Americans, take your capital somewhere else!
That is what banks from around the globe have been telling their American clients, as they attempt to evade having to abide by a new tax law which is expected to come into force in 2014.
Jimmy Sexton, an American, was forced to close his checking account at Volksbank in Austria earlier this year. And Genevieve Besser, an American living in Germany, was given two months notice last year to close her securities account at ING-Diba, the German arm of Dutch bank ING. The U.S. Foreign Account Tax Compliance Act, which requires businesses to report all assets held by Americans, aims to recoup the hundreds of billions the U.S. says it loses each year from tax evasion. But it’s also leading global banks big and small to dump U.S. customers rather than wrestle with the complicated law.
“U.S. citizens living abroad are really having a hard time with their banks,” said Gerard Laures, a partner in the financial services tax division at KPMG.
Proper compliance — which means reporting everything from basic savings accounts, pension funds, investments, and more — could easily cost institutions millions each year, he estimated. And penalties are severe; businesses face a 30% tax on U.S.-sourced income if they fail to comply.
“Many banks have taken the decision to tell U.S. customers to go away,” Laures said.