Posted on August 28, 2012 by Jefferson D. Tomas Posted in Issues regarding US persons abroad 6 Comments http://www.forbes.com/sites/robertwood/2012/08/27/post-olympics-brits-even-embrace-fatca/ Share this:TwitterFacebookEmailLike this:Like Loading...
*I believe that, if anything, FATCA-type regulations will become internationally widespread. The only difference though is the US’s citizenship-based taxation model. It will interesting to see if this goes through and also if the UK warms to the idea of citizenship-based taxation as well.
I’ve been seeing this coming for some time – The UK already makes it very difficult to move overseas and lose your UK tax domicile status, especially for those born in the UK. I know someone who not only had to have no assets or property in the UK to be considered as permanently residing abroad, but he also had to give up membership in the London branch of his University’s club before the UK tax authorities would believe that he actually lived overseas!
I assume that the UK version isn’t quite as bad as the US one since I imagine that it applies to UK residents and not citizens. I think though that the UK and France will be the first foreign countries to adopt citizenship-based taxation should the disease start to spread. I just hope that it stops there though and doesn’t spread to the whole EU…Imagine a FATCA for 27+ nationalities and birth places! I don’t see how that could work with current technology without costing an absolute fortune.
*Yes, the UK will be seeking information about foreign accounts of its residents. George Osborne did once suggest looking at citizenship-based taxation for the UK. However, considering the United States has had to negotiate “savings” clauses in its tax treaties to preserve its right to tax non-resident citizens, it seems likely that if other countries also adopt citizenship-based taxation, the whole tax treaty network will fall apart. Suppose the UK adopted citizenship-based taxation. Which country would come first, which second, and which third in the race to tax a dual US-UK citizen working in France?
*That’s the whole point isn’t it. In these days of international work/living things can get very complicated for someone who’s born in one country, gets a second or even third nationality from parents and lives in yet another country. By the time they’ve all tried to have a slice of the cake the poor sod at the end will be lucky if he/she can find any crumbs at all!
I can see the whole thing causing major economic chaos because people simply will not be able to afford to live with these sort of laws in place. And people don’t always have the option of just “going home”; you need a job and if the job isn’t there then you have to live where you can find the work.
It’s why I’m looking to ditch the American side because as a dual (British too) citizen living in Switzerland I could end up paying tax in 3 separate countries. It’s ridiculous. Unfortunately, this has become a visible subject just when countries are looking for ways of making money to fill their depleted coffers. If this had happened 7/10 years earlier I doubt there would have been much made of the idea.
As I’ve mentioned before, France and Spain already have a limited version of citizenship-based taxation. France taxes its citizens who live in Monaco (which doesn’t have income tax), due to a treaty between the two countries. Spain continues to tax its citizens who move from Spain to a tax haven (some of which have income tax) as residents of Spain, for the first five years after moving there. Spain maintains a list of countries and territories that it considers tax havens.
Here is an article about the proposal which uses the word “citizen” in relation to taxes in the UK. See my comment and the response. I hope it’s just sloppy words, but who knows. My children have 3 citizenships UK/US/Canada, all of which they were born with. Can you imagine the paperwork that would be required if the UK started expecting tax forms from them as well as the US and whatever country they are living in?