The news of a deal between the 5 major EU governments and the US regarding FATCA came as a major shock to many, including myself, last week. I have now come across news that the EU, now bolstered by the US drive to implement FATCA, has on its agenda to really join US pressure and try to “break Switzerland” as I like to say. On the forums I have also come across posts which have implied that Russia and China are probably not going to resist FATCA either. See everything below.
European Deal could double the pressure on Switzerland with the EU joining the US in violating Swiss sovereignty:
European Fatca deal “threat to Swiss secrecy”
As a complete aside, part of me thinks that many EU countries also want to scare EU citizens into not putting their money into Swiss Francs or in Switzerland at all due to the Eurozone crisis. There are major tax dodgers holding accounts there, but you never know…!
Russia may also be giving in to FATCA as well. Eric writes on the forum that:
“The Association of Russian Banks just sent a letter to the Russian Ministry of Finance asking what they’re supposed to do about FATCA.
http://www.arb.ru/site/docs/docs.php?doc=1324
Previously they had basically recommended that Russia just roll over and comply with FATCA:
http://www.arb.ru/site/docs/docs.php?doc=1205
Roughly translated excerpt: “according to the results of the preliminary consultation with credit organisations’ specialists and international experts, we believe it appropriate to recommend that Russian credit organisations participate in FATCA. This step at a minimum would resolve the problem of withholding of funds, because in place of enforced penalties, they will only need to collect and transfer data. Aside from this, such a step prevents possible reputational harm to Russian credit organisations in the international financial market.”
Most importantly though, Geeez has found a report that the Chinese are in talks with the US on implementing FATCA along the lines of the EU deal:
http://notlearningcantonese.posterous.com/chinese-media-reports-beijing-and-washington
By the way, in the link above, hover over the first link in the first line “US’s FATCA laws…ruining the lives of American expats”. Yes, that’s right, that is a link back to this website! Looks like the site is really starting to take off 🙂
If the EU, Russia and China give in to FATCA and put significant pressure on Switzerland’s banking sector, who is going to be able to resit FATCA? Who is left? Canada, Japan, Australia…? I am so embarassed that my country (Italy and thus the EU) was one of the first to “sell out” to the US. FATCA is a blatant violation of the rule of dominant nationality, as Petros has mentioned in a post beforehand, yet all of these countries seem to be lining up and falling over each other in order to please Uncle Sam as quickly as possible and trample over the rights of their own citizens (in blatent violation of European and National Data Protection Laws!).
I think tha the only way that FATCA will be repealed now is if the US Congress thinks that it is doing economic damage to the US. If the whole world implements it though, is there even any danger anymore in investing in the US since basically every bank will already be subject to FATCA? Is renouncing now the only way to protect your privacy and have banking services as a “US person” overseas if there will be no “FATCA-Free” safe havens in the future?
As a closing thought, look at this link that Geeez found from a blog on Uruguay:
http://www.paradiseuruguayblog.com/2010/10/banking-in-uruguay.html
Yes, that’s right – It is already very difficult to open an account as a US citizen even in tiny Uruguay, in addition to the majority of EU countries, Brazil and others. Add your banking stories here as well!
Xi Jinping, who is widely predicted to become the next leader of China in 2013, is currently visiting the US and has called for “Deep Ties”. If anyone sees any mention of FATCA during this trip please post in this thread! So far I can only find information relating to discussions about (no surprise here!) currency policy.
http://www.bbc.co.uk/news/business-17047047
Cheers
There is an interesting article I think we could all agree on here:
http://www.businessinsider.com/the-despicable-truth-emerges-about-fatca-2012-2
As I heard in America, “you can´t fight City Hall”. It seems to me that Fatca will be implemented so the hope of repealing it, at least for now, seems unrealisiic. It also seems to be that the FBARS and the Forms in the IRS Return will continue. Then we have to think what else we could be doing. Thoughts:
1. Support ACA and AARO
2. Push for Representation through the Caucus For Americans Abroad. Dual Citizens living in the USA already have representation. They are the ones who can start a movement inside the USA.
3. Support IRS Tax Advisor insofar as working towards fairness in terms of penalties for mistakes made.
I am not sure how Fatca will identify Foreign Bank Accounts of dual citizens who have accounts in their country of origin and are registered as locals. I also am not sure how Forein Banks will identify GreenCarders who have bank accounts back home and are considered locals. It seems to me that the IRS could ask these people to come forward and declare their Foreign Bank Accounts without threatening them the way they are doing.
As far as I can tell I will remain as a dual citizen and will try to have my voice heard.
I believe, putting pressure on Swiss banks is legitimate tax purpose. In fact, corrupt politicians saved trillions of dollars stolen from poor people in developing countries in Swiss banks. According to some estimations, Indian politicians alone stashed 500 billion to 1 trillion dollars during past 60 years.
