The number of Americans giving up their US citizenship has surged by 39 per cent in the three months through September after rules under the Foreign Account Tax Compliant Act, or FATCA, kicked in.

The number of Americans giving up their US citizenship has surged by 39 per cent in the three months through September after rules under the Foreign Account Tax Compliant Act, or FATCA, kicked in, according to a report by Bloomberg.

The news service cited Federal Register data published at the weekend. The number of people that gave up US citizenship rose to 776 in the third quarter, up from 560 in the same period a year earlier, it said.

More stringent rules have taken effect from 1 July under the FATCA Act, which was originally signed in to law in 2010. The legislation has proven controversial as it has been blamed by a number of banks for making it too expensive to serve American expats. Banks such as HSBC and Deutsche Bank have withdrawn services, although other banks, such as Royal Bank of Canada, have made a point of continuing to serve them.

The act seeks to require what are designated as foreign financial institutions to establish that they are fully compliant with disclosing any US clients or suffer the penalty of paying a 30 per cent withholding tax. The measure has been defended for tightening up on alleged tax evaders. Critics have said it is an unwarranted extension of US tax powers.

So far, 2,353 Americans have renounced their citizenship this year, close to the all-time high of 2,369 in the first nine months of 2013, the report said.