Stowaway

Probably not a good stowaway option
Photo by Official US Navy Imagery

No significant post today due to a sick baby. Instead, I'll share an interesting news article about a stowaway. Among the things I learned: the captain of the ship is responsible for the well-being and transportation of the stowaway until a port is reached which can legally accept the stowaway. In this case, the nationality of the stowaway couldn't be determined and the captain was forced to continue caring for the stowaway after both French and US authorities refused to accept the man. I haven't been able to determine the man's fate. Anybody?

If you're interested in this topic, you'll probably find the Wikipedia article on stowaways as fascinating (and sad) as I did.

France, here we come

The pic on the right is from 1999. I believe I took that picture from the top of the Arc de Triomphe.

That was my first trip to Europe and I met my brother Lewis for the first time (long story) on that trip. He's British and when we visited Eton near the Windsor Castle, I was struck by the beauty and told my brother "I could live here". Little did I know that I was only a few years away from being able to do that. When I moved from Nottingham to London in 2007, I briefly toyed with living in Eton, just because I could.

And now, by this time next week, I'll be living in Paris (well, Les Lilas, a suburb of Paris). This might (again) interrupt my posting schedule, so be patient.

I'm going to miss Amsterdam and I'm frankly a bit pissed off that we're in a position where the move in needed, but life goes on. My new job is great and, damn, France! We're just about finished packing. My wife is in Paris for three days now to take care of a few things with our new flat and then we move on Friday.

Renouncing your citizenship

For many people who wish to leave the US (I couldn't say for other countries), I often hear of them talking about "renouncing their citizenship". Invariably, this is a political thought rather than a "I want to see the world" thought and something I usually hear in association with fairy tale expat fantasies. For Americans living abroad, though, it's becoming a more common topic. With the CEO of the Luxembourg Banker's Association now referring to Americans as toxic liabilities due to FATCA, Americans being denied banking overseas, and how many expats are double-taxed (depending on your income sources, this is easy to have happen even if you don't make a lot of money), I'm seeing more Americans on expat boards, Facebook expat groups and other places openly discussing renunciation.

Or maybe you love your new country, want to stay there, but you have to apply for citizenship to do so. As many countries don't allow dual citizenship, you wouldn't be "renouncing" your citizenship as much as exchanging it (depending on your point of view, you could also say "upgrading" or "downgrading").

Sooner or later, many expats are going to ask themselves whether or not they should give up their original citizenship, but they're not aware of the process.

I take no stance on whether or not you should give up your citizenship. It's a very personal decision and I couldn't possibly be one to judge, but if you do wish to give up your citizenship, you'll be happy to know that there is now a comprehensive citizenship renunciation guide on the Web. I've read through it and double-checked a lot of the information and it looks solid.

Here are a few key points:

• You do not have have citizenship in another country to renounce (but you'd be an idiot not to).
• You have to apply at an appropriate foreign consulate.
• You do not have to have your taxes paid (but the IRS will come after you later).
• You can't get your citizenship back unless you go through the same painful process as all other immigrants
• You will not be denied reentry to the US, but only to the extent that your new citizenship allows it

Be aware that this is a drastic step. For those who foolishly consider "renouncing" without having another citizenship, that just means you'd be stateless and have nowhere to go.  In fact, I'm only aware of two Americans in history who have ever voluntarily become stateless, Mike Gogulski and Garry Davis. It's generally not a pretty position to be in.

Marine Le Pen versus immigrants

Marine Le Pen
The Pretty Face of French Hate

Starting this year it will be harder to obtain the French nationality. You will need to pass a test on French culture and history and speak French as well as a 15-year-old native. This is actually pretty much in line with many other countries, but critics claim that this is pandering to the far right. But I don't want to talk about that. Instead, I want to focus in a very interesting paragraph (emphasis mine):

Marine Le Pen, the popular leader of the anti-immigration National Front, has been campaigning in favour of a ban on dual citizenship in France, which she blames for encouraging immigration and weakening French values. While several UMP members have endorsed her stance, Guéant has stopped short of calling for a ban on dual nationality, largely because of the legal difficulties such a move would entail.

Got that? Marine Le Pen, leader of a party whose name in other countries is cover for blatantly pro-Nazi political groups, wants to ban dual nationality.

No big surprise, right? However, Le Pen has repeatedly made another curious demand:

Ceux à qui nous avons eu la générosité d’accorder la nationalité française doivent pouvoir la perdre s’ils ne respectent aucune des règles de notre pays.

