• Switzerland's news in English
 
US citizenship turns onerous for expats
Photo: US Department of State

US citizenship turns onerous for expats

Published: 11 Feb 2013 12:39 GMT+01:00

"It was a pretty big decision and there was a bit of anxiety," said the 50-year-old photographer who served in the 1990-91 Gulf war and has been living in Switzerland since 1993.

But once he received his Swiss passport and handed back his US one last September, "it was like a load of weight off my shoulders."

Schmith is one of a growing number of American expats who are opting to give up their citizenship rather than deal with the increasing difficulties imposed on them by US tax authorities, observers say.

John, a 60-year-old business strategy specialist who asked that his last name not be used, told AFP he had decided to give up his US passport after losing sleep for years over the intricate tax filing requirements Washington places on all US citizens, regardless of where they live in the world and where they make their money.

When the United States recently began pushing through regulations aimed at fighting offshore tax evasion, the implications for him — a "squeaky-clean" law-abiding citizen — became too overwhelming, he said.
 
"I just got more and more anxious about my ability to protect myself and my family from the administrative overhead of the US government," said John, who has been based in Switzerland since 2002.

Six European countries, including Switzerland, have recently agreed to comply with the 2010 US Foreign Account Tax Compliance Act (FATCA), requiring banks to report all holdings by their US clients to the Internal Revenue Service.

"Offshore tax evasion costs the US jobs and billions of dollars each year, and it puts an unfair burden on the average American taxpayer to make up the difference," Senator Max Baucus, who chairs the Senate Finance Committee and sponsored the legislation, told the New York Times last year to explain why FATCA was needed.

Jackie Bugnion, a Geneva-based tax expert working for the American Citizens Abroad lobby group, however told AFP that while the aim in theory is to "go after the wealthy resident in the United States who is hiding money overseas," only a small minority of those affected fall into that category.

An estimated four to seven million Americans live outside the country, ranging from US military personnel, diplomats and others on temporary assignments, to so-called "accidental" Americans who happened to be born in the United States to foreign parents and dual citizens who may have lived most or all of their lives abroad.

According to observers, most of these people don't owe any taxes to the United States, but they still have to go through the process of filing complex IRS returns each year.

"Over the past 10 years, I have paid more to tax preparers than I have in tax," John said, insisting his decision to give up his US passport had nothing to do with the amount of tax he was being asked to pay, but rather the filing burden and fear of penalties if he messed up.

Banks are eliminating US clients

The United States is the only country in the world besides Eritrea that taxes based on citizenship rather than on residence or the source of revenue, Bugnion said.

This also means that anyone who happens to have a US passport falls under the new FATCA rules, regardless of their background or fortune.

Fearing the workload of ensuring compliance with FATCA and especially the consequences if they slip up, "banks have been actively eliminating American clients," Bugnion said, lamenting that Americans often "can no longer get mortgages, and are being told their bank don't want their business."

While this is happening all over the world, Americans are especially feeling the heat in Switzerland — the main target of a US campaign to track down institutions and individual bankers who help US clients open secret accounts overseas.

 "Switzerland is the canary in the coalmine on this issue," Bugnion said.
 
Switzerland's largest bank UBS, for instance sent out letters to all its American clients late last year telling them to prove compliance with US tax rules or to take their business elsewhere.

That letter came as a shock to many, Bugnion said, adding that she had been receiving desperate calls from people who had spent their entire careers abroad and had never realized before they were supposed to file US tax returns.

"Suddenly they realize their entire life's savings could be at risk," she said.

In addition to making it difficult for Americans to simply open bank accounts abroad, the US tax rules also trip up US citizens' attempts to do business in other countries, observers say.

John, for instance, said he had long wanted to go into business with a good Swiss friend, but "every time we got close to a deal, my citizenship became a huge stumbling block."

According to US law, any business anywhere in the world which is more than 10-percent owned or controlled by American citizens or interests must file its annual balance sheet to US tax authorities.

Bugnion said she had spoken with people who had been forced to shut down businesses, while John said he knew people who had lost their jobs because companies didn't want to put up with the hassle and cost of employing an American.

There are some signs that relief could be on the way.

A Senate Finance Committee aid told AFP that chairman Baucus was preparing proposals that might affect the taxation of US citizens abroad.

The senator, he said on condition of anonymity, "is committed to improving the US tax laws to ensure that US competitiveness is not hindered by unnecessarily burdensome tax rules."

