Thursday, May 31, 2012

Example of a Mini-Eduardo Saverin

Here's a great example of how ordinary people can have their life saving wiped out by the IRS because they lived overseas: International Tax Blog: Example of a Mini-Eduardo Saverin.

We expatriates aren't complaining about the taxes, it's the absolutely ridiculous set of laws that punish us for living outside of the US.

It's now easy to become a permanent resident of Panama

Panama City Skyline
Photo by JurriaanH
I keep meaning to write about Panama, but I never get around to. Now there's a great reason to. On May 16, 2012, the Panamanian Ministry of Public Safety published Decreto Ejecutivo Numero 343. Short version: it's a vague law designed to make it very easy for economically desirable foreigners from certain countries gain immediate permanent residency in the Republic of Panama.

The law is maddeningly vague and it's for people who can demonstrate specific economic or professional activity in Panama, are financially solvent (you only need a bank account with at least four figures!), and are not criminals. It applies to nationals from the following list of countries:


  • Argentina
  • Australia
  • Austria
  • Belgium
  • Brazil
  • Canada
  • Chile
  • Czechoslovakia
  • Finland
  • France
  • Germany
  • Ireland
  • Japan
  • Netherlands
  • Norway
  • Singapore
  • Slovakia
  • Spain
  • Sweden
  • Switzerland
  • United States
  • Uruguay
I find that list very interesting. The UK and Portugal are not on that list, for example, though I would have expected that.

The correspondent who tipped me off  about this informed me that merely starting a business in Panama should be enough to qualify. As far as I can tell, accepting a job in Panama should also let you qualify.

Check out this English language description of the law at panama-guide.com.

Wednesday, May 30, 2012

The laws are failing expats with children

You had better think about them!
Photo from Wikimedia Commons
Recently I've been looking into acquiring the French Blue Card. This seems strange as my wife is French and I can legally live and work here as long as we're married. We're quite happy together, so why would I want the EU Blue Card? Part of this, frankly, would be for having first-hand knowledge of a process I sometimes write about, but the other part is simply for insurance: if anything were to happen to my wife, I still want to be able to raise our daughter here.

An immigration specialist I spoke with assured me that as a parent of a minor French child, so long as I have been a primary caregiver for at least two years, I have the right to remain in France. Not quite as good as the Blue Card, but much better than being deported back to the US! I'm lucky that in this case, France has looked into this matter and ensured that the right thing is done. Others are no so lucky.

Your author and hisdaughter
in Meaux, France
A Canadian friend of mine living in Amsterdam sent along this horrifying news article : mom can't leave Canada with children, or stay either. In short, an American woman married a Canadian man, but he would never sign the immigration paperwork or sponsor her to remain in Canada. Now that they've separated, she has a restraining order forbidding her from removing the children from Canada, but she has no legal right to remain in the country.

We're transforming from squabbling nation-states into a global society, even if we maintain separate governments and tighten our borders. Our legal frameworks just aren't up to the task of handling our emerging supranational culture. While it's still small, it's growing, but our state-centric legal systems are producing children who have no nationality and people discovering they owe thousands of dollars in taxes to countries they've never lived or worked in. Currently the laws in this area are very much hit or miss and I would love to see the world's governments come together and try to address this issue. With an estimated 200 million people living in countries other than the ones they were born in, it's getting harder and harder to ignore this problem.

Monday, May 28, 2012

The accidental Kenyan: What would happen if the African nation copied U.S. tax policy?

The accidental Kenyan: What would happen if the African nation copied U.S. tax policy?:

This is absolutely brilliant, but I doubt there are any US politicians who would give a damn. I would love Kenya to adopt this, but only on a "reciprocal" basis. That is, "we're going to tax our citizens abroad the same way that their resident countries tax them".

Actually, some Americans would like that because it means a handful of Kenyans would leave the US, but other Americans might finally wake up and realize how they're punishing the American diaspora.

A Communist Bar in Paris

Parisian culture is a rich blend of many cultures and ideas. You see this everywhere and one of the regular places I have lunch with my colleagues is the restaurant/bar Joli Môme (old French slang for "pretty girl"). Located in Square Bolivar in the 19th arrondisement of Paris, the Joli Môme is, for want of a better description, a communist bar. They have posters urging you to protect workers rights, pro-Melenchon stickers (a communist politician), great food and slow service.

My lunch last Friday was a delicious soupe marocaine followed by a fiery tagine poisson washed down by a Stella Artois, a great beer for a warm day. I remember thinking how, in the US, most companies would have fired me for that lunchtime beer but over here, no one cares.


