Fiscaal Nieuws from the Netherlands reports on the case of a Dutch-American dual-citizen who appealed to the Dutch Board for the Protection of Human Rights after his investment account with BinckBank was closed following the signing of the FATCA IGA by the Dutch government on December 18, 2013.
Here is a translation of the article kindly supplied by Innocente:
FATCA unlawful discrimination by banning US customers
April 10, 2014
The American X has lived in the Netherlands since 1970 and also has US citizenship in addition to Dutch. He had an investment account with BinckBank (“Alex”). On December 1, 2013 BinckBank ended the relationship because X had not shown that he is not liable for taxes in the United States. X approached the Netherlands Institute for Human Rights to claim that BinckBank engaged in unlawful discrimination due to citizenship. BinckBank argued that it had terminated all 150 US customers who met the definition of “US Person”, used by the US Internal Revenue Service (IRS), because it refused to comply with requirements resulting from the planned Dutch legislation in response to the US Foreign Account Tax Compliance Act (FATCA) to provide all transactions and historical transaction data by US Persons to the Dutch Tax Authorities. According to BinckBank the discrimination was based on a generally binding regulation, because the agreement on December 18, 2013 between the Netherlands and the US Intergovernmental Agreement (IGA) for the implementation of FATCA forced it to do so . The Institute left open the question whether the IGA was a generally binding regulation because the IGA did not require BinckBank to close its customer accounts because of their US citizenship The Board also rejected the appeal by BinckBank for reasonableness and fairness, as the broad obligations required by FATCA brought disproportionately heavy costs. The law, in the General Equal Treatment Act (Equal Treatment Act), explicitly states that direct discrimination on grounds of citizenship was not only prohibited, except for exceptions included in the Equal Treatment Act itself. Honoring the appeal made by BinckBank on reasonableness and fairness would be contrary to the closed system of the Act. The Board concluded that BinckBank had engaged in unlawful discrimination in the provision of services on grounds of citizenship.
so the Dutch do have a backbone. they ratted out Anne Frank, maybe they do better this time.
A cleaned-up translation of the “Fiscaal Update” article:
“FATCA unlawful discrimination by banning US customers
April 10, 2014
The American X has lived in the Netherlands since 1970 and also has US citizenship in addition to Dutch. He had an investment account with BinckBank (“Alex”). On December 1, 2013 BinckBank ended the relationship because X had not shown that he is not liable for taxes in the United States. X approached the Netherlands Institute for Human Rights to claim that BinckBank engaged in unlawful discrimination due to citizenship. BinckBank argued that it had terminated all 150 US customers who met the definition of “US Person”, used by the US Internal Revenue Service (IRS), because it refused to comply with requirements resulting from the planned Dutch legislation in response to the US Foreign Account Tax Compliance Act (FATCA) to provide all transactions and historical transaction data by US Persons to the Dutch Tax Authorities. According to BinckBank the discrimination was based on a generally binding regulation, because the agreement on December 18, 2013 between the Netherlands and the US Intergovernmental Agreement (IGA) for the implementation of FATCA forced it to do so . The Institute left open the question whether the IGA was a generally binding regulation because the IGA did not require BinckBank to close its customer accounts because of their US citizenship The Board also rejected the appeal by BinckBank for reasonableness and fairness, as the broad obligations required by FATCA brought disproportionately heavy costs. The law, in the General Equal Treatment Act (Equal Treatment Act), explicitly states that direct discrimination on grounds of citizenship was not only prohibited, except for exceptions included in the Equal Treatment Act itself. Honoring the appeal made by BinckBank on reasonableness and fairness would be contrary to the closed system of the Act. The Board concluded that BinckBank had engaged in unlawful discrimination in the provision of services on grounds of citizenship.”
More on the ruling is available here:
http://www.mensenrechten.nl/publicaties/oordelen/2014-40
This story is obviously good news for people in the Netherlands. It is interesting to note that the account in question is described as an investment account that “engages in online buying and selling orders for investors,” since U.S. persons have been shut out of such accounts even in countries where savings, mortgage and checking account closures seem to be less common..
The detailed arguments make clear that there are some exemptions in Dutch law for discrimination on the basis of national origin and that the bank was arguing its case on this basis: Google translates the material as follows:.