In the meantime, however, "Normal people with normal incomes are (being) tremendously negatively affected by these regulations," John said, expressing bitterness that he had been forced to give up his nationality.

Schmith meanwhile insisted he didn't regret becoming Swiss, but said he would have preferred to also hold onto the passport of the country he once fought for.
   
"If it hadn't been for the US micromanaging, I would still be an American," he said.

Nina Larson/AFP (news@thelocal.ch)

Your comments about this article

2013-02-18 09:16:03 by SwissBob
""Offshore tax evasion costs the US jobs and billions of dollars each year, and it puts an unfair burden on the average American taxpayer to make up the difference,' Senator Max Baucus, who chairs the Senate Finance Committee and sponsored the legislation, told the New York Times last year to explain why FATCA was needed."

And yet the US refuses to help Brazil and other South American nations identify their citizens who are illegally hiding billions in Miami banks. The Cayman Islands may have 18,000 shell companies; but the state of Delaware alone has 750,000! Oh hypocrisy, thy name is USA.
2013-02-26 03:30:13 by Dr. Coe
The only other known historic culture to tax citizenship, based upon association, was Roman.

America follows suit as it offers up cakes and circuses to its citizens, all the while spending money it does not own, possess, nor legally direct claim to.

The counterpoint to this action is distinctly European.

Europe has damaged its own reputation here in the U.S. by serving little more than as a foreign snitch to the U.S. Treasury...a treasury that is wholly owned by a private banking concern and serves a federal corporation which is in no way attached nor legally in service to U.S. sovereigns constitutionally.

(SEE: The Act of 1871)(An Act To Provide A
Government for the District of Columbia)

(SEE: U.S. CODE - Title 28, Part 6, Chapter 176, Sub Chapter A, S3002, line 15).

It is all subsequent fiduciary acts following this high jacking of U.S. sovereignty which has caused untold misery to ensue upon we sovereigns, our European cousins, as well as upon vast regions of the world-at-large.

Switzerland should have stood strong against implied threats from a phony banking institution (Federal Reserve) and its false, corporate government... CORP U.S.

Instead, the Swiss caved to false pressure... basically insuring that a tremendous loss of banking revenue from otherwise honest, well-intentioned American men and women would in future times be lost to them.

Shame on America!

Shame (also) on Switzerland!!
Today's headlines
Ex-banker admits lying over French tax fraud
Pierre Condamin-Gerbier. Photo: AFP

Ex-banker admits lying over French tax fraud

A man who acknowledged lying when he served as a key witness in a major French tax fraud investigation was sentenced to a two-year suspended prison term in the Swiss canton of Ticino on Friday. READ  

Swiss spills beans about guarding the pope
Photo: David Geisser

Swiss spills beans about guarding the pope

Although better known today for their colourful uniforms than their centuries-old reputation as fearless warriors, the Swiss Guards remain a powerful symbol of the Vatican. The Local speaks to David Geisser, one of the latest recruits, about a career protecting popes.
 READ  

Massive write-downs soak Axpo in red ink
Photo: Axpo

Massive write-downs soak Axpo in red ink

Swiss utility company Axpo said on Friday that eroding wholesale prices for electricity have forced it to write down 1.5 billion francs on the value of its power plants and energy supply contracts. READ  

Banks vow negative rates won't be passed on
Photo: Yoshiko Kusano/Photopress

Banks vow negative rates won't be passed on

Major banks in Switzerland say they have no intention of charging small savers negative interest rates in the wake of the Swiss National Bank’s decision this week to charge such rates to financial institutions. READ  

Suspected stabber Nabilla freed from prison
Photo: AFP

Suspected stabber Nabilla freed from prison

Swiss model and French reality TV star Nabilla Benattia left a women’s prison in Versailles, France on Thursday on conditional release while facing charges of attempted murder after stabbing her boyfriend. READ  

Swiss school grad 'hero' among café siege victims
Photo: César Ritz Colleges/Facebook

Swiss school grad 'hero' among café siege victims

César Ritz Colleges, a Swiss hotel management school group, issued a tribute on its Facebook page to a former graduate who died while trying to end this week’s café hostage-taking incident in Sydney, Australia that left three people dead and five people injured. READ  

Forecast cuts 2015 Swiss economic growth
What, me worry? Swiss economy seen as continuing to defy trend in eurozone. Photo: Credit Suisse