Naturally, if I'm talking about sitting in a Communist bar, I have to talk about Communism in France. Communism in France can be summed up with one word: dead. The communists are unlikely to return to power in France not because the French necessarily abhor communism, but because communism would require a complete rewrite of society and French communists are very uncompromising. The French are often very idealistic, but they're also realists: communism isn't coming back short of a complete collapse of the economy and voters turning desperate.

Today, François Hollande, the President of France is a socialist, the first socialist president since François Mitterrand who left office 17 years ago. But I suspect we'll find that Hollande's socialism is different from Mitterrand's in that Hollande actually appears to be a socialist and Mitterrand was, well, Mitterrand. Mitterrand was a larger than life figure and very politically adroit, the latter showing in his quick abandonment of his early hard-left economic reforms after they turned disastrous. Hollande's reforms are forthcoming and I'm quite curious to see what will happen.

Mitterrand was elected at a time when the US and the UK were taking a hard right turn and France was a bit unusual in not following. Hollande, on the other hand, has become president after we've long traveled down the right fork and people are watching him closely. If an economic recovery comes to France, regardless of whether or not it's Hollande's doing, I suspect that there will be a rethinking of politics in Europe. The free market austerity program has been a dramatic failure in Europe and many are struggling to find other solutions. Greece has seen a massive political upheaval at the polls, with even a neo-Nazi party getting seats in parliament. Meanwhile in Iceland, they're rewriting their constitution and arresting the bankers (!). Hell, even in Germany, the Pirate Party is likely to win 10% in the next election. For my American readers: in the US, that result would be meaningless because you can have 49% of the populace support a party and have that party win no seats. I'm not exactly sure how that represents "democracy".

Europe is getting very, very interesting right now and almost anything seems possible. I'm looking forward to the change as Europe, in contrast to the US, seems to be evolving. I don't know if the result will be good, but I can hardly imagine it will be worse than the mess we're in now.

Friday, May 25, 2012

Germany Blue Card: It's Now Much Easier to Move to Germany

Bonn - German flag
Photo by R/DV/RS

The German Blue Card has been approved! The end of that article states that the upper chamber of German parliament, the Bundesrat, must still approve the law,  but this has already happened (article in German).

So what does is take to move to Germany?
  • Have a job offer of at least €44K (€35K for some areas)
  • Have a degree or equivalent experience.
You can download the full (German) text of the Blue Card law (pdf) and see for yourself. The German government will no longer assess whether or not you are highly skilled. The assumption is that if a company is willing to take a risk on you, they need you. You will need to earn a salary of at least  €44K, or €35K if you are in a high-demand profession such as medicine or IT.

Feb 2011- Germany_197
Random Germany Photo
Photo by Juiwen Wu
The German law refers to "Blaue Karte EU“ für ausländische Arbeitnehmer mit einer akademischen oder vergleichbaren Qualifikation. This translates to "EU Blue Card for foreign workers with an academic or equivilant qualification". So yes, they want you to have a university degree, but if you're qualified (typically five  years experience is the minimum, though it's not stated in the law), then you can skip the degree.

You can apply for permanent residency in Germany after three years, or only two years if you develop a B1 proficiency in German.

Germany needs skilled workers and they don't have enough workers with the right skills. This could be your big chance to move to Europe. It's time to start rereading my How to Get a Work Permit series.

The new law should come into effect July 1st, 2012.

Update: here's the German government English language explanation of the Blue Card. It's pretty damned impressive.

Update 2: Blue Card applications are now being accepted.

Wednesday, May 23, 2012

Ignored Data Behind the Politics of Renunciation

Many of you are undoubtedly familiar with the Pareto Principle. This principle was developed by an Italian economist who observed that in many cases, 80% of your results are determined by 20% of your actions. The difficulty, of course, is identifying the 20%, so let's try to do that.

My wife has a Masters Degree in French law and has worked extensively as a French political advisor. She's explained that in her experience many politicians make their decisions based on the data they receive ... except ... if there is a minor but highly political issue that the public is responsive to, they often take the opportunity to use this as a smokescreen to distract the public while the real work happens behind the scenes. In that case, the politician is often in a position of having to respond to public perception and this may very well not be in synch with the data. For example, I have been reading a British immigration report from July of 2000 which showed fairly conclusively that both skilled and unskilled migrant immigration was beneficial to the UK economy yet UK immigration has been capped at 20,700 (non-EU) immigrants, despite internal reports making it very clear that this does not satisfy market needs. However, it does satisfy political needs.

