The number of Americans giving up their citizenship in the U.S. rose to an all-time high of 5,411. One of the biggest reasons behind this increase? Taxation.
In this article, we’ll explore how laws such as FATCA and cryptocurrency taxation are driving Americans out of their home country, as well as which options work best in this situation.
Bitcoin, Taxed
In 2009, Bitcoin made its official debut around the world and changed the face of digital currency forever. It wasn’t long before other cryptocurrency platforms also launched and people around the globe took note of this powerful way to invest.
Bitcoin, like other cryptocurrencies, has much to offer. Investors are anonymous, thanks to blockchain technology, and investments are amazingly secure. If we should name the most important factor, anonymity is what makes Bitcoin and the other cryptos are deemed as a tool for asset protection. Unfortunately, adopting this strategy isn't as simple as it sounds - 'thanks' to the regulations.
Countries around the world are cracking down on those who use cryptocurrencies. Perhaps the strictest are the laws in the U.S.
In the past year, anyone who was involved in cryptocurrency in the United States received a notice from the IRS dictating that they were required to file taxes on any amount they’d invested in cryptocurrency. All of a sudden, cryptocurrency isn’t as anonymous, secure, or tax-proof as it once was.
Controversial solution: Citizenship Renunciation
Over the years, people have found ways to get around tightening financial legislation. For example, FATCA (Foreign Account Tax Compliance Act) was launched in 2010. This legislation set forth major repercussions for many, especially international investors. The very year FATCA went into effect, we saw the number of Americans renouncing citizenship spike. With that said, renouncing citizenship isn’t anything new. It can be used as a tool to strategically get ahead financially in the blockchain world.
In 2009, 742 Americans renounced citizenship. In 2010, the year of FATCA, the number more than doubled at 1534. The numbers say it all, don’t they? The big question is, should you?
If you are involved in cryptocurrency, you might be wondering how necessary or how smart of a move it really would be to do something as drastic as renounce your citizenship. It’s important to consider the fact that people make citizenship changes frequently for their own personal gain. It’s just a strategy.
If you are involved in cryptocurrency in any capacity, however, there are some things you should consider. If you are in the U.S., your cryptocurrency is now taxed and need to be reported, which means that it's no longer as anonymous as it once was. You are now responsible for keeping records and filing as needed. Plus, consider that you are already impacted by laws such as FATCA, which require that you discloses overseas bank accounts containing $10,000 or more. If you forget to file something, then you are liable for the penalties entailed in such.
Dual Citizenship: a Better Option?
With all of that said, renouncing your U.S. citizenship can be a lengthy and costly process. Plus, you might not want to give up your citizenship completely. If you are in a position where renunciation seems like a perfect solution, then there’s nothing wrong with that, but if you are on the fence, you might breathe a sigh of relief knowing that you have options.
Perhaps the best alternative to renunciation is to pursue a dual citizenship. In 1967, the U.S. began letting residents get dual citizenship, and as it stands, there are 42 countries to choose from. For example, as a U.S. citizen, you can have dual citizenship with countries such as Switzerland, the UK, Australia, Sweden, Nevis, St. Kitts, Italy, Ireland, and Macedonia.
There are a number of benefits of pursuing a dual citizenship, beyond the reasons we’ve already covered in this article. For example, if you want to be involved in an ICO, it can be beneficial to have a non-U.S. residence. If you want to get away from the uncertainty of always changing laws, then seeking a dual citizenship or even renouncing your citizenship could be beneficial. Plus, gaining some sort of citizenship in an offshore jurisdiction can offer a number of benefits. For instance, you could use your new citizenship to save on taxes from other income, enjoy access to amazing real estate deals, dabble in gold and silver, and also have access to international currencies.
Final Thoughts
While renouncing your citizenship certainly sounds like a major move, it might be the best thing you do for your overall finances - especially if you invest in Bitcoin or any other kind of cryptocurrency.
As with any other financial strategy, it’s always important to fully research your options and be sure that you are always in compliance no matter where you are. You may also want to consider a consultation session with a trusted offshore company formation specialist.
JAN
2020
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