US / UK sign FATCA agreement

@theOAP

Two points:

1. Increasing tax complexity to provide employment is a sad waste of human ability.

2. If I won the lottery, I would have to pay a large chunk to the IRS instead of spending it in the UK. Perhaps governments care little for the welfare of US persons on their soil, but sure they do care about the US taking money out of their economies. I think this is the best argument for why governments should oppose US worldwide taxation policies.

The UK is a tax haven to anyone except a US person. The non-domicile rules allow rich foreigners to pay tax only on money brought into the UK while they keep the bulk of their funds in other tax havens to spend on their jet-setting lifestyles. These people need pay no tax to their home countries. And then there's the Crown Dependencies and Overseas Territories which are surely tax havens.

Sure, but we are talking about US citizens here and those with ulterior tax motives would look elsewhere than the UK, as you say places like IOM.

I think I've mentioned this before, but although the majority of Americans on here probably identify more with the Democrats than the Republicans, when it comes to expat rights (particularly with taxes) the GOP is overall more in their interests. For example, the proposal from a few months ago to end the FEIE and the proposal discussed here were all introduced by Democrats (and I'm sure likewise most of the past proposals/laws designed to curtail expats from leaving their U.S. tax obligations). Basically the right has the "love it or leave it" mindset, while the left wants you trapped in.

It seems like more countries will adopt similar deals with the United States.

I like this article on why it might be a good idea for Americans living abroad to keep their money away from foreign investments.

Why Americans Should Never, Ever Own Shares in a Non-US Incorporated Mutual Fund [nofollow]

It seems like more countries will adopt similar deals with the United States.

I like this article on why it might be a good idea for Americans living abroad to keep their money away from foreign investments.

Why Americans Should Never, Ever Own Shares in a Non-US Incorporated Mutual Fund

Yep, no news to many in this board....the sad thing is when it is news and then it's bad news. Even if you don't meet the FATCA thresholds you still should file an 8621 and should have been filing before FATCA came in. IMHO knowledge of the IRS code should be used prophylactically to avoid tax complications rather than being able to file forms for complicated situation.

From the article

"Why Americans Should Never, Ever Own Shares in a Non-US Incorporated Mutual Fund"

Finally, this issue serves to demonstrate an important point that all American expatriates need to understand. The PFIC rules are just one of many reasons that American investors need to keep their investment funds in U.S. accounts, even if they are investing globally. A thorough analysis of the tax, cost, reporting and security issues invariably leads to the conclusion that when it comes to wise and efficient investing, savvy American investors keeps their wealth invested globally, but through U.S. financial institutions.

The conclusion ignores the possibility of a US citizen's country of residence having it's own version of PFIC rules. Long term US citizen residents of the UK owning US mutual funds should understand the UK's "Reporting Funds" regulations that deal with overseas investments...and in this context that includes US mutual funds. If a fund is not "Reporting" according to HMRC all its distributions and capital gains are taxed like ordinary income and you don't get your capital gains tax allowance. However, HMRC is a lot more helpful than the IRS as it has a big spreadsheet of foreign funds that it considers reporting....these include a lot of Vanguard ETFs. This is useful for any US citizens wanting to invest in mutual funds and keep things relatively simple for US and UK taxes.