So let's step back from the politics and look at the numbers. Here are US renunciations since 1998 (the published data starts in 1997, but that year is rather anomalous and I'm not including it until I better understand what is going on):

Source. This data matches my own research, but until
I have generated my own numbers, I will rely on this.
So we can see a sharp rise in the number of Americans renouncing their citizenship, but note that this is measured in the ten thousandths of a percent! Given that most of those are probably middle-class expats who probably owed little to no money in taxes, it's quite a stretch to suggest this is a serious political issue worthy of our politicians hunting down renunciants. However, when the estimated 6.32 million US expats are taken into consideration, we realize that laws designed to punish expats are affecting one US citizen in fifty. That should be something politicians should pay careful attention to and that's why we see the increase in the number of US citizens giving up their citizenship. And don't forget that I've already pointed out that more US citizens are giving up their citizenship than is being reported (the US only reports on renunciations, not relinquishments).

Out of curiosity, I've decided to try to find out the renunciation rates of other countries. The only other country I've been able to get data on is New Zealand. Their Department of Internal Affairs for the Citizenship office graciously sent me their total number of renunciants per year and the highest total was 24 for 1998. However, they have a much smaller population than the US, so I again calculated the percentages (note that both US and New Zealand percentages are calculated against the correct yearly population):

Source: information received via email from the Department of
Internal Affairs of the New Zealand Citizenship Office.
2012 renunciation data is obviously "Year to Date"

As you can see, the numbers aren't terribly different. However, we can't conclude much from this because there are several pieces of information we don't have. For example, like the US, New Zealand only tracks renunciants who have formally renounced. Thus, we don't know who may have indirectly given up citizenship by acquiring another "exclusive" citizenship. However, unlike the US, there is no legal incentive to give up citizenship because they don't have the United State's unique citizen-based taxation. Thus, it's very likely that the graph above represents a comparison of US voluntary and involuntary renunciations versus New Zealand's involuntary renunciations (due to taking citizenship in a country that forbids dual citizenship).

I would love to find more information like this. I've filed a Freedom of Information Request with the UK government and hope to have an answer in a few weeks (the answer is very likely to be "we don't know" if they don't track this data). If any readers can find this information for other countries, along with a source, I would be very grateful.

My ad-hoc method of research into this topic reveals four primary categories of renunciations:
  1. Politicians for whom dual-citizenship is a political liability.
  2. People escaping from oppressive regimes.
  3. People acquiring citizenship in countries that forbid multiple nationalities.
  4. Americans.
Aside from New Zealand, I simply can't find people renouncing their citizenship for reasons other than categories one through three above (and New Zealand did not provide the reasons for their citizen's renunciations). As far as I can tell, only Americans are giving up their citizenship from a non-oppressive regime and it appears to mostly be due to the nightmare of bizarre tax laws impacting US expatriates. These people often don't even owe US taxes, but they are facing the possibility of massive fines and criminal records for not realizing they needed to file Form TDF 90-22.1 or filing the new Form 8938 and being unaware that a tiny mistake on this complicated form didn't quite match up with the Form TDF 90-22.1. Or maybe they were self-filing and didn't know about Form 2555 or Form 1116 which would have eased their tax burden.

Unfortunately, because I've only been able to get the data for New Zealand and the US, I can't prove my suspicions, particularly since they don't appear to match the New Zealand data.

I'm quite confident there would be a taxpayer revolt in the US if they had to face the onerous tax requirements that American expats face. However, we expats are out of sight and thus out of mind. Further, we have no political power in the US and politicians happy to flog populist anger and improve their poll ratings at our expense.

And in case you're wondering why US expats care when we often owe no US taxes: it can easily cost us $1,000 just to file a tax return. The lowest price I've seen from a reputable expatriate tax return firm is $300 for the 1040, Schedule B, Form 2555 and Form 1116. And that assumes that you have the simplest possible taxes, have only earned income (that's a very specific legal term) and don't have to pay for notarized translations of foreign financial documents. If you were unaware of your expatriate tax obligations, you can easily pay $16,000 to enter the OVDI program and that still doesn't eliminate fines and possible criminal charges for being unaware of your legal obligations to the IRS. You try to explain to an American teacher in Uganda who's struggling to pay her rent why this is fair.

Monday, May 21, 2012

The Beautiful Meaux, France

You can see larger versions of every picture by clicking it.

When we moved to France from Amsterdam, we were faced with the dilemma that Paris is one of the most expensive cities on the planet. Worse, flats are tiny. With three times the population density of the USA, it's understandable why many places in Europe have much smaller living areas, but damn it, I like room.

So we considered Meaux. We ultimately wound up not moving there, but we recently went to visit it. After having moved 38 times in my life, I'm not keen to move again any time soon, but I'd be seriously tempted to move to Meaux. It's gorgeous (and the delicious brie de Meaux is worth mentioning, too).

Parking outside the tourist center

When we pulled into Meaux, we parked outside the tourist center. My first thought was "damn, this is beautiful.

Walking down Rue Bossuet to get to the cathedral

Note how the pollution has been cleaned on the left.