Forecast cuts 2015 Swiss economic growth

The Swiss federal government's experts' group says Switzerland's economic prospects remain favourable in a "risky environment" although it cut its growth forecast for 2015. READ  

French businessman plans takeover of Orange

French businessman plans takeover of Orange

Apax Funds has announced it is selling Orange Switzerland, the country’s third largest mobile operator, to NJJ Capital, a holding company owned by French businessman Xavier Niel for 2.8 billion francs. READ  

Switzerland cracks top ten list for business
Zurich, Switzerland's biggest centre for business. Photo: Switzerland Tourism

Switzerland cracks top ten list for business

Switzerland ranks among the top ten best countries in the world to do business, according to Forbes magazine’s list for 2014. READ  

Central bank imposes negative interest rates
Photo: Michael Faes

Central bank imposes negative interest rates

With fresh turmoil in foreign exchange markets putting upward pressure on the franc, the Swiss National Bank announced on Thursday the introduction of negative interest rates. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Features
The Local's top ten snow sport alternatives to skiing in Switzerland
International
Swiss chocolate café at centre of hostage-taking drama Down Under
National
Why has The Local got a new logo?
Features
Exploring the 'most beautiful village' in French-speaking Switzerland
Business & Money
Italian thieves steal 260 tons of Swiss Lindt & Sprüngli chocolate
National
World's longest train tunnel — under the Swiss Alps — set to open in 2016
National
Switzerland's Christmas market season gets into full swing
National
Porn film on video screen spices up fare at Swiss McDonald's restaurant
National
Masturbation scene in Swiss TV ad for Media Markt draws complaints
National
Cantonal lawmakers end 'happy hours' tippling in Vaud pubs and bars
Politics
Former concert pianist Sommaruga elected as next Swiss president
Culture
Jailed German art forger's paintings go on sale at Bern gallery
Business & Money
Ikea founder Ingvar Kamprad's family listed as Switzerland's richest
Features
Long-time expats face dilemma: to be or not to be a Swiss citizen
National
Switzerland's voters massively reject strict immigration limits
Business & Money
Pieces of Napoleon's auctioned hair to be put in Geneva luxury watches
National
Activists petition federal government for ban on eating cats and dogs
National
Swiss meat firm faces scandal over alleged false labelling of products
Sport
Federer victory gives Switzerland its first Davis Cup tennis title
Business & Money
Italy's PM upset over Swiss mogul's acquittal in asbestos deaths
Business & Money
University of Zurich study finds 'banker's oath' could spur honesty
Sponsored Article
Exclusive offer: Try out home exchange
National
Swiss National Bank chief calls proposal to boost gold reserves 'fatal'
National
Mudslides kill four people in Ticino and neighbouring Italy
Culture
British X Factor star seeks internet support for Swiss Eurovision place
National
Court overturns ban by backing right for schoolgirl to wear scarf
National
Swiss ranking for English skills worsens among non-Anglo countries
Culture
Swiss model and French TV star Nabilla held for 'attempted murder'
Travel
Switzerland's Zermatt voted best ski resort in the Alps by skiers
Sport
VIDEO: FC Zurich claims crime after 'vicious' tackle hospitalizes player
Tech
Federal government announces new '.swiss' internet domain name
National
Zany emergency: Basel firefighters rescue ass stuck in manhole
Business & Money
American jury clears former UBS top executive of tax fraud
International
Switzerland ranks second to Norway in global 'prosperity' index
National
Financial regulator bans former Coop Bank CEO for three years
International
Switzerland slips in World Economic Forum's gender equality rankings
National
Job candidates unhappy with hiring process in Switzerland
National
Glacier 3000 opens new foot bridge spanning two mountains in Vaud
National
Swiss seek special Unesco heritage listing for yodelling and watchmaking
International
Switzerland regarded as best place in world for expats: global survey
National
Red faces at Migros over Hitler and Mussolini coffee cream pots
National
Quarter of workers in Switzerland 'stressed out': new survey
Travel
Lonely Planet ranks Zermatt among top places to visit in 2015
Features
Eritrean asylum seekers find refuge in Swiss monastery town
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

2,057
jobs available
The Local Spain is hiring!
The Local is seeking a new editor for our site in Spain to join our growing team of internationally-minded, driven, ambitious and clued-up journalists.
Details and how to apply