I am a resident of an EU country and married to an EU citizen. I have heard in the past about discrimination against Americans and I have already had a checking account in another European country closed because I am an American. However, I assumed that I could at least get normal financial services in my country of residence.
Today, however, I found out otherwise. I went to open a basic checking account at Swedbank, which is a major bank in Scandinavia and Eastern Europe. Once I had finished opening the checking account, I asked the clerk to open an investment account. The immediate response was NO! I asked why and he said that because I am a US citizen, the bank will not open any investment accounts for me.
The problem is that American citizens are toxic for banks outside of the US. If Swedbank accepts me as a client, they have to satisfy the laws in TWO countries (the US and my country of residence). That is clearly too much of a burden for a bank, especially for a small client.
I just have to say thanks to the US Congress for this ridiculous situation. :-(
Tuesday, June 30, 2015
Saturday, February 25, 2012
Expired Green Card holders beholden to IRS, even if they live outside of the US?
No one is going to believe this, but it appears to be true: Holders of expired Green Cards who live outside of United States and don't even have the right to return to the US are soon going to have their bank accounts cleaned out by the IRS.
A quick look at the IRS website shows that anyone holding a Green Card who simply leaves the US and moves to another country thinking they are done with the IRS is WRONG. The IRS expects such persons to continue paying US taxes, unless they file Form 8854 and go through a complicated procedure, that includes a monstrous exit tax for the rich. Details here: http://www.irs.gov/instructions/i8854/ch01.html
Attorney Patrick W. Martin has written about the fact that under FATCA, the IRS is soon to discover such persons and begin charging them penalties for failure to disclose their foreign bank accounts and pay US taxes. The irony is that many if not most of them have no legal right to return to the US to live, but they are still beholden to the IRS!
See his website for more details: http://www.procopio.com/userfiles/file/assets/files1/docs-1258118-v1-fatca-of-the-hire-act-crashes-head-on-into-the-twilight-zone-lawful-permanent-residents-living-overseas-2--1424.pdf
Our congressmen create these laws, while the rest of us have to wonderhow far up their asses their heads are stuck why they are so clueless about competition in the global economy.
A quick look at the IRS website shows that anyone holding a Green Card who simply leaves the US and moves to another country thinking they are done with the IRS is WRONG. The IRS expects such persons to continue paying US taxes, unless they file Form 8854 and go through a complicated procedure, that includes a monstrous exit tax for the rich. Details here: http://www.irs.gov/instructions/i8854/ch01.html
Attorney Patrick W. Martin has written about the fact that under FATCA, the IRS is soon to discover such persons and begin charging them penalties for failure to disclose their foreign bank accounts and pay US taxes. The irony is that many if not most of them have no legal right to return to the US to live, but they are still beholden to the IRS!
In the meantime, until the law is modified or clarified, [tax] practitioners and especially taxpayers residing overseas with invalid green cards, should be aware that [such persons] are U.S. income tax residents (absent a tax treaty override) and should annually file U.S. income tax returns as if they were living in the United States.
See his website for more details: http://www.procopio.com/userfiles/file/assets/files1/docs-1258118-v1-fatca-of-the-hire-act-crashes-head-on-into-the-twilight-zone-lawful-permanent-residents-living-overseas-2--1424.pdf
Our congressmen create these laws, while the rest of us have to wonder
Monday, February 20, 2012
How to have a corporation with absolutely no IRS scrutiny
Do you want to own a corporation and not have to file a single return with the IRS?
It is possible, but thanks to new American legislation (FATCA) the conditions are set to change:
- Corporation, LLC or partnership established outside of the United States
- No "US person" (American citizen, dual national or Green Card holder) may hold more than 10% of the shares of the corporation
For example, if a German citizen starts a corporation in his own country, he doesn't have to file any paperwork with the IRS! Of course, that's not really astounding since the IRS doesn't normally have any control over German corporations.
However: With the new FATCA legislation, if a US person owns 10% of the same German company, it will soon fall under IRS jurisdiction and the owner will be obliged to file reams of unfamiliar paperwork with the folks in Washington -- just because of the presence of the US person.
Now, no sane German citizen living in Germany would willingly submit to both the German tax code AND the American tax code (currently > 70k pages including many obscure provisions directed at American persons residing outside of the United States with huge penalties for noncompliance), so this can only lead to two things:
- No one will want to have a US person owning > 10% of their non-US company
- Anyone currently with a US person owning > 10% of their non-US company will seek to terminate the relationship with the American
Therefore, our US Congress has created legislation to track down a few thousand rich tax cheats, but at the same time all US citizens are transformed into untouchables in the society of world business. Starting in 2013, companies around the world will choose between compliance with TWO tax regimes or not allowing Americans to own more than 10% of their company.
This means that across the globe, avoiding a dual-taxation regime imposed by the American IRS will require excluding American participation in businesses. Thanks, US Congress!