It was a short walk to the Meaux Cathedral. Work on it started in the twelfth century and it's still not finished!

The most beautiful little girl in the world (mine).

This is the Europe I've dreamed of

We sat and had a quick drink at a café in front of the cathedral. That's when I realized that I wanted to live here. We have a lovely, nice-sized (for Paris) flat, with a back garden and quiet neighborhood, so there's no way we're going to move any time soon, but still, this is the Europe I love: the small towns more than the big cities.

Leïla in front of the cathedral.

L'Hôtel de Ville de Meaux

All of the heads are missing. I wish I knew the story behind this.

The architectural details are amazing.

Our daughter enjoying a merry-go-round in Meaux.
Some things are universal.

When we went back to Les Lilas, I found myself missing Meaux almost instantly. It's a fascinating town which has stood, apparently, for over 2,000 years. From what little information I could gather, it was the capital city of the Meldi tribe, one of the groups of Gaul who inhabited France. Obviously it bears little resemblance to 2,000 years ago, but this history is fascinating nonetheless.

If you move to another country, I would heartily recommend small towns over big cities. London is not the UK. Amsterdam is not the Netherlands. Paris is not France. Everyone wants to move to the big cities that they've heard of. When I lived in the Lace Market in Nottingham, I had an exposure to British culture that I never experienced in London.

Saturday, May 19, 2012

The Real Reason Americans Are Giving Up Their Citizenship

Forbes nails it: Eduardo Saverin, Not The U.S. Government, Is Entitled To The Wealth He Earned.

Ignore the title. Forbes has done an excellent job of summarizing many of the issues that we expats face. I wish they had done a better job of "humanizing" the problem by sharing some of the stories of people who have been hurt by the USA's crusade against expats, but for their target audience, I think it was a damned fine article.

Friday, May 18, 2012

Senators preparing a new shot in the war against expats

US Flag
Photo by Patty Vicknair
Cross-posted at the Daily Kos.

Imagine, if you will, the following situation.

A young man, born in South America, moves to the US as a child, acquires US citizenship, invests in a successful company, and later moves to Asia. After living in Asia for several years, this successful young man invests in a number of business opportunities in the US, South America, and Asia. Despite being foreign-born, because he acquired US citizenship, he's required to file his tax returns every year and dutifully does so. Then Form 8938 came into effect and he has a problem. Now he's required to report on his foreign financial assets and businesses outside the US aren't happy about this. Foreign businesses are already avoiding the US due to the PATRIOT act, but now they're not happy about having American partners with invasive tax filing requirements due to the new form 8938.

Thus, our young man has a problem. He can lose potential business deals due to foreign companies with no presence in the US not wanting their financial details reported to the US, or the young man can decide to retain his original citizenship and give up his US citizenship and continue his business without any problems.

And that's exactly what Eduardo Saverin did in September of 2011. A Brazilian who's lived in Singapore for the last several years, Eduardo Saverin decided that due to his US citizenship being a tremendous obstacle to what he can do with his money. With Americans abroad being denied bank accountsbrokerage accounts, and being denied business opportunities, it seems perfectly reasonable that a Brazilian living in Singapore might want to give up his US citizenship. Unfortunately, Eduardo Saverin is one of the founders of Facebook and is expected to save many millions of dollars by giving up his US citizenship prior to Facebook's IPO (your author has read estimates of anywhere from $35 to $100 million in tax savings).

That's why US senator's Schumer and Casey want to tax him anyway. And bar him from returning to the US.
[Expats] who avoid paying their taxes by renouncing citizenship will be permanently denied re-entry into the U.S. ... Called the “Ex-Patriot” act (short for “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy”, according to ABC News), the act proposes to re-impose a mandatory 30 percent tax on the capital gains of anyone who renounces citizenship — even if they are no longer resident in the U.S.
This is rather interesting. While I haven't read the text of the bill (I can't find it), it appears from this brief summary that an "accidental American", such as, for example, Boris Johnson, a prominent British politician and the mayor of London, could easily be barred from entering the US if someone decides that he gave up his citizenship to avoid paying US taxes.

This hearkens back to the famous "Reed Amendment" which attempted to group tax dodgers in the same class as polygamists and international child abductors: people who are barred from entering the US. The Reed Amendment has never been enforced because of the ludicrousness of it. Two people, in exactly the same situation, decide to exchange their US citizenship for another citizenship. One is allowed to visit the US and the other is barred from ever entering the US merely because someone decides that the latter is a tax dodger? The Brazilian Saverin has already stated quite clearly that he's giving up his temporarily acquired US citizenship because of business restrictions. How do we read his mind and prove that he's also dodging taxes?

