For the first time Americans abroad must file local tax returns in their foreign location, writes Iain Yule
July 2014 saw the introduction of the Foreign Account Tax Compliance Act (FATCA) rules – the arrangement which is being brought in between the US taxman - the IRS - and local tax authorities.
In essence, say expat advisers at The Fry Group, the rules dictate that any person with a US connection has to declare their details to their local taxman - who will then share it with the US.
These somewhat draconian rules have been a few years in the making, mainly due to their reach and complexity. The guidelines will catch all US citizens no matter where they are, and require individuals to declare financial arrangements like a beneficiary of a trust - even if that person will never receive any money.
This has led many financial institutions to start ‘evicting’ any individuals connected with the US out of their accounts and investments.
An example of this occurred when we saw that the UK’s National Savings and Investments had begun asking American people to leave.
There is more information on the implications of FATCA for Americans abroad at www.greenbacktaxservices.com
Iain Yule is Editorial Director of World of Expats.