It is possible, but thanks to new American legislation (FATCA) the conditions are set to change:
- Corporation, LLC or partnership established outside of the United States
- No "US person" (American citizen, dual national or Green Card holder) may hold more than 10% of the shares of the corporation
For example, if a German citizen starts a corporation in his own country, he doesn't have to file any paperwork with the IRS! Of course, that's not really astounding since the IRS doesn't normally have any control over German corporations.
However: With the new FATCA legislation, if a US person owns 10% of the same German company, it will soon fall under IRS jurisdiction and the owner will be obliged to file reams of unfamiliar paperwork with the folks in Washington -- just because of the presence of the US person.
Now, no sane German citizen living in Germany would willingly submit to both the German tax code AND the American tax code (currently > 70k pages including many obscure provisions directed at American persons residing outside of the United States with huge penalties for noncompliance), so this can only lead to two things:
- No one will want to have a US person owning > 10% of their non-US company
- Anyone currently with a US person owning > 10% of their non-US company will seek to terminate the relationship with the American
Therefore, our US Congress has created legislation to track down a few thousand rich tax cheats, but at the same time all US citizens are transformed into untouchables in the society of world business. Starting in 2013, companies around the world will choose between compliance with TWO tax regimes or not allowing Americans to own more than 10% of their company.
This means that across the globe, avoiding a dual-taxation regime imposed by the American IRS will require excluding American participation in businesses. Thanks, US Congress!
Monday, February 13, 2012
Scorched earth war on tax evasion
The US Congress passed the Foreign Account Tax Compliance Act (FATCA) in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. The goal is to lessen the ability of US citizens, US Green Card holders and US dual nationals ("US persons") to avoid paying taxes in the US.
Unfortunately, this piece of legislation is sure to make it even more difficult to live outside of the US as a person with ties to the US. For the average American and the average congressman, any American living outside of the US is, first and foremost, a tax evader. Accordingly, any effort that reduces the ability of Americans to have access to foreign (non-US) financial services such as bank accounts, brokerage accounts and life insurance policies is a valuable tool to prevent tax evasion.
The irony is that the United States was at the forefront of the globalization of the world economy that happened starting in the 1980s. Now the United States is waging war on the very US expats who are essential for success in global business.
Due to the American double taxation regime, the US passport is the worst passport to have for anyone who wants to start a business outside the United States. If a German company wants to start a subsidiary in the United States, they can send a few managers to the US for a few years to focus on building their business. The German tax authorities don't require German citizens living abroad to pay German taxes or file endless tax paperwork in Germany.
But if an American company wants to start a subsidiary in Germany, their American managers are subject to massive, unfamiliar reporting requirements in the US, despite living in Germany, in addition to filing and paying German taxes. The US tax code currently has some 70,000 pages and a good chunk of the tax code is directed toward limiting the activities of US persons abroad. The result: Only the largest American companies can afford to pay American employees enough to live abroad. Moreover, only the most elite accounting firms grasp the complex US tax code enough to deal with international operations, so accounting is terribly expensive. Any single US person who starts a company outside of the United States will inevitably run afoul of this hugely complex system and run a significant risk of incurring massive IRS penalties.
Is it any wonder that Americans have a huge trade deficit while Germany is an export leader? The same advantage vs. the US exists for Japan and every other country in the world due to the American double taxation regime.
Unfortunately, this piece of legislation is sure to make it even more difficult to live outside of the US as a person with ties to the US. For the average American and the average congressman, any American living outside of the US is, first and foremost, a tax evader. Accordingly, any effort that reduces the ability of Americans to have access to foreign (non-US) financial services such as bank accounts, brokerage accounts and life insurance policies is a valuable tool to prevent tax evasion.
The irony is that the United States was at the forefront of the globalization of the world economy that happened starting in the 1980s. Now the United States is waging war on the very US expats who are essential for success in global business.
Due to the American double taxation regime, the US passport is the worst passport to have for anyone who wants to start a business outside the United States. If a German company wants to start a subsidiary in the United States, they can send a few managers to the US for a few years to focus on building their business. The German tax authorities don't require German citizens living abroad to pay German taxes or file endless tax paperwork in Germany.
But if an American company wants to start a subsidiary in Germany, their American managers are subject to massive, unfamiliar reporting requirements in the US, despite living in Germany, in addition to filing and paying German taxes. The US tax code currently has some 70,000 pages and a good chunk of the tax code is directed toward limiting the activities of US persons abroad. The result: Only the largest American companies can afford to pay American employees enough to live abroad. Moreover, only the most elite accounting firms grasp the complex US tax code enough to deal with international operations, so accounting is terribly expensive. Any single US person who starts a company outside of the United States will inevitably run afoul of this hugely complex system and run a significant risk of incurring massive IRS penalties.
Is it any wonder that Americans have a huge trade deficit while Germany is an export leader? The same advantage vs. the US exists for Japan and every other country in the world due to the American double taxation regime.
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