Destinations for US expats avoiding FATCA are shrinking fast

Would-be US migrants looking for a haven well out of the reach of the dreaded FATCA and the Internal Revenue Service are finding their options decreasing by the month.

So many nations are panting to be included in the scheme, mostly to avoid a US withholding tax on their financial transactions taking place in the USA, that the US Treasury has put its implementation back by a full six months. FATCA will now become law on 1 July 2014.

US expats living overseas and already burdened with an annual IRS tax return and liability may be considering relocating as well, but again the list of non-participating countries is diminishing. All overseas holdings by US taxpayers valued at more than $50,000 must be reported to the IRS by foreign banks and investment arms as well as by the expats themselves.

The IRS rules haven’t actually changed, but the laws tightening up on the loose ends of taxpayers who fail to declare capital gains or income are going to make it far more difficult for expats to avoid paying their dues. The legislation as it’s presented to foreign financial institutions is carrot and stick-style, with the only nation likely to eventually refuse to play being China.

Most Western nations and EU states have already opted in, as have Japan, Canada, Switzerland, Ireland, Mexico and most of the Scandinavian bloc. Still in negotiation are Australia, the Caymans, Cyprus, New Zealand, Singapore, South Korea and more.

India, several tropical offshore tax havens, Jamaica, the Isle of Man, Russia, South Africa, the UAE, the Philippines and a good few other nations are edging towards options for inter-governmental discussion. African, Latin American and mainland Asias countries are all that’s left as a relocation choice for expats who refuse to play by the new rules.