Many Americans have a knee-jerk reaction to people giving up US citizenship (but they don't give a damn about people giving up the citizenship of other countries as exemplified by their proud declarations of being of "British", "German", etc. descent). Frankly, I have no idea what Saverin did wrong. He's Brazilian and he's lived in Asia for years. When Form 8938 started curtailing his business and financial interests, it makes perfect sense for him to decide to remain Brazilian but give up his US citizenship (I have no issue with patriotism, but jingoism fills me with disgust).

While I have very mixed feelings about the Economist magazine, I feel the Economist hit they hit the nail on the head regarding Saverin:
Wait a second! Did Eduardo Saverin plunder us? Are we now a desolate husk of a country, sucked dry by Eduardo Saverin's rapine? Well, no. Facebook created wealth. Mr Saverin is leaving having deployed his capital in a manner that made America better off than it was when he arrived. But will he escape without rendering unto Caesar what is Caesar's? Well, no.
In this case, the Economist appears to get some details wrong, but in short, since Saverin is worth considerably more than $2,000,000US, he's considered a "covered expatriate" and must pay an "exit tax" as if he sold everything he owns. He's already facing at least three hundred million dollars in taxes on his estimated $2 billion net worth and he knows that. If this was just done for taxes, Saverin would have saved money by not giving up his US citizenship.

In a country where most US businesses avoid paying any federal income tax, does it seem a bit strange to go after one man? Senator Charles Schumer, one of the men incensed at Saverin's behavior, has long fought hard to limit taxes on the enormous profits made by hedge fund managers. Of course, even though he hit political pressure and backtracked slightly, there's a reason that those in the securities and investment industries are still his top campaign contributors: Schumer takes care of the rich and they take care of him.

Senator Robert Casey, meanwhile, has been repeated introducing bills to suspend taxes on the chemical industry:
Why do we have two Senators fighting hard to cut taxes on very successful businesses and try to punish expats on a one-time alleged tax dodge? Currently, with around 1700 Americans giving up citizenship last year, when you look at the US population of 309 million people, we have only 0.0006% of Americans giving up their citizenship. Given that the vast majority of us are middle class (my research shows that most expats tend to be teachers, accountants, waiters, social workers, and so on), we have a tiny, tiny, tiny fraction of wealthy Americans giving up their citizenship. We're talking about a handful of people that Schumer and Casey's bill is designed to target, but as with most "let's punish the expats" laws, they're hurting innocent people who can't afford to pay the exorbitant costs being foisted on expats. I'm not sure how hurting innocent Americans to punish a handful of wealthy people adds up, but ...

Bullshit. I know exactly why it adds up. I hear it all the time. One expat who lives in France mentioned how one American screamed at her for being a traitor for living in France with her French husband. Just hit Google and search for traitor expat (minus "julian" to avoid the Julian Assange links) to get an idea of how we're viewed.

Right now, the US in a serious recession and some suggest it could become a new Depression. Others argue that we're already entering a Depression (like how I contrasted Fox News and Krugman there?). What better way to distract the voters than to punish the much-loathed and politically impotent expatriate community?

The "Ex-Patriot" act will raise little revenue, will discourage the wealthy from adopting US citizenship, but will resonate with voters who want to lash out at someone.

Wednesday, May 16, 2012

Want to understand the economic woes in Europe?

International Money Pile in Cash and Coins
Photo by epSos.de
Read Krugman Wishes He Were Wrong Amid EU Austerity Backlash. And if you're struggling to understand what a recession really is, read this story about a baby-sitting co-op that failed because ... it went into recession. This is relevant because in my post covering whether or not it's a bad time to move to Paris, one respondent argued that with the economic uncertainty in Europe, of course it's a bad time.

In the baby-sitting co-op mentioned above, couples agreed to baby sit for other couple's babies. They would receive a coupon if they babysat and pay one out if they needed baby-sitting. It worked well until at one point, a lot of couples wound up having babysat quite a bit and had reserves of coupons and there were few coupons in circulation. Other people were afraid to pay coupons for a baby sitter because they were worried that there wouldn't be coupons left for them to earn later. Thus, they only spent their coupons if they had to.

The co-op, thus, went into a recession. How could you get out? You could, um, try to force people to spend their coupons, but people aren't going to be very happy about that. What's the point of the co-op if it forces you to do something? You could try to take the coupons and forcibly redistribute them, but people certainly hadn't signed up for that! (For those who are thinking "taxes", don't forget that most major economies allow voting and people have a say in how taxes work).

Maybe pass rules against hording? How are you going to enforce those? Maybe you could fiddle with prices and say that you only need to spend a half coupon to hire a baby sitter and you still get a whole one to baby sit. That might work in the short run, but as any economist will tell you, you could easily have more people wanting to baby sit than to have their children babysat (this would make more sense if the coupons were fungible, but eventually a "black market" in coupons could arise quite innocently).

