News first came out of Tina Turner’s decision to give up her US citizenship in late 2013. A report from the US Embassy in Bern, Switzerland, noted that Turner had signed a Statement of Voluntary Relinquishment of U.S. Citizenship.
There has been a fair amount of speculation since the news became public. The well-known artist, who retired from the stage in 2009, had been living in Switzerland since 1994. She is reported to speak fluent German.
There has been and continues to be an increasing trend among Americans to forfeit their US passports. For many, the reasons seem to be largely tax driven, given the often complicated tax impositions on US citizens living and working abroad.
Turner, however, has stated only practical reasons for her decision, publicly stating that she “can’t imagine a better place to live”.
Gaining Swiss citizenship is not a quick or easy process, requiring approval from cantonal and federal authorities in the country.
Residents of her hometown in Tennessee were reportedly less happy about the move. The then Mayor of Brownsville, Jo Matherne, showed some concern over the decision, though noted that Turner had “never forgotten her roots”.
Despite Switzerland’s reputation in the popular imagination as something of a haven for rich people to store their money, several commentators were quick to note that tax rates for Swiss citizens are in fact high.
The tax implications of living in one country but remaining a citizen of another can be quite severe. This is particularly the case for citizens of the US, which actively pursues taxes on worldwide income.
The Foreign Account Tax Compliance Act (FATCA) is a United States law which requires its citizens (whether living in or outside of the country) to file yearly reports on all of their non-US finances. Accounts which are held jointly – including with non-US citizens – must also be reported. Failure to comply can attract a strong penalty.
According to estimates by the US State Department, there are approximately eight million US citizens residing overseas. Tax can be complex for citizens of just one country, but making multiple filings to different authorities can serve to further complicate the process.
Though Turner’s own reasons for exchanging her US passport with a Swiss one were reportedly for personal and practical reasons, it can be assumed that her tax filing has been made more straightforward since the change.
Turner is not the first high-profile individual to have given up US citizenship. Other well-known former US citizens include billionaire Eduardo Saverin, who co-founded Facebook, and actor and martial artist Jet Li, both of whom are now Singaporean citizens.
Relinquishing citizenship is not quite the end of the story, however. An exit tax is imposed by the US on individuals giving up their citizenship. Over the years there has even been some talk among members of Congress of maintaining a tax burden on wealthy individuals who gave up their US citizenship for tax reasons.
Legal and tax implications aside, the decision to give up citizenship of your home country is a serious, personal decision. It will be interesting to see whether the trend among US citizens to give up their American passports will continue in the future.
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