FATCA & Taxes in Germany

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FATCA & Taxes in Germany


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Old 11th April 2019, 01:42 AM
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Default FATCA & Taxes in Germany

I am interested if there are any US citizens living in Germany and how they deal with all the communism rules the US spreads out. I am a US citizen intending to move to Europe but do not want to follow Obama's FATCA rule which is a huge invasion into financial privacy. Nor do I feel the need to do my US tax returns as I will no longer live in the US and have to pay my taxes regardless in Germany - there is zero need for the USA to know how much I have, what I have, how I make it as I will not make money in the US nor live there anymore....

Since I do have 3 citizenships but am natural born american, I'd like to see if there are ways to keep the US citizenship without doing all these communistic rules imposed on me by being american?

Does anyone live in Germany or Austria or Switzerland that neither follows FATCA nor does his/her US returns...

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Old 11th April 2019, 06:33 AM
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Oh, I suspect that there are lots of US Citizens out there who don't bother with US taxes or FATCA - though generally speaking they just don't raise their heads above the radar.

Or, there are those who choose "selective compliance" due to various risk factors.

There are a couple of "gotchas" you need to be aware of:

Banks in many countries these days may refuse to open a bank account for you if you have any obvious "indicia" of US citizenship and/or you refuse to provide them with either a W9 (acknowledging US citizenship) or a W-8BEN (indicating that you are NOT a US "person" for tax purposes, often requiring "proof" in the form of a CLN - Certificate of Loss of Nationality). The main one is a US birthplace, which is a dead giveaway.

If you are entitled to US Social Security benefits - now or in the future - that will link you in to the US tax system when benefits start to be paid out. Depends on how much you will "need" SS benefits when you retire. (And if you have an IRA, 401K or other deferred taxation pension plan, you need to consider that, too.)

OTOH, the US withdrew all its overseas IRS personnel and shut down the offices a couple of years ago, so enforcement capabilities for taxes are rather limited. If all your income is sourced from outside the US, it actually isn't terribly difficult to just "fly beneath the radar" as they say.

And, once you have lived overseas long enough to apply for nationality, you have the option of renouncing (which costs $2350 at present). A friend of mine in Germany just went through the process, which is fairly easy and straightforward although it takes a LONG time (i.e. many months). If you take German nationality, renunciation is required before the Germans will process your paperwork, so you do spend some time (6 to 9 months) in a "stateless" condition.

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Old 11th April 2019, 09:33 AM
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Originally Posted by Bevdeforges View Post

And, once you have lived overseas long enough to apply for nationality, you have the option of renouncing (which costs $2350 at present). A friend of mine in Germany just went through the process, which is fairly easy and straightforward although it takes a LONG time (i.e. many months). If you take German nationality, renunciation is required before the Germans will process your paperwork, so you do spend some time (6 to 9 months) in a "stateless" condition.
Renunciation is only required once all other requirements have been satisfied and the applicant received the 'assurance of naturalistation', so there should maybe days of being stateless, not months. My husband got his renunciation certificate from his Embassy in the morning and was naturalised German the same afternoon.

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Old 11th April 2019, 12:21 PM
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Renunciation is only required once all other requirements have been satisfied and the applicant received the 'assurance of naturalistation', so there should maybe days of being stateless, not months. My husband got his renunciation certificate from his Embassy in the morning and was naturalised German the same afternoon.
The issue isn't so much that of the Germans processing the paperwork, as that of the Americans issuing the CLN. That's what takes the most time in the whole process.

But to be fair, the folks at the Consulate are actually quite sympathetic and easy to work with in all of this.

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Old 11th April 2019, 03:21 PM
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As americans shouldn't have to worry about all this or it should be kept at a minimum but the more I read the more it actually stresses me out to a point where I seriously consider renouncing - kind of sad that americans are pressured into that corner by their own greedy government.