Well, you could print more coupons, but people argue that this would be inflationary. But that's the point! I've argued against this in that past, but now I'm pretty sure I'm wrong. Here you print more coupons, break the hoarding cycle and things are running smooth again, you remove some of the coupons from circulation or you invite more people into the co-op.

Which is the exact opposite of what most governments in Europe are doing. Nobody's buying, so the governments are demanding austerity programs where we continue to not buy. Anybody see a problem with that? Yeah, I thought so.

Interesting, the US government may come to Europe's rescue. The FATCA program is creating a huge new banking industry sector across the planet. I'm guessing it's not enough, by itself, to pull Europe out of its crisis, but it could certainly help.

Monday, May 14, 2012

New renunciation figures: record numbers continue

Tax Day
These suck when you're an expat
Photo by MoneyBlogNewz
The Federal Register has published their USA renunciation figures for the first quarter of 2012 (I use the XML feed. I assume they're the same). Annoyingly, I missed this then it happened a couple of weeks ago because, again, the format of the data has been changed and my software missed it. For 2011, the corresponding number was 499 renunciations listed. For this year, it's only 430, but still a huge increase over the 231 renunciations for the entirety of 2008. I've predicted that 2012 will have a record number of expatriations, so I'm down by about 69 so far, but I don't think I'm going to be too far off. Still, it's an astonishingly high number compared to historical trends.

Interestingly, it turns out that 2011 was not the highest number of renunciations on record. The year 1997 holds the record for the most US renunciations: 1,812. It appears that this is due to many Hong Kong residents giving up their US citizenship at the time Hong Kong reverted to Chinese control because China does not allow dual citizenship.

One of the names on that list of people who have renounced their citizenship is Eduardo Saverin. A Brazilian by birth, he's been an American for a little over a decade, but now lives in Singapore. However, he's also one of the founders of Facebook and Saverin renounced his US citizenship just before the Facebook IPO, a move likely to save him many millions of dollars. Unfortunately, this high-profile case overshadows the many other people who don't live in the US and are tired of being denied bank accounts, being threatened with criminal prosecution by the IRS for not knowing they were required to file Form TD F 90-22.1 with their taxes (which was never widely advertised), or simply fed up with the hassle of paying a couple of thousand dollars to prepare a tax return on which they owe no money.

I certainly can't say why most of the people on the list chose to give up their US citizenship — everything I've read has been idle speculation — but it's interesting to see this trend continue.

Friday, May 11, 2012

U.S. Expats Offered Stark Choice with New Ballot Wording

Ballot
Ballot photo by Chris Phan
Just once I would love to read an article entitled "Expat Groups Consulted on Some Law Impacting Expats." But no, it's clear I'm not going to see that any time soon. The latest law impacting expats is explained at Change to Ballot Request Form Angers U.S. Expats.

The short version: a ballot change requires expats to declare that they are:
  1. Planning to return to the US
  2. Planning to never return to the US
The reason for this is because overseas ballots typically allow you to vote in local elections (I still get to vote for Oregon laws) along with the federal ones. This change allows election officials to only distribute federal election ballots to expats to don't plan to return.

On the surface, I actually have no problem with this. I wouldn't mind being excluded from Oregon elections because honestly, they don't impact me. However, the federal elections, particularly for the Presidency, still have a huge impact on me and I don't want my fundamental right to vote stripped from me. However, the choice offered is abysmal.

I know plenty of expats for whom the "are you planning to return" answer is "I don't know". There are others who plan one way and things turn out the other. There are also plenty of Americans born outside of the US who have never in the US and thus cannot "return".

In this case, it does look like the wording was an honest mistake and I was heartened to see the officials admitting it, but with the rather chilling impact of punitive laws being passed against US expats, I'd be concerned that at some point in the future, someone legislator will promote a bill targeting those who are "planning to never return to the US".

Wednesday, May 9, 2012

Michele "Batshit Crazy" Bachmann Acquires Swiss Citizenship

Update: Michelle "flip-flopper" Bachmann has already renounced her Swiss citizenship.

I'm feeling a bit under the weather today, so I fear I must be briefer than I like, but Michele "I think I'm a banana tree" Bachmann has acquired Swiss citizenship.





If you're unfamiliar with this strange, strange woman, here's a little taster:





That video actually makes her seem less crazy than she really is. Here's my favorite quote from Bachmann:
"I find it interesting that it was back in the 1970s that the swine flu broke out under another, then under another Democrat president, Jimmy Carter. I'm not blaming this on President Obama, I just think it's an interesting coincidence." -Rep. Michele Bachmann, on the 1976 Swine Flu outbreak that happened when Gerald Ford, a Republican, was president, April 28, 2009
Politico.com has more on the Bachmann story.