I feel, to maintain credibility of out movement, we must focus on unique situation of law abiding expats having accounts in the country of their living and compliant with local laws. The ambiguous laws such as FBAR and FATCA destroying lives, families and especially businesses of expats unjustly, even when expats duel-citizens don’t owe any taxes. The biggest problem is innocent mistakes of duel-citizens/expats due to complex tax code are treated equal to deliberate criminal acts like money laundering or tax evasion of people living in the USA. We loose, if we fight for blanket protection.
May be my understanding is wrong, but I feel, agreement with EU countries may be a step in right direction. My understanding is that, banks supply available information to respective governments. The IRS can get the data from the governments. This is much harder to implement for IRS. The banks don’t need to go out of the way to collect data for US-citizens. The IRS can only withhold 30% only when they have proof that a country/bank intentionally helping US citizen evade taxes. I feel, this is much dilution of FATCA.
@Bharat
The current “deal” with the IRS and the 5 EU governments violates all of our Data Protection Laws still. Just because it goes through our governments doesn’t mean that implementing this still isn’t breaking the our own data protection laws and violating our own sovereignty. I feel 100% betrayed by the EU and Italian government for even offering to speak to the IRS.
This will be a positive development only if these countries fight for their own citizens and refuse to report their own citizens, which is a violation of the dominant nationality rule. The US consulate won’t/can’t do a thing in Italy if I go to prison since they rightly recognise the fact that Italy has absolute sovereignty over me as an Italian citizen. On Italian territority I am Italian for every other purpose EXCEPT for when the American tax collectors want to bleed me dry? I am 100% Italian only and an “Accidental American”. I will accept nothing less than absolute protection from the US government, which is why I take such a position.
Agree with you 100% on Switzerland though. Putin supposedly has an official wealth of 120,000 Euros, for example, but is reported to have billions in Swiss accounts, which are hidden through complex LLCs and holding companies and are basically untraceable.
Just to key in.
I went to my bank yesterday (RBC) to wire some funds.
In dealing with supervisory type for my transaction, (it was a bit complicated, so a normal teller would not do). I asked if they had any more updates on FATCA, as the last time I was physically in that ‘branch’, (couple of months ago), i got a lot of “RCA Victor” looks when asking about said legislation (remember the dog?).
AAAnyway…..
This time, they seemed to be well informed (or Miss-informed) and advised me that the Government was implementing changes to the privacy laws(act) in order to facilitate FATCA’s arrival.
They felt I would be happy with this direction as it would solve all of the problems of Duals, Permanent residents, and Accidental Americans, or anyone identified as a US person for that matter.
Following my response of ‘WTF’ she turned to some other employee’s and said ‘is that not what we are being told to tell our clients?” and they all nodded ‘yes’.
AAANyway…
I just thanked her and went on my way as I felt they have either been intentionally miss-lead , or this is the statement they are supposed to make when asked about FATCA.
What scares me is that there response was quite confident and gave me the impression that we are just being pacified by our Finance Minister and Financial institutions in order to silence the masses until judgement day arrives.
Any thoughts?
Heh, notlearningcantonese is my blog. I try to put in links to Isaac Brock, renounceuscitizenship, etc. every so often. Hopefully it’ll help a bit in the Google rankings. You can try this Google Search to find other sites that have links to us too. Apparently there’s about 285 links out there right now (many of them left in the comments sections of other website by our own participants, but a few actual links from other bloggers).
I wouldn’t worry about confident responses from local bank personnel including the manager. They’re trained to look confident even when they’re clueless.
I had an experience many years ago with the bank manager at my branch who refused to release about $40,000 of my own money so we could put a down payment on a house. She said they needed 10 days notice for such large withdrawals.
Since I was about to close on a house I was livid but she confidently stated that was the bank’s policy and I was out of luck. I called the regional vice president and left a voicemail stating if they didn’t give me my money TODAY I was going to call the newspapers. I had my money that day.
I did find it interesting that the article did mention that a Chinese bank is in the process of getting rid of it U.S. bonds.
Now that they’ve seen the agreement with some European nations, I’m sure the Russians and the Chinese would love a reciprocal agreement with US tor allow them to identify and perhaps try to seize money or assets from born in their countries. Would the US sign such an agreement with those countries? If Eritrea, Saudi Arabia, Syria and Iran want to come on board in the same way, is that likely to happen?
What will be the response of American citizens born abroad be if this becomes a global agreement? What will be the response of American banks? How will IRS process all the information coming to them from American banks to submit to countries around the world?