Loosely translated:

Those to whom we've had the generosity of granting French citizenship should lose that citizenship if they don't respect the laws of our country.

Again, nothing too surprising from the racist right.

But put those together: if you become French, they want to take away your other citizenship. If they then point their fingers and cry j'accuse!, they'll take away your French citizenship.

In other words, you'll be stateless. What then? The French can't deport you because no one will take you! Keep you in concentration camps for the rest of your life? Didn't think this one through too carefully, did you Marine? Or maybe you did and are hoping the French hear the big words and don't read the small print.

The Accidental FATCA Jobs Program

Yesterday I wrote FATCA, the US Declares War and had almost three times my normal traffic, though I suppose the provocative headline helped.

Then I saw my search stats.

FATCA was my number one search term for yesterday (and it already is for today). And just glancing at my search logs revealed that FATCA searches represented about 10% of yesterday's search engine traffic with many of those being unique visitors. It's almost double the number of searches for information about the French Foreign Legion, long the most popular search on this site. On top of that, with well over half of my traffic being from the US, I found very little of my FATCA search traffic was from the US, suggesting that there are a lot of people outside the US who want or need this information.

This is obviously very important for people and I'm surprised by the amount of traffic this one item is bringing, even if most Americans have never heard of this term, so I'll be updating with FATCA information from time to time.

FATCA, as pointed out, is not only an unworkable mess, but it's a huge burden to hand down to both the IRS and FFIs (Foreign Financial Services). However, while the Japanese and Australians have told the US to piss off and the Europeans have expressed grave reservations (because, amongst other things, it would be illegal for them to comply with US demands), the Canadians are cheerfully bending over and saying "thank you sir, may I have another?".

Well, that's the Canadian government. The banks are furious, but they're at the mercy of the government. And as one attorney testifying before the Senate Finance Committee pointed out:

FATCA, however, is imposing compliance costs of over a hundred million dollars for each of many institution, even where there is little likelihood that the affected institution has or will encourage tax evasion. And in a cruel irony, little of this money is going to be spent in the United States to create U.S. jobs. Rather, it will be spent abroad, creating jobs there.

Isn't that lovely? Many Americans wanted a jobs program at home, but we created one overseas — to punish Americans. And yes, there are already FATCA job postings in Canada.

What other impacts might there be as a result? Well, in October of 2011, in Toronto, Canada, in what may be the first event of its kind, the US Consulate held a citizenship renunciation meeting where 22 Americans simultaneously renounced their citizenship. That's just in Toronto. We don't know how many across the world are planning this, but expat forums have many Americans openly discussing renunciation now. Many of these are Americans who became Canadian, but many are Canadians who were born in Canada, have never lived or worked in the US, but nonetheless have an American parent. They're outraged that the US is not exempting them from this policy. There is even discussion that the IRS may be sharing information with Homeland Security in hopes of catching people crossing the border. Many, probably most, of these people owe no taxes whatsoever, but have committed the "crime" of having failed to file a tax return with the US government. If you live in the US, standard penalties apply. If you live outside the US, failure to file a tax return is a potential $10,000 per year fine.

This is absolutely insane. It's a witch hunt against expats and there's really nothing we can do. We have no political influence and Americans at home don't really care. This has led to horrifying situations where my daughter, born here in Europe, faces a lifetime of US taxes but probably won't be allowed to vote.  Our Social Security benefits are slashed (but we still have to pay for it), our Medicare is taken away (but we still have to pay for it) and now foreign banks are turning us away for the crime of being American.

The United States is the only country in the world which taxes their citizens abroad. Well, except for the brutal Eritrean dictatorship. Good company we keep there.

FATCA: US Declares War

The US has a bright new gift for the world as it rings in the new year: declaring economic war on the world.

Welcome to HSBC.
Americans not welcome.
Photo by Kansir

Yes, that's hyperbole, but only because the rest of the world is collectively telling the US to f*** off and telling many American expats that they can no longer have bank accounts.

So here's what's going on: the Foreign Account Tax Compliance Act, known as FATCA, requires every foreign financial institution in the world to institute the following:

1. undertake certain identification and due diligence procedures with respect to its accountholders;
2. report annually to the IRS on its accountholders who are U.S. persons or foreign entities with substantial U.S. ownership; and
3. withhold and pay over to the IRS 30-percent of any payments of U.S. source income, as well as gross proceeds from the sale of securities that generate U.S. source income, made to (a) non-participating FFIs, (b) individual accountholders failing to provide sufficient information to determine whether or not they are a U.S. person, or (c) foreign entity accountholders failing to provide sufficient information about the identity of its substantial U.S. owners.

