Authorities in America have announced that the charge imposed on American citizens living abroad who plan to renounce their citizenship will be reduced from $2,350 to $450.
Such a decision will be of particular interest to accidental Americans whose parents are from this territory but who have never lived there or to those who were born there but have always lived in other countries, VisaGuide.World reports.
A report provided by Connexion France shows that America and Eritrea are the only countries in the world that apply a citizenship-based system, while the rest of the world contracts territorial-based taxation or residence-based taxation.
Following the United States 2010 Foreign account tax compliance act (Fatca) international banks are obliged to search their registers for citizens of America and also report their assets to the tax authorities in America if they amount over $50,000.
This means that people are required to pay taxes in the United States every year despite the fact that they have never lived or worked there.
Following the current regulations, American citizens are not required to be taxed twice in case they already paid tax in their country of residence on an income of more than $112,000 for 2022, however, they still must file a tax return, while the Fatca rules make the process more complicated to them to open a bank account in other countries.
This is the main reason why citizens of America living in other countries consider giving up their US nationality while hundreds of these persons have enquired nearly renunciation in France alone, according to US authorities.
Subject to the exorbitant” $2,350 fee, a group of a total of 1,400 members previously urged the Accidental Americans Association (AAA) to file a lawsuit against the State Department back in 2020, urging for the cost to be reduced.
“The fee was introduced at $450 in 2010 and was increased fivefold to $2,350 in 2014. This was ostensible to cover service costs […] But the timing coincided with the passage of Fatca, which was clearly expected to incite Americans to give up their US nationality,” the AAA pointed out in this regard.
Recently, the Assistant Secretary for Consular Affairs in the United States, Rina Bitter, unfolded plans that the department is planning to reduce the fee to $450. However, it was reported that despite the fact that the fee has been reduced, renouncing American citizenship will continue to remain a complex process.
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