Barack Obama’s half-sister (Maya Soetoro-Ng) was born in Indonesia to an American mother and an Indonesian father. So, an agreement between those two countries would mean her bank would need to identify her as an “Indonesian person” and submit information to IRS to submit to Indonesia. Her husband (Konrad Ng) is Chinese-Canadian. So his bank would have to submit information to IRS to submit to China and to Canada if there was an agreement between those countries.
Barack Obama’s father was from Kenya. So, if Kenya claims him as a citizen, (as US is doing to anyone born outside US to a parent who was born in US), would this mean American banks and IRS would have to provide information about the finances of President of the United Sates to Kenyan government in an agreement between those nations?
Where are the resources to deal with all this? 30 Year Tax Vet tells us IRS is understaffed now. Are they going to add huge numbers of staff at taxpayer expense to,process this? Do American banks have the staff or systems to deal with this? Does the US plan to solve their unemployment problem by hiring people to gather, process and report on all this information?
Would it be constitutional in US to gather and report such information on American citizens who were born elsewhere?
Why aren’t governments seeing the insanity of this? Where will this end?
I repeat… the banks will cater to the USA wishes. And let me say that I can´t be against the IRS wanting to get people who should pay IRS taxes and are hiding it. I think we should pick our fights and define better what we are against. Let´s start by a statement that we are not the people the IRS is after. We are US citizens living abroad, dual citizens living in the US and Abroad and Greencarders living in the US abd abroad. In a way we are being considered tax cheaters and criminals before any judgement and we are being asked to do a lot of work and pay a lot on order to “prove” that we are innocent. The Tax Payer Advocate is in our favor if you read her repport. ACA and AARO also are speaking in our behalf, The problem i have is how we can be heard. We are a lot of people if you count these three categories: Americans Living Abroad, Americans Living in the USA who have accounts in foreign banks and are not hiding it, dual citizens and greencarders who have accounts in their home countries. How can we work together to try to improve the way the IRS is dealing with us?… That is the question.
@markpinetree- the IRS and by extension Washington, are not willing to listen. As far as they are concerned we are in the wrong. They can’t comprehend the idea that we do not live within their jurisdictional boundaries.
This is the same attitude of “possession” that won’t allow them to let me renounce the American citizenship of my developmentally disabled son. On the one hand they say that a person must be able to comprehend to fact that renounciation is permanent and that if a person lacks that capacity then he/she is forever stuck as an American.
Yet on the other hand they also want to hold the developmentally disabled person accountable for IRS tax compliance. This means not only fulfilling the filing obligations but also being restricted in his/her investment opportunities in the country of residence/citisenship. In other words the U.S. through the IRS has the power of making us into second class citizens in the country of which we are citizens and residents. We are forced to live like Americans even though we are not in America. In many ways we are forced to live worse than do Americans in America because only we are subject to double taxation and only we are penalized for making investments that are perfectly legal in our country of residence and/or citizenship.
But how does one hold a developmentally disabled person accountable for conformity with a law that he/she does not understand?
The U.S. doesn’t want to listen, because they don’t feel that they have too.
“We are US citizens living abroad, dual citizens living in the US and Abroad and Greencarders living in the US abd abroad.”
No, we are people born in USA who do not want to have anything to do it it, including its citizenship.
@markpinetree: I agree with you. The IRS must allow us to be tax compliant without ruining our businesses, livelihood and finances of our family members, who are not US citizens. Most expats and duel-citizens owe no taxes. But the complex and ambiguous laws that may take 10 years to be clarified after few court cases add huge regulatory burden on our small struggling businesses in our countries (where we choose to live).
It is insane. We’re getting the short end of the stick. I hate what’s happening.
@everyone- form 8854 should be amended to include those who have acquired dual citizenship and have also not lived in the U.S. for ten of the last fifteen years and who will continue to be taxed by that country after loss of U.S. citizenship.
Currently as it stands you cannot benefit from the tax expatriation rule unless you were also born a citizen of the country in which you now reside and where you will be paying taxes after your loss of U.S. citizenship. This would be most sensible but as has been observed previously, common sense is not what any of this is about.
No comment: http://edition.cnn.com/2012/02/16/politics/china-vp-visit/index.html?hpt=hp_t3
A reader comment from the article that Jefferson D. Thomas linked:
“It’s amazing that Obama should tell a communist how to run their country when in reality that is the way he is heading here in the USA. With his health bill he plans on killing off anyone retirement age by not giving them preventative medicines or anything that may extend their lives.He also wants to destroy the middleclass(already being done) by the so called leveling off the classes. That’s being done by keeping us in perpetual depression and telling everyone that unemployment is lower when in fact it’s as high as it’s ever been. The only thing the unemployment figures shows is the percentage of people that are collecting and not those who are now off the roles because the benefits have run out. There is no new work out there very few in the future due to Obama’s attacks on the so called rich who feel threatened and won’t start new ventures.”