Got that? Every bank in the world must now submit to US law and become an extension of the IRS. If they do not comply, they're to be subject to 30% withholding of all US-derived money and must file a return with the IRS to claim the money back.

The New York Times has one of the better articles on this situation. Here's a nightmare paragraph:

Noncompliance would be punished with a withholding charge of up to 30 percent on any income and capital payments the company gets from the United States. Under the law, for example, if Deutsche Bank, having agreed to register with the United States authorities in compliance with the law, were to transfer $25 million to a noncompliant Polish bank, Deutsche Bank would be required to withhold part of that sum, transferring it to the I.R.S. The Polish recipient would then have the option of challenging that withholding by filing an American tax return, claiming the money, despite not being an American citizen.

In practice, tax experts say costs like that might drive the Polish bank out of business.

Just to be clear: the Polish bank might have no US customers and do no business at all in the US, but still be driven out of business for failure to comply with US law (complying might well be in violation of domestic laws).

Let's put this another way: what if Iran demanded all US banks to turn over to Iran bank information on all Iranians with US accounts. The US would (quite rightly) tell Iran "no". Now imagine if all 200+ countries in the world demanded that all of the other 200+ countries in the world instruct their banks to report to every other country's tax authorities. The world banking system would collapse, but the US is still demanding special treatment. (I would really love to know the names of the politicians behind this idiocy, but despite all of the information out there, this is one piece of information I cannot find.)

Japanese and Australian banks have already announced that they won't cooperate, while under EU law, it's illegal for our 27 member states to turn this information over to a foreign government. Banks in many other countries will be in a similar predicament: obey their countries laws and face 30% withholding on any US-derived funds.

Or your can just read what the International Council of Securities Associations has to say about FATCA (pdf, emphasis mine):

[We] suggest that a more appropriate approach would be the development of a global framework that would allow the US and other governments to obtain information regarding income paid to citizens of their countries by foreign financial institutions which is in harmony with each jurisdiction’s existing laws and does not create an excessive compliance burden for financial institutions. This approach, which would be developed through negotiations between governments and not through negotiations and agreements between the IRS and private entities, would be consistent with the G20’s emphasis on building a coherent global framework for financial markets

Actually, read the entire ICSA letter. It very short and calmly points out how US law is so unworkable (and in much of the world, illegal) that it simply can't move forward. Among other items, it points out that the IRS is likely to collect far less in extra taxes than the massive amount it will have to spend in order to monitor every financial institution in the world for compliance.

Given this mess, it should come as no surprise that some tax advisers are suggesting that dual nationals consider giving up their US citizenship.

Side note for people in IT, like me: just imagine how hard it would be to upgrade all of your IT systems to handle verifying and tracking the nationality of all of your customers, along with transmitting this information to the relevant US authorities. This is one of many reasons why foreign banks are refusing to cooperate. Even without the 30% transaction penalties, it's a huge financial burden to implement systems based on the whim of another country's laws.

Happy New Year from Amsterdam!

If you're the sort to make New Year's resolutions, resolve to follow your dreams and move to another country. You have one year. Go!

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This will be my last New Year's celebration while living in Amsterdam. I feel a bit melancholic about that, but there you go. My life is changing (again!) and we're moving to Paris in couple of weeks.

New Year's Eve was spent having a wonderful dinner with our friends Jurian and Madelijn. We enjoyed escargot, lobster, champagne and vanilla ice cream. Philistine that I am, I still preferred the beer to the champagne. Don't tell anyone!

When midnight struck, Amsterdam detonated.

Honestly, I can't think of any other way of describing it. Amsterdam celebrates the New Year the way the US celebrates the 4th of July: with lots of fireworks. Except that, unlike much of the US, very, very powerful fireworks can be bought by just about anyone. You travel to Belgium, lay down a few hundred Euro and help turn Amsterdam into a war zone.






Of course, this is not without its drawbacks, but it was a fun evening nonetheless.

One thing which astonished me was our daughter. With all of the bright lights and loud explosions, I expected her to burst into tears. Nope. She was delighted (and tired) and was content to just watch everything.

Meanwhile, there's a little cleaning up left to do.

Sadly, these sorts of fireworks are illegal in France, so it may be the last time I see anything like this again. We'll have to bring our daughter back when she's old enough to understand this. Or maybe we'll just come back to see our friends. I'll miss this city.