I do have german citizenship through parents as well so I could establish myself in europe without using US documentation. However it seems easier and less headaches to just comply with everything but how difficult is it? You guys are expacts living in Europe, so questions:

1. is Fatca a big issue or intrusion?
2. do you comply with fbar filings or are those filings rather loose?
3. i am self-employed in the usa and intend to so in germany as well but found out that if i do my taxes i will still be hit with the self-employment tax of 15.3% as the FEIE does not apply to that. So since in Germany every self-employed person actually MUST register a company ("Gewerbe") and as thus is a sole propietor couldn't I just do my US taxes telling them I am employed by my own company (since "employment" would not hit the self employment tax)?? Any insight?

Lastly, I intend to not make more than 30k a year with maybe 50k in german debit/savings accounts... if I avoid doing all fatca, fbar and taxes, is it really a big deal or am i reading way too deep into it

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Old 11th April 2019, 08:24 PM
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I think you may be over-thinking the whole FATCA thing here. Let me just answer your questions.

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1. is Fatca a big issue or intrusion?
It depends on what financial assets you have. Basically, it's nothing but the FBAR filings as long as your foreign financial assets (bank and brokerage accounts and the like) don't exceed $200,000 (a higher threshold than for those living in the US). And even at that point, it depends a bit on what you have and how you choose to file.

What can get to be a big issue is that some banks and brokerages choose not to take on "US person" customers - and they'll go by the fact of your having a US birthplace. (Your place of birth becomes part of your i.d. here for many sorts of transactions.)

Quote:
2. do you comply with fbar filings or are those filings rather loose?
The FBAR is actually only an informational filing, and is probably the easier of the two filing requirements (i.e. FBAR and income tax filing). Again, too, it depends on your particular circumstances when it comes to things like declaring accounts held jointly or the "signature authority but no financial interest" accounts (like, if you have signature authority over a bank account for your employer or a club or association).

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3. i am self-employed in the usa and intend to so in germany as well but found out that if i do my taxes i will still be hit with the self-employment tax of 15.3% as the FEIE does not apply to that. So since in Germany every self-employed person actually MUST register a company ("Gewerbe") and as thus is a sole propietor couldn't I just do my US taxes telling them I am employed by my own company (since "employment" would not hit the self employment tax)?? Any insight?
The notion of "self-employment" is very different here in Europe. If you are self-employed (in the sense you think of it), but registered with the social insurance funds, then you are exempt from the self-employment tax in the US. And over here, you do have to be registered with the social insurance funds if you are in business for yourself. So, really, no issue as long as you're street legal in Germany.

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Old 11th April 2019, 10:33 PM
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Fatca: So I understand FATCA is really just required if you hold 200k in a foreign account or have it as a cumulative financial asset. So if I don't reach 200k, no need to file nor to worry.

Self-Employment: I am aware of social insurance fund requirement. So I guess when I do my US return I can't utilize the self-employment section but rather have to see myself as an employee of my own sole proprietorship. I tested it with turbotax and as self-employed it imposed the self employment tax as the FEIE would not apply to it, but when changing it to 'foreign income from foreign company' FEIE took the entire income and brought liability to $0. So am I understanding it right that as a self-employed in europe on my US tax return I could claim to be an employee of my own sole proprietorship??

3. Are there any ways and loopholes that would exclude a fbar requirement on my end as an expat? Say a non-US family member has an account in Germany and adds me to it as a user or maybe other ways?

I guess what I am trying to do is to be fully compliant with US law but use every loophole possible to share the least... you seem very knowledgeable, do you mind to PM me, i'd like to ask ya a few more questions i don't wanna publish on here to easy my expat tax worries...

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Old 12th April 2019, 06:13 AM
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Basically, on the self-employment issue, you ARE an employee of your German business (as long as you are paying all the appropriate "social security" contributions - i.e. health care and retirement plus whatever else is required). As I said, "self-employment" as such doesn't exist in much of Europe, due to the need to formally register a business, even a single person one.

On #3, the determining factor for FBAR is that you have signature authority over the account. So, if you can withdraw or transfer funds on your signature, you have to count it in for the $10,000 threshold. (And, yes, you are supposed to count the full balance of the account, not just your "share.")

