Are You Ready for the Foreign Account Tax Compliance Act (FATCA)?Jul 12 • Categorized as Citizenship & Residency,Offshore Banking
by Michael Davis, Banker Trust
How to minimize the impact of the Foreign Account Tax Compliance Act.
The Foreign Account Tax Compliance Act (FATCA) will require banks either to give up details of their US clients or to withhold 30 percent on all receipts from the US. This is driving many Americans with dual citizenship to give up their US Passports in record numbers. 3,805 United States citizens renounced their citizenship last year in 2011.
Immigration officials are projecting that as many as 8,000 United States nationals in 2012 will choose that the United States Government is dipping too deeply into their pockets to retain their status as US citizens.
In addition, as taxes continue to rise in the United States, the upcoming expiration of the Bush Administration tax cuts and a proposed 55 percent tax increase on the horizon for the wealthy, an increasing amount of the United States’ wealthier population are disillusioned. One of the co-founders of Facebook, Eduardo Saverin, made the decision to give up US citizenship recently.
“High-net-worth individuals are making the decision that having a US passport just isn’t worth the cost anymore. They’re able to do what they do from any place in the world, and they’re choosing to do it from places with much lower tax rates,” said Duggan Bertsch lawyer Jim Duggan.
All across the globe Americans with dual citizenship are deciding to jump ship. For instance, the number of dual nationality Swiss-Americans renouncing their US passports has risen sharply in recent years, due in large part to the pressure being exerted by the IRS, the US tax authority, online news site Le Matin reported.
The United States is one of the only countries in the world that taxes its citizens even when they have settled abroad. This means that all Americans living in Switzerland, even if they have dual American-Swiss nationality, must complete and submit a US tax return.
In addition to this tax return burden, the recent pressure placed on Swiss banks by the IRS to disclose details of US clients to ensure compliance with the US tax regime has caused Swiss banks and asset managers to reject clients with any US affiliation. In one case, a man who had been settled in Switzerland was thrown out of his bank for having US citizenship.
Frustrated by the bureaucratic hurdles forced upon them by Washington, many people are opting to give up their little blue passports.
The first step in dealing with FATCA, is to acquire a second passport. Even if you choose not to renounce citizenship, having a second passport can protect your bank accounts, real estate and businesses, both abroad and within your own country.
The quickest and most economical passport for American’s to acquire is from the Dominican Republic. For approximately $25,000 you can become a dual citizen with a life-long passport.
Dominican Republic offers a second passport and citizenship for life for the main applicant, applicant’s spouse and dependent children.
Travel visa-free to more than forty (40) countries. Additional visas may be obtained to other countries at an extra cost.
Tax Free Status
Second passport and Dominican citizenship is the key to preserve your wealth. If you have income coming in from outside of the Dominican Republic you do not pay income tax on this income.
Protection of bank accounts, real estate and businesses, both abroad and within your own country.
The Government of Dominican Republic does not inform the country of your current citizenship or residency about your second or third citizenship.
Editors Note: For additional information on this and similar topics, please see PremierOffshore.com