only we could return to those halcyon days of 2008 when American rivers were running with chocolate.

Freddie's picture

It was unicorns and gumdrops compared to this shit.

CH1's picture

Going from US citizen to British citizen is similar to going from level 7 of hell to level 8 of hell

Not really. The UK does not claim a cut of world-wide income.

So, if you renounce US ownership, and structure your affairs sensibly, you can avoid a LOT of tax-theft.

ziggy59's picture

Not yet.. Wind is changing globally... The elite know they are phucked unless they screw the peons now, again, for the umpteenth time

sessinpo's picture

The UK as is most other nations, taxes overseas income at their rates. Most nations have a double taxation exclusion. So if you give up your US citizen ship and get taxed in the US for income made in the US, then your UK tax rate would be reduced. That is SOP for most countries.

Cull Morgan's picture

You're dead wrong on this one. Almost no other countries claim a right to tax their citizens' foreign income. From the top of my head, only North Korea and Eritrea join the US in this exclusive club.

laomei's picture

Not even North Korea does that.

Tompooz's picture

New Zealand?? Taxing non-resident Kiwi's?  Not to my knowledge. It would be extremely counter-productive for a country that wants to attract qualified immigrants.

 

The Philippines, yes. That country has copied its former colonial master.

newengland's picture

Instead, North Korea starves its people, and China makes its people into $ a day wage slaves for iPhone.

formadesika3's picture

This is true as a rule. But here's what's really important. No countries other than the U.S. have the military and economic means to enforce their claims on their citizens' foreign income. However, this could change if an international agreement is put in place. It goes without saying the U.S. would have to be part of such a compact for it to be effective.

I expect this to happen if/when things get bad enough. 

newengland's picture

U.S. citizens abroad only pay tax to the U.S if they exceed a certain amount which puts them in the bracket of...politicians.

Why do you think that tax wise guy politicos and their lobbyists decide tax bands at home and abroad? In order to evade it.

laomei's picture

Entirely untrue.  As a permanent resident I can easily freelance all I want here and social insurance it entirely optional and can be bought in at whatever level I feel like, or not at all.  Reporting any of this however, incurs FICA taxes as well as self-employment taxes.  US Person employer = FICA, regardless of where in the world.  Unless the US signed a treaty waiving it, and most countries have no such treaty.  Unearned income of any kind have no "certain amount" for exemption either, regardless if they are tax free or not.  Pure double taxation.  The only possible way to reduce the taxes is to claim foreign tax credits, however that removes the ability to claim the Foreign earned income tax.  All other tax credits are reliant on residing within the US, and as such are unable to be claimed.... yet, they seem to believe that we need to pay for some reason.  Furthermore, there are already efforts being made to remove the FEIE entirely, claiming it is a "loophole".

 

The best part of it, is that the exempt amount is linked to the USD, which means as the us is playing the "cheap dollar" policy in their currency manipulation, it impacts expats rather harshly, as suddenly, they are deemed to be earning more, regardless of that having any basis in reality.  In quite a few countries with high taxes and social safety nets, that FEIE is acutally quite pathetic.  And just to make it ever so much hilarious, if you dare to earn $100k a year in a foreign country (lower than the total FEIE amount by the way) and renounce, you are automatically considered to be renouncing for "tax purposes" and then you're just fucked.  No appeals process either.  There's your reward for even bothering to be honest about anything.  No refund on FICA contributions either by the way.  Oh and if you happen to have assets, they want an exit tax on those as well.

 

Not even going to get into the hilarious FATCA crap which is demanding that all foreign banks report everything they have on US Persons to the IRS and spend hilarious amounts of money on US-licensed systems to do it.  It's only causing banks to dump all the US Persons they have as customers and making it increasingly difficult for expats to live a normal life.  Of course, US-HQ'd banks abroad are exempt from this requirement, as apparently they gleefully violate all secrecy laws in the countries they are established in and throw everything to the USG to use as they desire.

 

You really do have an absolutely disgusting system and it's abhorant that anyone pays any taxes to support this vile behavior.  Not to mention the acts of state-terrorism being carried out which only make your life ever more difficult.  Yep, great things to pay taxes for.

Real Estate Geek's picture

  The UK does not claim a cut of world-wide income.

Neither does the US . . . but of course that only applies to corporation-people, not people-people. 

Maybe us people-people should hire one of those lobbyist guys.

joego1's picture

I think when the SHTF the governments will have problems tracking/taxing people. They will be more concerned about saving their asses from the hoards. Come back when it's over and tell them you have been lost in a canoe accident for 5 years.

MachineMan's picture

Why move to Britain, Is there Tax System any better? 

Freedumb's picture

I would say its better. No citizenship basis taxation (so you won't generally be taxed on ordinary income earned in a country outside of the UK while resident outside of the UK). Only the US continues its policy of citizenship basis taxation, apparently on the absurd logic that because the US is such a world power, Americans will continue to use US government services regardless of where they reside (*cough*bullshit*hmrmmm).

Also UK citizenship gets you streamlined access to work/reside in a whole assortment of tax havens aka HK, Caymans, BVI, Bermuda, etc. Plus EU access. And banks are increasingly trying to get rid of any US depositors/account holders because by 2014, when you have US citizen / US "Person" customers, and you screw up some element of complying with FATCA (Foreign Account Tax Compliance Act, straight out of Orwell's worst nightmares), your bank is going to be subject to insane penalties.

