Source: BBC

How does it feel to give up your nationality, to renounce the country you were born in, potentially forfeiting the chance to ever return?

“It’s not going to be easy at all. It’s the last thing I ever thought of doing,” Jane tells me when I meet her in a Paris cafe.

Her voice cracks and her eyes well up. She is in the process of relinquishing her American nationality. Soon she’ll visit the US embassy formally to renounce her citizenship, she says, under duress.

“I’m very proud of being an American. It’s what I am when I look in the mirror.

“If it weren’t for Fatca [the Foreign Account Tax Compliance Act] and the decision by the bank, I’d never be doing this. Never ever. It’s just breaking me in half.”

She’s not alone. According to the US Treasury, a record 4,279 individuals renounced their US citizenship or long-term residency in 2015 – an increase of 20% on the previous year, which was itself a record-breaking year.

In 2010, just 1,006 gave up being US citizens, but since then the numbers have risen every year.

Double taxation

Reasons for giving up your US citizenship aren’t officially listed, but one of the main reasons cited is Fatca – a 2012 law designed to target overseas accounts held by wealthy Americans.

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The United States is one of only two countries in the world that has citizenship-based taxation (the other is Eritrea).

As a US citizen you must file a tax return, no matter where you live, and often pay US taxes on top of the tax you already pay in your country of residence – so-called double taxation.

This has been the case in the US since the Civil War in the 19th Century and until recently really only affected the rich. Americans abroad are given a yearly allowance of $106,000 (£73,000) before double taxation kicks in.

But Fatca expands the scope of what can be taxed, and places a burden on foreign banks to identify US citizens among their customers to US tax authorities. The penalty for failing to do so can be as high as 30% of all a bank’s dealings with the USA.

Refused banking

As a result, ordinary Americans abroad are being denied access to basic banking facilities; banks would rather refuse US citizens’ custom than run the risk of hefty penalties.

“I went to one and as soon as I typed in I was born in the United States, there was a big set of red letters that said ‘No to US persons’,” says Jane.

“I’ve got to pay my bills, I’ve got to buy food – I’ve got to have a bank.”

For people like her the only option is to renounce their citizenship, and this is causing such a backlog of paperwork that in November, the fee for renunciation was put up to $2,350 – an increase of about 400%.

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It’s a heavy price to pay for financial stability, but for many there’s an even bigger, more emotional price to pay – becoming an ex-American.

“They first of all make laws that make life impossible and then when you decide it’s impossible and you’ve got to do something that’s against what you believe in your heart, they’ve gotta just up the fees like a bunch of extortionists,” says Jane.

Jane has lived and worked in France for 30 years drawing what she calls a “humble” salary. She has filed a tax return every year even though she earns significantly less than $106,000 a year.

But under Fatca her pension and savings can also be taxed, and that’s money she can’t afford to lose.

The process to renounce is humiliating, she says.

It must be done in person, in front of other Americans at the US embassy. Her real name will then be published in the Federal Register (Jane agreed to talk to the BBC anonymously) – a move she feels is made to shame those who renounce.

And it’s expensive too.

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