US Expats Given A Twelve Month Moratorium On Repatriation Tax

To the intense relief of expat American SME businesses owners overseas, there’s now a one year reprieve from the dreaded repatriation tax.

Around a million US expats with a ten per cent or more stake in a foreign owned business were expected to be hit by the poorly conceived Trump tax reform bill, intended only to affect mega-companies such as Apple and Google. The bill forces multinationals to repatriate their profits made in other countries, but sloppy wording saw it apply to US expats with an interest in small overseas companies. The 'deemed repatriation' tax even demanded full details should be given in a certain format not used anywhere except the USA, making even attempting to comply an almost impossible task.

Relief, if only temporary, came on Monday with a statement from the IRS informing expat SME investors with net tax liabilities of under $1million for the 2017 tax year would not now face penalties or accelerated full payment of the 15.5 per cent tax. Whilst the year’s exemption is seen as taking the pressure off for now, campaigners are hoping it will give time for Congress to amend the original legislation.

US tax attorneys working with expats overseas believe their clients would have been caught between the devil and the deep blue sea had the IRS not granted temporary relief, as huge numbers would have been forced to either become tax evaders or simply close down their companies. After the Trump bill passed into law, the Republicans Overseas and Democrats Abroad expat groups got busy lobbying lawmakers in both parties as well as warning of the unintended and severe consequences of the carelessly worded bill on expat SMEs. Both are relieved the pressure is off for now, as it will give them a full year to fight for a change in the law.