CovOps
 Location : Ether-Sphere
Job/hobbies : Irrationality Exterminator
Humor : Über Serious
 |  Subject: Today's Ancap Good News: Americans Renounce Citizenship To Avoid IRS  Wed Aug 04, 2010 7:58 am | |
| At the US Embassy in London, there is a waiting list that none of the officials likes to discuss. On the list are Americans hoping to give up their citizenship, as they seek shelter from the Internal Revenue Service.
One lawyer fighting for her clients’ right to do so is Suzanne Reisman, a former civil rights lawyer, who is now a private-client lawyer in Mayfair, central London.
“You make a lot of sacrifices when you have to pay US taxes and live outside the country for a long time. But you also make a lot of sacrifices when you give up your passport,” she says.
Having lived in London since 1998, Ms Reisman herself has considered giving up her US passport. But she probably won’t. “I don’t think I want to die in the UK,” she says.
With many executives living away from their countries of origin, the reasons to change citizenship range from clarifying tax status, making it easier to cross borders, particularly in the case of passport holders from emerging markets who find themselves working in countries such as the US for a prolonged period of time, or discovering that over time their allegiances have changed.
While any individual will need to weigh the pros and cons of any change in status, both in terms of the hassle it can entail but also the long-term consequences, it also poses challenges for employers.
The backlog at the US Embassy, where no appointments are available until February, stems from a rise in the number of American expatriates living in the UK who have been seeking to escape paying US tax on their worldwide income and capital gains since the simplification of US tax laws in 2008.
The rules are far less complicated than they were. A one-off exit tax is levied on all income and capital gains – this applies to those holding assets of more than $2m and includes pensions, deferred compensation, unrealised gains from properties and investments and interests in foreign trusts.
If you have less than $2m (€1.5m, £1.3m), you escape most penalties. “If you can get below that $2m net-asset-value snapshot, it’s fairly easy. You escape the exit tax,” says Richard Cassell, a partner at Withers, the law firm. “But few people want to write the cheque if they have more than that. It becomes painful.”
A few advantages are gained by forfeiting US citizenship, accountants say. Chief among them is that doing so widens one’s investment choices. “It removes the possibility of a super-complicated life of having to juggle two different tax systems,” says Alex Jones, a director at Deloitte, the professional services firm.
“Being American presents you with a very particular and peculiar set of problems from a tax perspective and over the next few years, it could get worse for the wealthy,” he adds.
By comparison, the tax positions of Britons who move to the US are somewhat less complicated. British citizens do not face double-taxation in the US as they escape UK taxation on most types of income while abroad. But shares in investments such as unit trusts and ISAs could draw US tax at a higher rate if sold, so advisers often encourage expatriate Brits to avoid cashing them in while abroad.
Current UK tax laws also muddy the tax positions of Americans who have lived in the UK for the past seven years as HM Revenue & Customs is now entitled to tax their worldwide income and gains. The only alternative is to pay a £30,000 ($48,000, €36,000) annual fee to keep assets not brought into the UK out of Revenue & Customs’ reach.
The reporting requirements for “non-domiciled” individuals who live in the UK could become stricter still. The coalition government’s review of taxation has yet to be completed, but Mike Warburton, tax director with Grant Thornton, the accountancy firm, suspects the rules may change again.
..“That’s a distinct risk. It’s definitely something that’s on the government’s radar,” he says.
http://www.theglobeandmail.com/report-on-business/americans-who-swap-passports/article1660469/?cmpid=rss1
Fucking parasites!
==============
- Quote :
Giving up a US passport helps some longtime residents of the UK get round these new non-dom rules. If you have, say, residency status in the UK and a second passport from a country which does not tax citizens on worldwide income and gains such as Australia and Ireland, you might attempt to change your domicile to either country, as you would then only face UK tax.
If an American chooses to become British, after years as an investment banker in the City or a marriage to a British subject, he or she gains a number of advantages. The most obvious benefit is that Brits can work in Rome, Geneva, Dublin or elsewhere with ease but manage to stay outside the UK tax net for the most part.
“The UK authorities would still look at me very carefully if I try to go abroad for a short spell, but if I wasn’t generating income in the UK, they would not care about me until I came back,” says John Whiting, tax policy director with the Chartered Institute of Taxation.
Expatriating also helps if you have a British passport and are looking to acquire a UK domicile, which may have some inheritance tax benefits, particularly if you are married to a Brit. |
|