Monday, May 7, 2012

Chile will pay you to move there

Damn, wish I had known about this sooner, but I found out that Chile will pay you $50,000US to move there!

Santiago, Chile
Photo via Wikimedia Commons
Well, of course there's a catch, silly. You have to come up with an interesting idea for a startup business, one with a potentially global reach, and yes, the founder of the startup must move to Chile for the first six month of the project. The Start-Up Chile program is entirely in English, but you will be living in a Spanish speaking country. The program has been going on since 2010 and apparently is a success for Chile

Not only will you get $50,000 to bootstrap your company, you get a one-year work visa and plenty of business contacts to start with. And you can bring business partners with you. You can leave after you get your startup launched, but as the BBC reports, many Start-Up Chile businesses are making the choice to remain in Santiago (and that's a great article, by the way).






You'll need to move quickly, though. Round 2 of applications for 2012 starts on June 11th, 2012 and round 3 is opening September 14th 2012.

Check out all of the Start-Up Chile on Youtube videos to get a sense of what others are doing.
... and their Twitter feed
... and their Facebook page

On a side note, I've restarted a personal blog at blog.overseas-exile.com. Some things have leaked into this blog that should really be on a personal one. By having separate blogs, I can keep this more focused on "how to become an expat".

Friday, May 4, 2012

Finding Jobs and Housing in France

If you've never checked out www.expat-blog.com, I strongly recommend you do so. They've been around for seven years and they're fairly popular. As I mentioned in Part 3 of my work permit series, you should be checkout out expat blogs for your target country to learn more about the expat experience there and to possibly make contacts.

The expat-blog.com Web site has a nicely organized selection of blogs from expats around the world (here's mine) and it's a great way to get a feel for the issues that expats face.

Recently they've released two new sections dedicated to jobs and housing in France. This can help you understand what sort of work opportunities there are and how much you're going to pay for rent when you first move there.

Be warned: you can lose a lot of time having fun reading through their information :)

Wednesday, May 2, 2012

American expats pay tribute to America

Note: I have no intention or desire to give up my US citizenship but, repeatedly, when I bring up the fact that other American expats do so because of how badly the US government treats its expats, people assume that I am planning on "jumping ship". Stop doing that. Freedom of dissent is supposed to be part and parcel of what it means to be an American. We don't have to agree on our views, but we also don't need idiotic cries of "traitor" just because someone doesn't understand what "Freedom of Speech" means.

Business Week has an interesting article entitled Wealthy Americans Queue to Give Up Their Passports. Of course, they failed in two areas:
  • They didn't define "wealthy"
  • They didn't provide evidence that it was "wealthy" Americans giving up their citizenship
I get awfully tired of seeing crap like this. Americans living in the US think we expats are all champagne-sipping Americans sitting on yachts planning to avoid taxes. Instead, we have a bunch of champagne-sipping Congressmen sitting on yachts planning to avoid their own taxes who are painting American expats as a bunch of wealthy tax dodgers.

I pay taxes. I live in France, so of course I pay lots of taxes. My taxes pay for French policemen, French firemen, French health care, French roads, and so on. I have no problem paying French taxes because there's a clear benefit from them. It's not that I don't want to pay US taxes, but I want to have those taxes to be proportional the benefits that I receive.

Historically, paying tribute often meant that you had been subjugated by a foreign power and you paid money to them, not for services rendered, but to stop them from invading you again. If you pay them for services rendered, that's taxation. If you pay them by compulsion and get nothing in return, that's paying a tribute. American expats are forced to pay tribute to the US government.

Imagine yourself as the typical middle-class US expat: you don't have a huge amount of spare cash on hand (particularly now) and you probably won't owe the US government much, if any, money in taxes due to the Earned Income Exemption. Except that you have to file anyway. You now have to file Form 8938 along with your tax return and possibly a Form TD F 90-22.1. Form 8938 and Form TD F 90-22.1 contain roughly the same information, but it's collected in different ways, at different times, and is sent to different organizations. If you make a mistake on one of them, you could be viewed as a tax avoiding felon, even if wading through this mess is naturally complicated.

Of course, there's also the prospect of OVDI, but many Americans find themselves facing their life savings being wiped out by OVDI, despite the US government having previously done very little to publicize these laws. Walk into a consulate on a routine matter and you don't get handed a list of what forms you need to fill out, to whom you have to send them and when they must be sent. Calling the IRS back in the states results in a "let me get back to you" but you never hear from them again.

