In the midst of the global crackdown on offshore banking and wealth protection – many of the citizens of the Western countries migrate to countries with less-strangling laws and regulations, as well as more stable and business/investment-friendly. This is particularly an emerging trend in the United States.
A recent coverage by CNN Money states that a record 1,426 Americans return their passports to the United States government in the third quarter of 2015. The total so far this year: 3,221 – which means that there could very well be more than 4,000 Americans renounce their citizenship – yet another all-time high.
Now, compare that to the 2014 figure of 3,415, you'll see a year-on-year increase of 25 percent or more. Even more intriguing, compare that to 2008: The figure in 2014 is 15 times more than the 2008's figure.
Interestingly, the figure is not really accurate. Many who renounce their citizenship aren't counted, which means that the number of Americans who renounce their citizenship is larger than the published figure.
But why the emerging trend?
One of the major reasons is the headaches in tax preparation for U.S. Expats. Many of them are tired of the complicated tax paperwork requirements - “thanks” to the global tax reporting requirements and FATCA in the U.S. Government's effort to battle tax evasion.
CNN Money further explains that the complexity in complying to the regulations is becoming even worse, as FATCA requires U.S. Citizens – everywhere they are – to report their assets overseas – including the requirement to disclose any overseas bank accounts that contain $10,000 or more. FATCA also requires for (offshore) banks to disclose ALL accounts held by U.S. Citizens.
Trying not to comply? The penalties are enormous, to keep Americans from even thinking about evading taxes: How penalties that can exceed your offshore account balances sound to you?
Indeed, battling tax evasion can mean harm even to those who never even think of evading taxes. The regulations are making the life of 7.6 million Americans living outside the U.S. difficult, as some offshore banks are forcing Americans to close their accounts due to FATCA.
The big question: Do I need to renounce my Citizenship?
All of those have left Americans very limited options: Complying with the laws and regulations or renouncing U.S. citizenship at an increasingly costly fee. Many choose the former, but an increasing number of Americans choose the latter.
So, are there any other options? Well, actually there is: Perhaps a better solution would be to renounce your U.S. dollar and store your wealth in the form of physical gold/silver, instead.
Peter Schiff can explain it to you better:
A side note: How about non-U.S. citizens?
The battle against tax evaders and money launderers has catches fire in other regions, particularly the Asian regions. Once viewed as some of the world's best offshore jurisdictions that held account privacy at the highest level, countries like Hong Kong and Singapore are forced to comply with the laws – or else.
If you are not an American, renouncing your citizenship might be a far-fetched idea, but when your home country's tax regulations are becoming as complicated ase those of the US, then you may also want to consider the option that Peter Schiff has suggested: Turning your paper Dollar or any other currencies to real money, gold or silver. As you still have options, you may want to consider protecting your assets in offshore jurisdictions.
Our partner offshore bank in St. Vincent and the Grenadines (SVG) can accommodate your asset protection strategy: Purchasing physical gold and silver, opening gold- or silver-backed bank account and other services like managed asset management and foreign market investing. Contact us to learn more about it.
As always, make sure that you consult with your trusted lawyers. Going offshore can be a great solution for protecting your wealth – if done right. If done wrong, you could face dire consequences – e.g. Paying costly penalties, even going to jail.