It is official. Tina Turner officially tied the knot recently with her longtime partner Erwin Bach. She also became a Swiss Citizen earlier this year. See http://www.today.com/entertainment/tina-turner-celebrates-wedding-home-switzerland-6C10699401.
While I am sure that she was not motivated by anything other than love, let’s face it, it’s hard being a U.S. Citizen living abroad these days. Blame it on the Foreign Account Tax Compliance Act, or “FACTA”.
FACTA was enacted to target banks located in countries like Switzerland, which, due to its bank secrecy laws, used to be a safe haven for persons seeking to park their cash without anybody knowing about it. Not anymore. FACTA , among other things, requires foreign banks to become rats for the Internal Revenue Service and to report the holdings of their U.S. customers. If the bank chooses not to comply, they face a 30% withholding tax on their securities transactions that originate within the U.S. Some foreign banks may decide that it’s just not worth the compliance costs and will turn away U.S. customers to avoid penalty. Either that, or they will raise fees charged to U.S customers.
FACTA is also an inconvenience for the spouses of U.S. Citizens living abroad. That is, if a U.S. Citizen is a signer on a foreign account owned by their non-citizen spouse, that account falls under the reporting requirements of FACTA. I doubt that Mr. Bach wants to report his financial information to the Internal Revenue Service, but that’s exactly what would happen if Turner remained a U.S. Citizen.
The entire purpose behind FACTA is to generate more tax revenue for the treasury. However, I think the opposite will happen. U.S. citizens living abroad will find that it may be much easier to conduct business abroad as an expat.