Americans cutting US ties to slow as FATCA beds down

The number of Americans relinquishing their citizenship will drop as the world adjusts to FATCA, says Nigel Green, chief executive of deVere.

Since the Foreign Account Tax Compliance Act (FATCA) was introduced in July last year, the number of citizens cutting of their US ties has jumped to 3415, 14% up on the year before.

However, Green says that this number is likely to fall as the global financial industry adapts to the so-called “era of FATCA”.

“The pace of US citizenship relinquishments is likely to slow, and over time the historic numbers of people severing ties with the US will probably subside,” he said.

“This is because more and more people are becoming aware of the various compliant ways they can mitigate the negative effects of FATCA, without having to take the drastic and often emotional step of giving up their American citizenship.”

He added that the reality of the “FATCA era” is leading to more solutions for American expatriates, such as a tax-efficient, supplementary overseas pension contract.

FATCA requires foreign financial insitutions to identify and report the financial details of their American clients, whose tax duties still apply when they move either themselves or their money from the US.

In the event that an FFI fails to comply, a 30% tax will be imposed by US authorities on withholdable payments made to FFIs.

Last week, FATCA went live in Jersey with the launch of an online platform which allows companies to register and submit information required under the act.