You're supposed to just magically "know" this information (and God have mercy on your soul if you didn't know you were required to file a required Form TD F 90-22.1 because the IRS will show no mercy whatsoever). And while you're at it, just try finding US tax experts outside the US. Just filing a minimal "I don't owe any tax" return can easily cost you $2,000. If you have to go the OVDI route, you could easily face up to $16,000 in filing costs without owing any money!

Of course, if any income isn't "earned income", then you can't claim the standard exclusion. Only a third of the world's nations have tax treaties with the US, so many people don't even have those to fall back on. I know one American lady whose lived in France for 20 years, bought a French house with her French husband, paid for it with a French income and then sold it — only to face capital gains taxes in both France and the US. And it also cost her a bundle to find a tax advisor for her paperwork.

So yeah, many US expats are giving up their US citizenship over punitive tax measures. It's hell to deal with. It's wonderful living over here, but the US is turning our taxes into a nightmare.

Unfortunately, the Bloomberg article cited above perpetuates the myth that Americans living abroad are swimming in wealth and are just trying to screw Uncle Sam. We receive virtually no benefits from the US government and benefits we should get are either eliminated (such as the Medicare we've already paid for) or drastically reduced (such as Social Security). We are required to jump through hoops for Uncle Sam while millionaire tax dodgers in Congress strip us of our rights while telling people that we're the ones abusing the system.

So can someone please tell me specifically what concrete benefits we Americans abroad are getting from the US government? And don't give me any flag-waving nonsense. I can wave plenty of flags all day long, but they don't take care of my daughter when she's sick, my French taxes do that.

Mailbag: Bad time to move to Paris?

A married couple, Alice and Bob, sent me an email asking if they should return to France to live. Neither have French citizenship. One interesting tidbit is that Alice has Australian citizenship and one of her parents was Scottish.


Dear Curtis,

After more than a year of a job search in the US, we find ourselves in a possible 'window' of opportunity to return to Paris, stop living on a temporary basis and start a family. We have no children, no ties to the US. But then there's this whole 'Euro/Global Crisis' thing.

The question we face is: should we give up economic safety and a pretty dull existence for a more enjoyable lifestyle (as far as we're concerned), but real risks related to employment and the future of France (is France the next Greece or even Spain?).

We hesitate between moving to Paris in the next 6 months or moving to a US city with a more European feel for a few years (saving Paris for a better economy). And we wonder when will it ever be "le bon moment"?

As an expert ex-pat, what do you think? Should we wait it out a few years, or pack our things for another adventure?

Sincerely,
Alice and Bob




Alice and Bob have quite a dilemma, but there are interesting possibilities here. I don't know what their "window of opportunity" is, so it's difficult for me to be too specific, but here are some rough thoughts.

First, it's true that France is at a very strange point and we don't know what's going to happen. It appears that the next president of France will be François Hollande, a socialist with very little national political experience. He's made a lot of promises about spending without specifying where the money is going to come from. The markets are rather nervous about him and it remains to be seen how effective he will be. That being said, the financial crisis is global and France is the fifth largest economy in the world. If they a Greek-style meltdown, they're taking everyone else with them, so I don't know that staying out of France will help. I also don't think France will fall like that (famous last words).

There is never un bon moment in my view because we cannot guarantee the future. You'll have to judge for yourself how good the opportunity is and what steps you can take to protect yourself if it doesn't pan out. It's been my experience that people who don't seize opportunities when they present themselves are less likely to seize those opportunities in the future. It may turn out to be disastrous, but you'll never forget the experience.

Also, if it's a work permit opportunity, you need to find out if your spouse will be able to work. I believe that under some circumstances, the spouse of a French work permit holder is permitted to secure work, however, unemployment in France is currently at 10%, so it will be difficult. Be sure that both of you are as fluent as possible in French to maximize your chances.

If you take this chance, be sure to look into the European Blue Card. France is now offering the Blue Card and if you qualify for it, you can eventually get long-term European Residence Permits and the opportunity to live and work in most EU countries (the UK, Ireland and Denmark have opted out).

One interesting bit is where you pointed out that Alice has Australian citizenship and one of her parents is Scottish. Have you looked into the UK Ancestry Visa? Commonwealth citizens with at least one parent or grandparent with UK citizenship can apply. If accepted, you, your spouse and dependents can live and work in the UK for up to five years. After that, you can apply for permanent residency. After one more year, you can apply for citizenship. With that, you can live and work just about anywhere in the EU. I know you want France and the UK clearly isn't, but it's a road to it and the London/Paris Eurostar makes it easy to travel back and forth.

If you decide to stay in the US and are looking for a city with a "more European feel", may I suggest you check out Portland, Oregon? I love that city and I've quite a few European friends who've fallen in love with it too.

Good luck and let me know how it works out!
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