In our lifetimes, the United States of America has been, and will continue to remain, a global financial, political, and military hegemon – regardless of where you sit on the debate about American geopolitical declinism. At Fusion we pride ourselves on being the one-stop-shop when it comes to helping all of our clients on their tax strategies as well as managing their businesses’ tax affairs. US taxation is just another tool in our toolbelt when it comes to delivering our clients with roundhouse taxation advice that goes above and beyond the physical borders of the United Kingdom.
Here’s some facts about US taxation that you may not be aware of:
The US is one of only a minority of countries to operate a ‘Citizenship Basis of Taxation’, which broadly means that if you are a Citizen or Green Card Holder of the US, you are subject to US federal taxation – regardless of where in the world you live. Unlike countries like the United Kingdom where if you are a British citizen and uproot and leave the UK, you are only subject to UK taxation on your UK-sourced earnings, such as UK property income, for example. This is in stark contrast to the US where if you leave the US, and you are a US citizen, and you have no US-sourced income connect to the US, then you will continue to be subject to US federal taxation, as if you never left the US to begin with!
What’s more, the US operates a Jus Soli immigration policy, which means that if you are born in the US, you are most likely a US citizen – unlike countries like the UK where if you are born in the UK, at least one of your parents has to be at least a British National in order for the newly born child to inherit their parent’s British citizenship.
Even if you weren’t born in the US, one of your parents could be born in the US, which could make you an ‘Accidental American’. That means it is possible to pay US taxation on your UK earnings, for example, despite having never set foot inside the United States!
Lastly, if you are looking to move to the US at some point in the future, or if the US is an integral part of your global business strategy, then it is important to for you to consider how the US will treat your non-US assets, such as UK pension schemes, UK Trusts, etc., after moving to the US.
