A record 4,279 people renounced their United States citizenship in 2015, up from 3,415 the year before, according to US Treasury figures released on Friday and reported in the US press.
It’s the third year in a row that record numbers of Americans have renounced their citizenship. The spike coincides with the introduction of the Foreign Account Tax Compliance Act (FATCA), a US law that forces Americans, including expats, to report their non-US financial accounts to the US authorities.
In 2013, the first full year after the introduction of FATCA, the number of renunciations hit 2,999 – up from 932 the year before.
While this is a tiny percentage of the approximately 8.7 million US citizens living abroad, research carried out by financial advisory firm deVere Group suggests as much as 73% of US expats are considering renouncing as a result of FATCA.
DeVere has treated this trend as an opportunity to encourage US expats to seek financial advice before taking the major, and increasingly pricey, step of giving up their US passport for good.
The group’s chief executive Nigel Green said: “The US authorities are taking this project very seriously and Americans must ensure that they are FATCA-compliant. The penalties are hefty.
“However, there are several well-established, bona fide, compliant ways that US expats can mitigate the often unbearable burden of FATCA. These include an additional overseas pension contract that’s specifically designed for US taxpayers with assets in their country of residence.”