EmileLargo's picture

Agree 100 percent. I am British and happily living in a tax haven and HMRC does not bother me. How long this will continue, however, is an open question. 

Incidentally, the French are thinking of adapting the American system. 

toady's picture

I remember all those 60' & 70'a British rockers spending a year out-of-country after a platinum album dropped

PhilB's picture

Where did you hear such nonsense? Neither France nor any other country is moving towards a citizenship based taxation system like the US.

akak's picture

 

And banks are increasingly trying to get rid of any US depositors/account holders because by 2014, when you have US citizen / US "Person" customers, and you screw up some element of complying with FATCA (Foreign Account Tax Compliance Act, straight out of Orwell's worst nightmares), your bank is going to be subject to insane penalties.

 

I have been reading about this repeatedly, and yet I still have to wonder: when did US laws become applicable worldwide?

CH1's picture

when did US laws become applicable worldwide?

When dollar hedgemony allowed them to become the greatest economic bully of all time.

A Lunatic's picture

Advancements in technology helped a bunch too..........

disabledvet's picture

we don't seem to be acting the "Warsaw Pact" role well. sure...the results appear to be the same...but this still doesn't have the feel of "Budapest, 1956." Or does it? Anywho my question is "since when did Federal Constitutional interpretation or lack there of triumph US State law?" http://en.wikipedia.org/wiki/Nullification_(U.S._Constitution) i mean if you have to say "all we need is to obviate the need for a Judicial Branch and everything will be fine" then aren't we all in a world of hurt? "WHO will extinguish those debts" comes to mind "when the market fails to." http://en.wikipedia.org/wiki/Delaware_Court_of_Chancery
hmmmm. interesting. "hears cases around title of lands etc." funny, i don't recall this court laying claim to any "titling crisis" based on the "robo signing scandal." yet clearly they have both the expertise and the jurisdiction. "As with the markets we won't bother with the clearing of the legal matters either"? really? "under what...or WHO'S authority" i would ask. is there some "national security directive" the world needs to made aware of? something that says "the existence of contracts themselves is to be determined at a later date"? or are we all operating under ye olde "they have my property and i want it back now" standard? sure "the Judiciary Branch is laughably small in America." But one could argue "that's because people's rights are/used to be enforced/matter." In the absence of any legal basis for....stealing for lack of a better word...aren't we simply opening the Pandora's Box of "all those other authorities who claim that right" as well? i mean "what do we steal once we laid claim and taken everything" comes to mind. http://en.wikipedia.org/wiki/Alexander_Macomb_(merchant) "here's a guy who owned 4 million acres of land...but died unable to regain his fortune cuz he couldn't sell his land fast enough." 4 cents an acre doesn't sound all that bad. i'll take ten! hmm. go figure. "what do we want! a trillion dollars! when do we want it? now!" doesn't ring a bell in ye olde Vietnam war protest years. "they got it though" didn't they...

W74's picture

I have no idea how or why banks that have hundreds of years of reputation built around secrecy, why they would suddenly report to the US.  What sort of blackmail was strong enough to get them to do that en masse?

CH1's picture

What sort of blackmail was strong enough to get them to do that en masse?

No ratting out customers and you are cut off from ALL US banks - through which are processed ALL dollars.

chubbar's picture

Actually I believe the problem is that many foreign banks have satellite banks in the U.S. If even one bank is located on U.S. soil then the whole banking system of that company comes under the banking laws of the U.S. and thus can be fined.

Kirk2NCC1701's picture

Correct.  That's why, for example, HSBC has eliminated virtually all its US retail banking (branches) and caters almost exclusively to large commercial/business clients.

Rustysilver's picture

Check with Swiss / UBS bankers; they will tell you why.

OpenThePodBayDoorHAL's picture

Thanks for asking the most obvious question. When US tax authorities started insisting foreign banks report the activity of US citizens. When the State Dept started pressuring smaller countries that were passing laws that shut out Monsanto. When New Zealand allowed the FBI on their soil to arrest the Mega-upload guy. When the US pressured the Swiss banks to give up their customer names. Now they have a "free trade" deal The Transpacific Partnership (currently being negotiated in secret)  they want to sell to Asia that requires member nations to provide emails and phone calls of citizens to a central authority controlled by the US; and gives the trade authority the power over nation's minimum wage and workplace laws among other things.

Ecuador seems to be one country that is at least trying to resist. I think the Chinese via Hong Kong will continue to resist on the bank secrecy stuff.

DosZap's picture

I have been reading about this repeatedly, and yet I still have to wonder: when did US laws become applicable worldwide?

When it comes to Banking, the SPIDER is on total control.

But like you, how does it really have the authority?, FEAR?,of what sanctions might do to your country.

Tompooz's picture

"when did US laws become applicable worldwide?"

 

Akak, you can make your laws applicable worldwide, by ramming treaties that contain your regulations down other countries' throats.

curly's picture

Still some pleasant countryside left?

Maybe not:  http://www.thedailymash.co.uk/news/society/anywhere-nice-absolutely-teem...

Greenwich, CT on the wold

 

Tijuana Donkey Show's picture

I'm moving there for the food, Britian is known for it's fine dining culture. 

Joseph Jones's picture

You mean, like, corn in their tuna sandwhiches? 

We who know better presume you omitted the obligatory "/sarc off" signature. 

Global Hunter's picture

How long until they renounce those who renounce their citizenship as traitors and make it illegal?