• Switzerland's news in English
 
app_header_v3

US citizenship turns onerous for expats

Nina Larson/AFP · 11 Feb 2013, 12:39

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
Neuchâtel votes no to foreigners running for office
Photo: kuhnmi/Flickr

Neuchâtel voted on Sunday against an initiative that would have made it the first Swiss canton to allow foreigners stand in cantonal elections.

Swiss voters say no to higher pensions
Photo: AFP

Swiss voters on Sunday rejected a plan to increase pension payments by ten percent.

Italians enraged by Ticino foreign worker vote
File picture of Lega Nord leader Roberto Maroni. Photo: AFP

The leader of Italy's Lega Nord is plotting "adequate counter-measures".

EU warns Swiss over vote to curb cross-border workers
Swiss President Johann Schneider-Ammann (R) and EC President Jean-Claude Juncker met in Zurich on September 19th to talk about the implementation of Swiss immigration restrictions. Photo: AFP

The EU warned Switzerland on Monday over a vote by one of its cantons backing curbs on migrants, an issue being closely watched in London as a possible template for Brexit negotiations.

Some deodorants could cause breast cancer: Swiss study
Twelve thousand women participated in a race against breast cancer in Le Mans, France, October 2014. Photo: AFP

The study suggests a link between aluminium salts and breast cancer.

Ticino votes to favour local workers over foreigners
Airolo in the Gotthard Pass. Photo: Dmitry A. Mottl

Voters in Ticino on Sunday strongly backed an initiative giving preference to local workers over foreigners.

France demands 45,000 Swiss accounts in tax hunt
Photo: AFP

France is tracking down UBS account holders.

Swiss back new law to allow phone and email tapping
A security camera keeps watch over proceedings in Davos: Photo: Johannes Eisele/AFP

Swiss voters approved a new surveillance law on Sunday, in a victory for the government.

Swiss politician argues against hijab in ID photos
The official guidelines should what ID photos allow. Photo: FedPol

Should the Islamic headscarf be banned in photographs for official Swiss documents?

Swiss driverless bus trial suspended after crash
Photo: PostBus

The pioneering self-driving bus was involved in a minor collision with a van.

Sponsored Article
7 tips for learning Swiss French
Photo: AFP
National
Geneva airport bomb hoaxer faces 90,000-franc bill
Photo: Schaffhausen police
National
Mother leaves toddler son alone in car to go clubbing
Photo: Fabrice Coffrini/AFP
Swiss populist attacked by knife-wielding pensioner
Sponsored Article
Why Jordan is the ‘Different’ East
Photo: File
Politics
Bern argues over passports for 3rd generation foreigners
Photo: Broad Bean Media
Education
Muslim pupils must shake hands – ‘no ifs and buts’
Photo: AFP
Society
Swiss ‘slave children’ to finally get compensation
Photo: Jan Geerk/Swiss-image.ch
Lifestyle
Zurich named ‘greenest’ city on the planet
Photo: Swiss
National
Brawl over seats forces Swiss to abort flight
Photo: Daniel Stockhammer
Culture
Research shows typical Swiss chalets ‘not actually Swiss’
Photo: AFP
National
Switzerland to get nationwide disaster alert system
Photo: S3
National
Swiss space firm boss left badly injured in violent attack
Photo: ETH Zurich
Education
ETH Zurich crowned best uni in continental Europe – again
File photo: Martin Abegglen
National
Report: Swiss citizenship rules leave some stateless
Photo: Fabrice Coffrini/AFP
National
Fatal crash: pilot told to fly below safe altitude
Photo: Peter Linke
Business & Money
Elderly Italian on benefits stashed €1m in Swiss bank
Photo: Stuart Richards
Society
Court sides with chickens in dispute over noisy henhouse
Photo: SAC
Lifestyle
Hiking: 7 incredible Swiss Alpine Club cabins
Photo: David Abercrombie
National
Swiss politician arrested over illegal entry of migrants
Photo: Coiffure X
National
Chewbacca stolen in ‘terrorist attack’ on Swiss hair salon
Photo: AFP
National
Foreigners in Switzerland surpass 2 million mark
Photo: AFP
National
Expert predicts major quake for Switzerland by 2040
Photo: The Local
National
Geneva runs out of permits for non-EU workers
Photo:C Carlstead
National
Geneva advises teachers on religion in school
4,287
jobs available