Americans Abroad

I know a rich guy from California whose father is Colombian (from where he got his money, I never asked). He had a German grandfather, and once he provided the Germans with one obscure fact they asked for--the name of the ship his grandfather left Germany on--they gave him his German passport. He doesn't speak a word of German, lives in an apartment in Switzerland, and keeps a legal residence in Gibraltar, where he pays 22,000 English pounds a year in taxes, period.

Americans have to file a tax return in the USA no matter where they live, and pay the difference in taxes to the US Treasury if their taxes abroad are less than they are in the States. Germany doesn't do that. If you have German nationality but can prove a genuine residence abroad then you pay your taxes in your country of residence, and the Germans don't bother you. With me, it's the opposite. Now that I have my residence in Germany (though all my income is still in the USA), the Germans want to tax me on all my income, including that part that is subject to US taxes no matter what. This is in violation of the double taxation treaty between the two countries, and is putting me in the 100% tax bracket for 2011. My accountants here have lodged a protest, but for now, I'm screwed.

I know other Americans with second passports from European countries. A friend in New England got her Irish passport very quickly the moment she established that one of her grandfathers had emigrated from Ireland. I know another woman who proved that her grandfather had left Luxembourg in March of 1900 as a baby. Luxembourg law says you get a Luxembourg passport if at least one Luxembourg parent was still in Luxembourg after January 1, 1900. She got her Luxembourg passport, and is now living in Brussels. She DID learn to speak French fairly well, at least.