The looming arrival of US tax compliance rules on expats is pushing up the number of Americans seeking professional financial advice, with global advisory firm the deVere Group claiming a 65 per cent surge in enquiries over the past three months alone.
Expats are trying to organize their financial affairs ahead of the 2013 start of the FATCA Act (Foreign Account Tax Compliance Act). The act will require Foreign Financial Institutions – a term covering banks to hedge funds - to report to the US government and withhold 30 per cent tax on US sourced income and gross proceeds of sale in cases of non-compliance. This rule is expected to be finalized by the end of summer 2012 and fully implemented by the end of 2017.
Already, wealth managers and lawyers have told this publication that the act is changing how some firms deal with US expats, in some cases, refusing to take on US clients because they are seen as too expensive for compliance reasons. It has been reported that HSBC, Singapore-headquartered DBS and Deutsche Bank, for example, have turned away US clients. On the other hand, some firms, such as Switzerland’s Reyl & Cie, are embracing US customers where appropriate. (To view this publication’s recent interview with Reyl, click here.)