• Switzerland's news in English
 

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
 HSBC boss backs Swiss account as profits slip
HSBC chief executive Stuart Gulliver. Photo: AFP

HSBC boss backs Swiss account as profits slip

HSBC's boss on Monday fended off criticism about receiving his bonuses through a Swiss bank account held by a Panamanian-registered company, as the banking giant reported a 15-percent drop in annual net profits. READ  

Fire destroys Valais discotheque and bar
Photo: Valais cantonal police

Fire destroys Valais discotheque and bar

An investigation is under way into the cause of a fire on Sunday night that destroyed a discotheque, bar and woodworking shop in Collombey-Muraz, a municipality of around 8,000 people in the canton of Valais. READ  

Federer caught up in bitter cricket rivalry
Federer holding up India cricket shirt. Photo: Roger Federer/Facebook

Federer caught up in bitter cricket rivalry

Swiss tennis star Roger Federer has apologized for getting caught up in the bitter rivalry between Indian and Pakistani cricket fans after he was pictured admiring the blue shirt of World Cup champions India in a marketing photo-shoot. READ  

HSBC CEO 'kept millions in Swiss account'
Photo: AFP

HSBC CEO 'kept millions in Swiss account'

HSBC chief executive Stuart Gulliver, who vowed to reform the scandal-hit bank, kept millions of dollars in a Swiss account, the Guardian newspaper reported on Sunday. READ  

Same-sex marriage 'backed by most Swiss'
Photo: AFP

Same-sex marriage 'backed by most Swiss'

A majority of Swiss back gay and lesbian marriage, according to the results of surveys published on Sunday by two weeklies. READ  

Breakdowns cancel flights at Geneva airport
Photo: Geneva airport

Breakdowns cancel flights at Geneva airport

The Geneva airport struggled to return to normal operations on Sunday, a day after equipment failures, two fires and snow forced the cancellation of 35 flights and the rerouting of 22 others. READ  

Avalanche kills four skiers in Valais Alps
The avalanche buried five people. Photo: Fabrice Coffrini/AFP

Avalanche kills four skiers in Valais Alps

The death toll from an avalanche that swept away a group of Italian skiers in the Swiss Alps has risen to four after a man died from his injuries, police said on Sunday. READ  

Burkhalter: anti-terror measures a 'priority'
Burkhalter and John Kerry at a meeting last year. Photo: Sebastien Bozon/AFP

Burkhalter: anti-terror measures a 'priority'

Combating violent extremism is a “priority” in Switzerland, Swiss foreign minister and former president Didier Burkhalter has said, telling a counter-terrorism summit in Washington this week that Switzerland has measures in place to prevent the radicalization of youth and the financing of terrorism. READ  

Lausanne man gets 14 years for strangling wife
The trial took place in Yverdon. Photo: Sjaak Kempe

Lausanne man gets 14 years for strangling wife

A Swiss court on Friday sentenced a civil servant from Assens near Lausanne in the canton of Vaud to 14 years in prison for strangling his wife to death at their home and burying her body in a nearby forest. READ  

Updated: several injured in train collision
The accident happened at 6.45am on Friday. Photo: Michael Buholzer/AFP

Updated: several injured in train collision

Two trains slammed into each other in the Swiss town of Rafz north of Zurich early on Friday, leaving passengers injured and train carriages upturned, police and media said. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
National
Army official calls for Swiss women to undergo military training
National
New Swiss health campaign combats smoking as 'norm' for too many
National
Swiss federal government unveils EU immigration quotas bill
Sponsored Article
Avoid the costs of wild Swiss currency swings
Business & Money
HSBC Swiss private bank revelations 'tip of iceberg': whistleblower
Business & Money
FATCA: 'The age of financial privacy is over'
National
Phil Collins' paralyzed ex-wife files lawsuit after Swiss complications
Culture
Gauguin on display in Basel touted as 'most costly painting ever'
Business & Money
Swiss Leaks: HSBC Swiss private bank 'catered to terrorists and crooks'
International
What's keeping British expats in Europe from voting in UK elections?
Business & Money
Trade balance bulges as Switzerland smashes record for exports in 2015
National
Swiss town's ploy against workers living in Italy 'not racist'
National
Architects propose skyscrapers for new Geneva 'urban centre'
Culture
Renowned Israeli conductor dies during symphony in Lucerne
International
Population of Swiss citizens abroad continues to expand
National
Vaud property salesman jailed over costly gambling addiction
National
Right-wing group seeks citizens' vote for national face veil ban
Health
Swiss doctors 'worst' for leaving foreign objects in patients
Features
Anglophone expats in Switzerland mine creativity to earn crust
National
Number of 'immigrants' swells to third of Swiss population: report
International
Pricey Switzerland tops latest global cost of living study
National
Swiss travel agents and retailers cut prices after franc surge
Technology
Solar Impulse team unveils round-the-world route for its plane
Business & Money
Swiss central bank's shock move to let franc rise sparks debate
National
Markets panic as Swiss National Bank scraps euro rate cap
National
VIDEO: Swiss soldiers publish pictures of antics on internet
National
A portrait of modern Switzerland in ten stats
National
Europe in statistics - from Spain to Sweden
Features
Geneva-based expat pens seismic novel about Haitian homeland
Features
Tons of explosives finally removed from hundreds of Swiss sites
International
'Don't succumb to fear': Swiss President Sommaruga on terrorism
Sport
Federer claims historic 1,000th win at Brisbane tennis tournament
National
Swiss newspapers condemn deadly Charlie Hebdo terror attack
Business & Money
Hackers steal client information from Geneva cantonal bank
National
Charlie Hebdo terror attack in Paris sparks Swiss rallies
National
Pop star Madonna leaves her mark during Swiss mountain holiday
National
Disassembled Solar Impulse heads to Emirates in jumbo jet
National
US ambassador in Bern sparks flap over Swiss ski lift line 'chaos'
National
New President Sommaruga lauds 'bold' Swiss democracy
National
Hopes fade of finding missing Scottish researcher still alive
National
Scientists in Lausanne and Belgium step up search for alien life
National
Nude 'selfie' mayor heads Switzerland's top ten scandal list
Features
The Local's top ten snow sport alternatives to skiing in Switzerland
Culture
Suspected stabber Nabilla given conditional release from detention
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

1,483
jobs available