Anybody else have no idea what this person is talking about in the first half of this comment?
I think we must support these documents from ACA:
http://www.aca.ch/taxreform2.pdf
http://www.aca.ch/taxreform1.pdf
These are very objective documents.
I would add the document from the IRS Tax Advocates, their report, that is also in our side. I think we should work together with these people and focus on these issues.
I don’t live in the US and after all of this, I don’t want to be a part of the US anymore – crazyniess – this should be my “expatriating” act right here, but they want $450 USD.
I was really thinking of the sillyness while I was travelling today. I could get more than 1 passport. Renounce US Ctizenship. Get a tourist visa back to America. Then take a job in America that pays $2 million a year (that’s the only way I could go back there!) , and show my birth certificate to prove a US citizen. Or just live there like Obama’s relatives collecting welfare! When I’m ready to leave the US, they say “You overstayed your visa.” – so what – I could have more than 1 passport. Just repeat the procedure with the other passport.
Given this GLARING GAPING hole in their logic, this is why I believe that a lot of their rules are the result of SPITE towards Americans that want to leave. When the number of renunciants started piling up, they added the $450 fee. Then they massage the renunciation numbers. Something really stinks about all of this.
@Don, given what I said about Uruguay, what I was trying to show is that in Uruguay, the US already pushed through a FATCA-like rule back in 2008-2009. But here in Brazil, know one ever even cared that I’m an American.
It’s HUGELY unfair to penalize someone due to where they were born. This ISN’T right!
“It’s HUGELY unfair to penalize someone due to where they were born. This ISN’T right!”
This made me think about the we attributes we inherit when we are born: a gender, two parents, ethnic background, place of birth and a name. Everything else in the course of our lives is in some way shaped by what we do as individuals. Notice that you can change your name and even your gender legally in some countries. An ethnicity can simply be hidden by not revealing it to people and you might not even know who your parents were – BUT you will always have the same place of birth and can never hide this fact from anyone.
I think that a new word needs to enter the English language – “Birthism”: discrimination based on one’s place of birth.
@Don, I like Brazil so much that I’m almost tempted to hold onto US citizenship and then sue the Federal Government if they start discriminating against Americans. If they start discriminating based on place of birth, what’s next? It’s really scary. But renunciation is so much easier! I just want to renounce and be free.
At this time I am not sure what Brazilian banks will do with FATCA. I am curious. Then I am curious too how this will work with dual citizens (Brazil/USA) and resident aliens (Brazilian Green Carders who have bank accounts in Brazil. Let me say once moe that I am no in favor of US Persons (citizens, dual citizens and resident aliens) hiding their investments to the IRS. But on the other hand I really don´t believe that they should ne harrassed and receive penalties for mistakes much stiffer than other Americans.
@markpinetree
Are you suggesting that you don’t have any issue with citizenship-based taxation, which is the underlying catalyst for all of this misery? I understand that you are wanting to do the right thing, including drawing the line at outright tax evasion. However, I don’t think that anyone on this site supports or condones that kind of behaviour. I trust that we are all hard-working, honest residents and/or citizens of the countries we call home, and we pay our taxes to the governments that actually provide some kind of tangible services to us in exchange for our hard-earned money. What we are against is the immoral, extra-territorial cash grab that the US seems hell-bent on proceeding with, entrapping all of us minnows in their whale-catching net, and for no other reason than the fact that they wrongly assume we are all tax cheats with hidden millions. The real point is that it should be none of their business what we are since we are no longer US residents, if indeed we ever were.
There is no room in this situation for mere “compliance” and doing the right thing when we are up against an ideology, a system and a set of laws that are clearly unjust and wrong. These are times when one has to fight, not cave-in to the powers that truly want nothing more or less from you than all the money you’ve got left. This isn’t a game that you can win by playing by their rules, as monalisa1776 has slowly begun to realise. No, they will come after you anyway, no matter where in the known universe you live, and do it year after year after year unless and until you renounce, relinquish or die. Unless we fight, then we are left with only these three ways to possibly get out of this Orwellian nightmare. For many people, unfortunately, only the final one is realistically available to them.
The US is the obvious bully in this, however all countries will benefit from a more transparent reporting of foreign accounts to ensure that residents are paying required taxes.
Even in a fully transparent financial world, a citizenship based tax regime will handicap the US in using USC’s to promote its products abroad.
The $50K reporting minimum, amounts to $100/month savings rate over a working life from age 20 to retirement and should be increased to $250-500K
The constitutional differences between the parliamentary and US government systems are problematic for any negociations.
European negotiators act with the near certainty the their respective parliaments will pass the enabling legislation for these agreements
The US negotiators act with the near certainty the the congress will NOT pass enabling legislation to assure reciprocity