39% rise in renounced US citizenship

The number of Americans renouncing US citizenship increased 39% in the three months to September after rules that make it harder to hide assets from tax authorities came into force.

People giving up their nationality at US embassies increased to 776 in the third quarter, according to Federal Register data.

The appeal of US citizenship for expatriates faded further as more than 100 Swiss banks began to turn over data on American clients to avoid prosecution for helping tax evaders.

The US, the only Organisation for Economic Co-operation and Development nation that taxes citizens wherever they reside, stepped up the search for tax dodgers after UBS paid a $780m (€615m) penalty in 2009 and handed over data on about 4,700 accounts.

Fatca requires US financial institutions to impose a 30% withholding tax on payments made to foreign banks that don’t agree to identify and provide information on US account holders. It allows the US to scoop up data from 77,000 institutions and 80 governments about citizens’ overseas financial activities.

In establishing the 2010 Fatca law, Congress and President Barack Obama in effect threatened to cut off banks and other companies from easy access to the US market if they didn’t pass along such information.