American renunciations down in 2017 after 4-year climb to 2016 record

For the first time in five years, the number of Americans who renounced their citizenships fell slightly in 2017 from the previous year, which had been a record, federal government data shows.

The number of Americans who gave up their citizenships in the 12 months to the end of December fell by 5.1%, to 5,133, which compares with 5,411 in 2016, based on the latest quarterly data, published on Friday on the Federal Register’s website.

This year there didn’t appear to be any well-known figures on the list. Last February, as reported, the UK’s well-known foreign secretary, Boris Johnson, appeared on the final list of the year’s renouncers.

The decline came as something of a surprise for watchers of the renunciation list, who had been predicting that the 2017 total would surpass the record-breaking 2016’s figure, in line with a trend for renunciations to increase year-on-year – in response, most agree, to the increased difficulties and costs associated with maintaining one’s US citizenship since recentUS legislation has made it more difficult for expatriates to avoid their tax return filing obligations and in some cases, the need to pay significant amounts of tax.

As recently as November, some observers were predicting 2017 would be another record year, on grounds that renunciations during first three quarters had totalled 4,448, and included, in the second quarter, the second-highest quarterly number ever.

Reports in the US media suggested the slightly lower fourth quarter numbers reflected a decision on the part of some expatriates to take a wait-and-see approach to renouncing in anticipation that Donald Trump’s tax reform bill, which he signed on 22 December, might make things less harsh for them going forward.

As reported, it may in fact have done the opposite, at least for some expatriates who own stakes of as little as 10% in overseas businesses, as they could end up qualifying for so-called controlled foreign corporation tax status. This, tax experts say, could see them owing a one-time payment to the US authorities of 15.5% on the profits their stake in the business has accumulated overseas, whether or not they were planning to repatriate them.

Relatively small percentage of total

While the numbers of Americans handing back their passports may have grown steadily since 2010, when President Obama signed into law the Foreign Account Tax Compliance Act that has facilitated the IRS’s crackdown on overseas bank accounts held by Americans, they are still relatively small compared to the total number of Americans estimated to live overseas – around 9 million.

Some American expats say the complicated renunciation process, coupled with the renunciation fee ($2,350), make it difficult and expensive to do, thus keeping the numbers low.

In renouncing his citizenship last year, Johnson joined a long list of famous Americans who have also handed back their passports over the past century, including pop singer Tina Turner, actor Yul Brynner, authors Henry James and T S Eliot, film director John Huston, performer Josephine Baker, and emerging market fund manager Mark Mobius.

The late socialite Christina Onassis, investor Sir John Marks Templeton, and Eduardo Savarin, one of the Facebook co-founders, also renounced their citizenships.

As reported, some American tax and citizenship experts are predicting that British Royal Family bride-to-be Meghan Markle, who is American and who is set to wed Prince Harry in May, may be obliged to renounce her citizenship at some point, given that her future husband is fifth in line to the throne and that this could present concerns if he were to end up becoming king one day.

To see the latest quarterly renunciation report, click here. 

preloader
Close Window
View the Magazine





You need to fill all required fields!