{"id":1850,"date":"2014-07-11T08:44:04","date_gmt":"2014-07-11T07:44:04","guid":{"rendered":"https:\/\/blog.iese.edu\/expatriatus\/?p=1850"},"modified":"2014-07-11T08:44:04","modified_gmt":"2014-07-11T07:44:04","slug":"the-f-day","status":"publish","type":"post","link":"https:\/\/blog.iese.edu\/expatriatus\/2014\/07\/11\/the-f-day\/","title":{"rendered":"The F-Day"},"content":{"rendered":"

\"wreckingball\"<\/a>\u2018It\u2019s F-Day \u2013 the day half the world has awaited with bated breath for the past two years\u2019<\/em> \u2013 that is the introduction for one<\/a> of the many articles covering one of the most recent hot topics in the business world. Specifically, F-Day refers to the 1st<\/sup> of July 2014, which is when a new American tax law (FATCA)<\/strong> came into force.<\/p>\n

Fatca<\/strong>, the Foreign Account Tax Compliance Act, was passed in 2010, and as of July this year it requires US citizens<\/strong>, also those living and working abroad, to report their financial accounts held overseas. Moreover, the law also requires foreign financial institutions to report to the US<\/strong> government on financial information regarding their US<\/strong> clients. In other words, intended to decrease the estimated losses of offshore tax non-compliance, the law requires US citizens<\/strong> living abroad to declare\u2028 more aspects of their income, which is hardly perceived as good news.<\/p>\n

Indeed, several sources highlight that this new tax law<\/strong> drives a record number of US citizens to renounce their citizenship. Referring to US government data, an article<\/a> in CNN Money notes that the number of American passports turned in during 2013 has tripled from the average for the previous five years. Naturally, many of these passports come from expats<\/strong>, who are heavily impacted by the new law. As another source, the RT news<\/a>, puts it, people \u2018seek to remove the burden of filing complicated and costly tax returns simply for living in another country\u2019.<\/p>\n

So, Fatca<\/strong> is perceived quite negatively for several reasons. First of all, the tax reporting is a very complex and costly process. A BBC news article<\/a> suggests that compared to the previously used tax reporting form, the Fatca<\/strong> form is much more rigorous and implies huge fines in case of non-compliance. Therefore, many expats<\/strong> look for professional assistance, which may add up to substantial annual expenses. As the BBC quotes, “Some people are spending $4,000-$5,000 a year to do their tax return only to find out they don’t owe anything to the US.”<\/p>\n

Secondly, as noted in the CNN Money article<\/a>, people find the new law intrusive. Fatca<\/strong> requests account holders to disclose their names, tax identification numbers, addresses and transactions from their accounts. The same is valid for US residents\u2019 spouses or partners. Drawing on one of the real life examples<\/a>, for some people this tax law<\/strong> becomes a question of choosing between country and family. Specifically, American expats<\/strong> living abroad may be compelled to give up their passports because their non-American spouse or partner doesn\u2019t want the US government to look into their financial data.<\/p>\n

Finally, banks are also unhappy about the tax law<\/strong>, as it involves high compliance costs for each American holding an account in their banks. As such, some banks refuse to do business with Americans and have even started canceling already existing accounts.<\/p>\n

Given all the aforementioned criticism, it begs the question whether Fatca<\/strong> really does more harm than good?<\/p>\n

For expats<\/strong>, we can assume that the law will lead to higher levels of expat<\/strong> localization abroad and a general increase in permanently relocated self-initiated expats<\/strong>. That means a permanent drain of knowledge and expertise from the US, as well as lost opportunities of making use of foreign expertise from returning nationals. In other words, relocating abroad as an American may lose its temporary nature, because it may be easier to stay permanently and adopt a foreign residency as soon as you are abroad. It looks like as of July 1st<\/sup> being an American becomes an either-or question: either being an American working at home, or being globally mobile, yet possessing a non-American passport.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u2018It\u2019s F-Day \u2013 the day half the world has awaited with bated breath for the past two years\u2019 \u2013 that is the introduction for one of the many articles covering one of the most recent hot topics in the business world. Specifically, F-Day refers to the 1st of July 2014, which is when a new […]<\/p>\n","protected":false},"author":345,"featured_media":1852,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18330],"tags":[82038,82039,82040,1442,82041],"class_list":["post-1850","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-views-and-news-about-expatriates","tag-expats","tag-fatca","tag-tax-law","tag-us","tag-us-citizens"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.iese.edu\/expatriatus\/wp-json\/wp\/v2\/posts\/1850","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.iese.edu\/expatriatus\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.iese.edu\/expatriatus\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/expatriatus\/wp-json\/wp\/v2\/users\/345"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/expatriatus\/wp-json\/wp\/v2\/comments?post=1850"}],"version-history":[{"count":3,"href":"https:\/\/blog.iese.edu\/expatriatus\/wp-json\/wp\/v2\/posts\/1850\/revisions"}],"predecessor-version":[{"id":1853,"href":"https:\/\/blog.iese.edu\/expatriatus\/wp-json\/wp\/v2\/posts\/1850\/revisions\/1853"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/expatriatus\/wp-json\/wp\/v2\/media\/1852"}],"wp:attachment":[{"href":"https:\/\/blog.iese.edu\/expatriatus\/wp-json\/wp\/v2\/media?parent=1850"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.iese.edu\/expatriatus\/wp-json\/wp\/v2\/categories?post=1850"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.iese.edu\/expatriatus\/wp-json\/wp\/v2\/tags?post=1850"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}