Saturday, January 26, 2013
What's FATCA Got To Do With It? Tina Turner Renounces U.S. Citizenship
The Daily Mail: Let's Stay Together? Tina Turner Renounces Her U.S. Citizenship to Become Swiss (So How Much Tax Will She Now Pay?):
Tina Turner is renouncing her American citizenship to become Swiss, it was revealed today. The American rock diva has lived in the Zurich suburb of Kuesnacht since the mid-1990s and speaks fluent German. The local Zuerichsee-Zeitung newspaper said on its website the local council announced its decision to grant the 73-year-old Turner citizenship in an official notice published in Friday's edition. The decision still requires formal approval from state and federal authorities. ...
Earlier this month, actor Gerard Depardieu announced he was renouncing his French citizenship because of the country's high taxes, and was promptly offered Russian citizenship by President Vladimir Putin. Tina's move has sparked rumors she is following in the footsteps of Depardieu and Facebook's Eduardo Saverin, who now calls Singapore, with its 18% tax rate, home. Wealthy socialite Denise Rich ... renounced her U.S. last year. She was married to billionaire commodities trader Marc Rich, controversially pardoned by Bill Clinton his last day in office. ...
But Forbes says of the singer's move: 'There’s little to suggest taxes motivate the decision, and Swiss rates are high.' ... Her agent did not return MailOnline's request for comment about whether the move was for tax reasons.
- ABC News: Tina Turner to Become Swiss Citizen
- The Atlantic: Why Tina Turner Won't Be an American Citizen Anymore
- Forbes: Swiss Tina Turner Giving Up U.S. Passport
- The Guardian: Tina Turner Takes First Steps to Swiss Citizenship
- L.A. Times: Tina Turner May Become a Swiss Citizen, Give Back U.S. Passport
@Bob and Tim: Yes, there is no expenditure-based taxation (that's the real name of what often is called lump-sum taxation, there is a bit more to it) any more in the Canton of Zurich, and Tina Turner would not be able to use it anyhow after becoming a Swiss citizen: it is only available to foreign citizens.
The marginal combined (federal, cantonal and communal) income tax rate in Küsnacht ZH is around 34.5%. A move to Wollerau, SZ on the other shore of the lake of Zurich would result in a marginal rate of 18.7% (the lowest in Switzerland, whereas the highest would be around 44.3%).
Posted by: dare | Jan 28, 2013 1:29:44 AM
Depending on the canton, Swiss tax rates range from about 22% to 42%, with the higher rates concentrated in urbanized cantons. And there is a VAT of around 8% on top of that. Doubtful that the comparative US tax burden is motivating Tina Turner to expatriate. Avoiding the FATCA bureaucracy may be a plausible reason. An even better reason is the absence of Swiss federal gift and estate/inheritance taxes. The cantons impose gift and estate/inheritance taxes, but at lower tax rates, applied to a much narrower range of wealth transfers, than the US tax system.
Posted by: Jake | Jan 27, 2013 2:32:07 PM
Tim - you are 100% correct. FATCA and the other disclosure rules are draconian and for no legitimate reason. Canadian/US dual citizens will be VERY hard hit (there are about 1M of them) and the Canadian government OWES those Canadian citizens a duty to protect them (as to the countries of all other dual US citizens). The US is killing a fly with a nuclear bomb - and NEEDLESSLY!
Posted by: Steve Klaus | Jan 27, 2013 1:24:16 PM
Tina Turner is probably old enough to remember Jim Crow laws. FATCA is Jim Crow for overseas Americans and she knows it when she sees it. No one likes horrific and degrading discrimination which the US is imposing with Nazi-like precision with blatant hatred against Americans overseas. They have sanctions against them. Thousands will renounce and then hundreds of thousands.
Posted by: thomas | Jan 26, 2013 8:44:23 PM
As to Bob's point. I don't believe the part of Switzerland Turner lives in(Canton of Zurich) allows lump sum taxation. I will have to look up the marginal rates for Zurich but my guess is there around 40%+. Note: she could move not far away to Canton Zug(home of commodities trader Mark Rich) and pay a top rate in the high 20s.
Posted by: Tim | Jan 26, 2013 7:34:38 PM
Forbes missed a major point.
FATCA, the Foreign Account Tax Compliance Act, introduced by the US government and designed to crack down on tax avoidance by wealthy US citizens investing offshore, represents a complex and costly compliance task.... It will take effect from July 2013 but preparations for the deadline are complex.
Will Tina Turner "apologize" for moving for tax reasons?
Posted by: Woody | Jan 26, 2013 3:48:15 PM
Swiss rates are high?
All I know is what I read in the Wikipedia:
Non-working foreigners resident in Switzerland may choose to pay a "lump-sum tax" instead of the normal income tax. The tax, which is generally much lower than the normal income tax, is nominally levied on the taxpayer's living expenses, but in practice (which varies from canton to canton), it is common to use the quintuple of the rent paid by the taxpayer as a basis for the lump-sum taxation. This option contributes to Switzerland's status as a tax haven, and has induced many wealthy foreigners to live in Switzerland.
In 2011, the federal income tax varied from a bracket of 1% (for single tax payers) and 0.77% (for married taxpayers) to the maximum rate of 11.5%.
Posted by: Bob | Jan 26, 2013 1:46:21 PM
Maybe Tina Turner should move to Zug, Switzerland.
Life in a nice, clean Swiss tax haven
Posted by: Woody | Jan 28, 2013 5:56:48 PM