August 19, 2013
GENEVA — Disenchantment confirmed. The number of Americans renouncing their nationality has risen six-fold since the same period last year. The numbers have jumped from 189 to 1,131 during the second quarter of 2013 amid diplomatic reform for Americans living abroad, the latest U.S. figures reveal.
This trend coincides with the implementation of stricter fiscal rules, owing to the infamous Foreign Account Tax Compliance Act (FATCA). That measure requires financial institutions to communicate information about the foreign bank accounts of American clients to the Internal Revenue Service, the American tax authority. This form of automatic exchange has reportedly pushed more and more binationals to abandon their blue passports. In addition, since November 2012, the IRS 8939 form not only demands to see details of bank accounts held abroad, but also life insurance contracts, loans and holdings in non-U.S. companies. All who fail to comply face a fine of $50,000 and can incur a penalty of up to half of the non-declared account, should it be discovered.
Fiscal motives alone aren’t the cause for the dramatic rise in citizens renouncing their U.S. citizenship, argues Anne Hornung-Soukup, a board member for American Citizens Abroad. She is also the wife of Genevan lawyer Douglas Hornung, who defends Swiss bank employees targeted by the American tax authorities.
“It’s more the combination of administrative costs, the logistics and the threat of fines that push my compatriots into action,” she says. Indeed, failing to declare to the IRS is punishable even in the case where there would be no taxation.
“An American passport has become toxic” for binationals, she says, in large part because banks have not reacted well to the new requirements. “More and more banks refuse us benefits, loans, mortgages or life insurance under the pretext that we are U.S. citizens. One of the envisaged solutions for our association is to campaign for taxation according to place of residence, not by nationality, as is the case today.”
How it began
The practice of Americans giving up their nationality peaked here a few years ago amid the scandal case involving UBS, the Swiss global services company. “At that time, the embassy in Bern had a waiting list far longer than other U.S. embassies around the world,” says Charles Adams, an American lawyer working in Geneva.
Binationals in other countries have also followed suit. But like Hornung-Soukup, Adams doesn't believe the rush to renounce U.S. citizenship is related to the disclosures required by expats per se. “Every taxpayer, no matter where they reside, has an obligation to fill out an annual fiscal declaration and, where necessary, to pay their due tax,” he says. “For expatriates, an income equal to 80,000 Swiss francs ($86,299) is exempt from taxation, and for almost 90% of Americans living abroad, there is no fee whatsoever owed to the tax authorities after the taxation of their country of residence.” After all, the FATCA standards apply to financial institutions, not to individuals.
But the figures confirm that the renunciations in Switzerland remain high. This is particularly true for bi- or trinational citizens, whose U.S. passports were issued because they were born there (the U.S. practice of jus soli dictates this).
The case of a 30-year-old legal expert in Geneva, who wishes to remain anonymous, is revealing. Her parents arrived in the United States in the 1980s and returned to Switzerland a few years later. The young woman was born during this period, and now is considering starting the process of returning her passport. Her nationality, originally perceived as an advantage because of the prospect of studying in the U.S., has increasingly become a handicap.
In 2009, the “invasive” nature of the administration stemming from her double nationality finally convinced her to take action. “It was a difficult decision,” she says. “Although I only have the passport, it’s still the place where I was born.” After letting the document expire, she will begin the process of renunciation.
Hornung-Soukup has been confronted with numerous cases of expatriation and deplores the aggressive nature of American administrative procedures. “Lists of the names of Americans who have renounced their nationality are regularly published on the U.S. Federal Register,” she says. “They are accessible to the public in order to create a feeling of shame and awkwardness. Among the 200 people who have renounced their American nationality in the last three months of this year, I personally know seven Swiss citizens.”
Making it official
The ambassador to Bern, Donald Beyer, said at an American International Club dinner in Geneva this year that 900 people renounced their American nationality in Switzerland in 2012 alone, according to American Citizens Abroad.
Aside from the Swiss-born in the U.S. (those Charles Adams calls “Accidental Americans”), there are also “true Americans” who plan to become Swiss and, as a last resort, abandon their original nationality.
One thirty-something American residing in Geneva says that she wouldn’t renounce citizenship based on tax issues, though related administrative issues do pose difficulties. “I declare my income and I have no problem whatsoever that the IRS receives direct information about my bank,” she says. “I'm considering naturalization. But renouncing my American nationality, that’s a whole other step. I have family there. That said, opening a savings account or a pension has become a real headache for me. If there is extra paperwork, I may review my position.”
For candidates to renunciation, the American embassy in Bern has information about the consequences of this move. Over the phone, officials there claim not to have statistics concerning place of renunciation, referring callers instead to the Federal Register. Likewise, they offer little response when asked about the motives of Americans giving up their passports or becoming Swiss citizens.
After having completed the necessary — and lengthy — documentation, an interview (both obligatory and under oath) at the embassy is required. A whole system is then set into motion. The request passes through the Department of State to the Department of the Treasury in Washington, D.C. And it is only with the agreement of the IRS that the certificate of renunciation is delivered. It allows former Americans to return to the U.S. without difficulty. Without it, the phrase “born in New York” on a Swiss passport would risk a raised eyebrow from customs officials, who requires U.S. citizens to enter the country with their American passports.
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Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.
October 17, 2021
It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.
More than a year later today, experts believe that air traffic won't return to normal levels until 2024.
But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:
Cleaner aviation fuel
The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.
While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.
Fees imposed on the airline industry should be funneled into a climate fund.
In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.
Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.
High-flying ambitions for the sector
Hydrogen and electrification
Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.
One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.
Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.
New aircraft designs
Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.
International first class will be very nearly a thing of the past.
The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.
Aerial view of Rome's Fiumicino airportcommons.wikimedia.org
Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.
The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.
Data privacy issues
However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.
Auckland Airport, New Zealand
The billion-dollar question: Will we fly less?
At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.
Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.
40% of Swedes intend to travel less
According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.
But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.
At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.
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SOUTH CHINA MORNING POST
South China Morning Post (SCMP) is an English-language daily published in Hong Kong. Co-founded in 1903 by the British journalist Alfred Cunningham, the newspaper has an estimated circulation of 104.000. It is currently owned by Alibaba group.
La Repubblica is a daily newspaper published in Rome, Italy, and is positioned on the center-left. Founded in 1976, it is owned by Gruppo Editoriale L'Espresso.
E24 NÃ¦ringsliv is a Norwegian, online business newspaper launched on 18 April 2006. In the course of the first week of operations it became the largest business web site in Norway. In week 46, 2008, it had 575,000 unique users per week.
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