Over the barbed wire!
David Bain reports that some wealthy Americans now subjected to new forms of international scrutiny by the Obama-era IRS operating under new orders to revenue hunt are taking the dramatic step of renouncing citizenship.
Private client lawyers and relocation specialists are reporting a surge in wealthy Americans living abroad who are prepared to give up their citizenship to avoid the scrutiny of US tax authorities.
Although such a move means they have to pay an exit tax, lawyers say this is a price people have become more willing to pay this year, now the fall in asset values has reduced the size of the imposition.
Jay Krause, a partner at private-client specialist law firm Withers, said: â€œThe number of inquiries from US citizens wanting to expatriate from their citizenship has increased rapidly in the last year.â€
The level of interest is set to increase following the tax disclosure deal between the US Government and UBS of Switzerland, involving the names of 5,000 alleged US tax evaders being handed over to the authorities. The UK concluded a tax deal with Liechtenstein last week.
Because of this, many ultra-wealthy individuals who have chosen to become stateless now cruise outside coastal waters in their mega-yachts in the belief that if they stay on the move, tax authorities will not be able to catch up with them. One analyst who did not want to be named, has estimated the number of stateless tax evaders amounted to a few thousand.
This implies the quantity of money outside the grasp of global tax authorities could be trillions of dollars.
Under US tax laws, the worldwide income of any US citizen or resident is subject to tax. The US is the only country in the world that requires its citizens to stump up, no matter where they live.
Krause said current economic conditions are making it more conducive for Americans to contemplate paying exit tax demands from the US Internal Revenue Service. â€œThe mark-to-market provision in the Exit Tax from the IRS is a big incentive,â€ he said.
In the final months of the Bush administration, the US Government introduced a package of tax reforms that included an amendment to the exit tax on US citizens and long-term green card holders who expatriate the US.
The tax allows US citizens and permanent residents wanting to renounce citizenship or permanent residency to pay a one-off income tax on gains over $600,000 (â‚¬420,000). All assets beyond this amount are valued at mark-to-market.
The exit tax allows a clean break from the US tax system from the date of expatriation without imposing the previous 10-year period after expatriation where tax rules used to apply â€“ another big incentive, say lawyers. …
KÃ¤lin said citizenships of the Caribbean Islands and western European countries prove to be the most popular for ex-American passport holders.
He said: â€œSt Kitts and Nevis is the favourite alternative citizenship option for US citizens. Many will also be looking at Austrian citizenship, but it costs the most.â€
St Kitts and Nevis is favoured for its perceived security, while Austria is one of the few European countries where it is possible to purchase citizenship.
Typically, it will cost $400,000 to secure a St Kitts and Nevis passport, whereas Austrian citizenship might run into several million euros.
Easier for me!
How silly of them! They should just take the same exit money and citizenship fees and run for Congress as democrats from an inner-city district. Look how well it worked for Charles Rangel.
Rangel not only didn’t have to renounce his citizenship. He not only gets to keep his Rules Committee Chairmanship, but also four New York City rent-stabilized apartments (each one of which is required to be his primary residence), while using another home in Washington, D.C as his primary residence for tax purposes.