The main control on all this is the reporting the banks do to the IRS of accounts with a US person as one of the signatories to the account. But, there is very little to no indication that the accounts reported to the IRS are regularly and systematically compared to what is reported on FBARs or on individual tax returns - unless the IRS finds a "problem" of some sort on an individual tax return.

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Old 12th April 2019, 04:26 PM
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I'll chime in with an answer, and a question. Where were you born? I assume US, but should confirm.

If you have a US birthplace, you will have one problem, but it's not a small one: when you move to Germany (let's assume) and open a bank account with either German or Austrian (let's assume) passports, your US birthplace will likely be noticed and the bank will assume that you are a US citizen. They may restrict their service offerings to basic accounts only, no investment products, and they will certainly demand your SSN so that you can be subject to FATCA reporting. The only way to solve this problem is to renounce US citizenship and show the bank your CLN.

I have not mentioned tax or FBAR compliance here because it's a non-factor. Whether you comply with any of that is a personal decision, based on your situation and risks. Will you have US assets, income sources or future expectations of social security? If yes, you might want to tread more carefully, do things by the book. If no, you can walk away from all of this once you leave the US. The entire tax and FBAR apparatus functions on the basis of voluntary compliance. The IRS cannot enforce penalties against you in Germany, period.

It's preferable not to be reported under FATCA, but if you are reported (having a US birthplace on your German ID, that's likely unavoidable unless you renounce) the the IRS will know a little bit of information about you but won't really be able to do anything with it, so you are still free to never file a single FBAR or US tax return.

Note also that it is *not* necessary to be compliant to renounce US citizenship. You can make a renunciation appointment the day you arrive in Germany and cease all communication with the IRS.

A partisan aside, while FATCA is indeed a product of the Obama administration (and the Democratic congressional majority in 2010), US taxation of non-residents has a much longer history, while the Trump administration (and Republican congressional majority) are responsible for the transition tax and GILTI, which are hugely destructive to self-employed persons abroad who've incorporated or run small businesses, should they choose to comply and actually pay the ransom.

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Old 19th April 2019, 04:06 PM
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nonoymous, i like your answers. could you please check out my posting "whats the reality about bank and tax filing for expats" in the german forum

also, do you speak out of experience or do you assume. i do agree that this whole expat prosecution is more a play and scare tactic than anything else but before I decide to just give em nothing i'd wanna make sure that i am prepared for any realistic consequences




Quote:
Originally Posted by Nononymous View Post
I'll chime in with an answer, and a question. Where were you born? I assume US, but should confirm.

If you have a US birthplace, you will have one problem, but it's not a small one: when you move to Germany (let's assume) and open a bank account with either German or Austrian (let's assume) passports, your US birthplace will likely be noticed and the bank will assume that you are a US citizen. They may restrict their service offerings to basic accounts only, no investment products, and they will certainly demand your SSN so that you can be subject to FATCA reporting. The only way to solve this problem is to renounce US citizenship and show the bank your CLN.

I have not mentioned tax or FBAR compliance here because it's a non-factor. Whether you comply with any of that is a personal decision, based on your situation and risks. Will you have US assets, income sources or future expectations of social security? If yes, you might want to tread more carefully, do things by the book. If no, you can walk away from all of this once you leave the US. The entire tax and FBAR apparatus functions on the basis of voluntary compliance. The IRS cannot enforce penalties against you in Germany, period.

It's preferable not to be reported under FATCA, but if you are reported (having a US birthplace on your German ID, that's likely unavoidable unless you renounce) the the IRS will know a little bit of information about you but won't really be able to do anything with it, so you are still free to never file a single FBAR or US tax return.

Note also that it is *not* necessary to be compliant to renounce US citizenship. You can make a renunciation appointment the day you arrive in Germany and cease all communication with the IRS.

A partisan aside, while FATCA is indeed a product of the Obama administration (and the Democratic congressional majority in 2010), US taxation of non-residents has a much longer history, while the Trump administration (and Republican congressional majority) are responsible for the transition tax and GILTI, which are hugely destructive to self-employed persons abroad who've incorporated or run small businesses, should they choose to comply and actually pay the ransom.

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