“3.9
Direct discrimination is prohibited, unless one of the exemptions listed in Article 2, paragraph Equal Treatment Act applies. This subsection provides that the prohibition of discrimination on grounds of nationality shall not apply if the discrimination is based on generally binding regulations or on written or unwritten rules of international law. The prohibition of discrimination on grounds of nationality shall also not in cases where nationality is decisive.”
I suspect that the last sentence actually is something more along the lines of “Nor does the prohibition against discrimination based on nationality apply in cases in which nationality is determinative”
http://www.mensenrechten.nl/publicaties/oordelen/2014-40/detail
These provisions help to explain why banks can ban accounts on the basis of international sanctions, for example, but not FATCA.
The bank argued that FATCA was a binding regulation, but the court argued that none of the conditions allowing for discrimination on the basis of national origin applied.
The EU Charter of Fundamental Rights, to which EU members should adhere, bans discrimination on the basis of social origin. Any action would have to take place at the national level, since the EU courts cover only government policy that violates human rights..
@ Innocente
Thanks for this much-better translation. A link to this definitely should be highlighted on the IBS home-page that first presents this news since the Google translation into English is totally confusing.
I think something like 2 cases were won in Switzerland too, prohibiting banks to send over information to America on these 2 clients.
Suggestion: could a collection of all such FATCA-related victories in the courts, wherever they occur, be collected prominently in the sidebar on the IBS home page?
@Innocente
Thank you for providing a comprehensible translation of this article. Dank u wel!
@LM
I second the motion that Innocente’s translation should be posted: no English language source seems to be picking this story up..
@Polly
This case seems a bit different from the Swiss ones in being about not allowing banks to discriminate against U.S. citizens on the grounds of nationality.
Interesting development. Thank you for the post and translations.
So the Dutch IGA forces it’s banks to discriminate between its customers but only to the degree that the banks must to continue to deal with the source of their vulnerability.
There are laws to be enforced against US persons, at the same time there are laws to protect these persons from those laws. All of this just emphasizes how incompatible CBT is with the rest of the world.
Someone else posted this quote by Abraham Lincoln that suits both FATCA and CBT the best:
“The best way to get a bad law repealed is to enforce it strictly”.
In order to see either FATCA or CBT’s demise, both should be enforced strictly.
That ruling is quite important, as it goes back further and to the root of all evil
http://samuelclemmons.wordpress.com/2014/01/28/laws-equally-stupid-as-fatca-securities-act-of-1933/
@Publius
Yes true. But at least some people are fighting it.
@Bubblebustin
I hope you are right.
Maybe I am totally misinterpreting this story, but to me it sounds like a VICTORY for FATCA. A Dutch court is saying that a Dutch bank cannot discriminate against American persons because of the excess burden imposed by FATCA, i.e. FATCA is now an integral part of the law in the Netherlands and everyone must play by its rules.
Any thoughts?
@garbo999:
The mission of the Netherlands Institute for Human Rights is to determine whether discrimination has or has not occurred. In the BinckBank case, it determined the bank had discriminated against a customer by closing his account due to his US citizenship. The Institute did not rule on whether FATCA was by nature discriminatory.
The mission of the Institute, which is part of the Dutch government, is described at this link:
http://www.rijksoverheid.nl/adres/c/college-voor-de-rechten-van-de-mens-commissie-gelijke-behandeling-cgb.html
——————————————————————————————————————————
On a related topic, the decision document states that the practice of closing US citizen bank accounts in the Netherlands, due to the US citizenship of the account holders and the costs of implementing FATCA, was not limited to BinckBank. Translation: “Moreover, the defendant in his defense pointed out that many Dutch banks implemented the same policies as the defendant.”
http://www.mensenrechten.nl/publicaties/oordelen/2014-40/detail
The BinckBank case obviously contradicts two of Robert Stack’s FATCA “myths”, namely:
“Myth No. 1: Some claim it’s overly costly and burdensome due to complex regulations and difficult to meet reporting requirements.”
“Myth No. 2: Some claim that U.S. citizens living overseas will become outcasts in the international financial world.”
@Innocente: But isn’t the Dutch court basically saying that closing an American person’s account is NOT OK? Therefore, US citizens living overseas will in fact not become outcasts because local laws will prevent that from happening.
(Note: I have already lost one important biz account to FATCA and am still angry about it. I just don’t see how this is good news for us as FATCA opponents.)
Does anyone have more specific info about this Dutch court case such as court case numbers or something?
There is a question out to someone in our Brock/sandbox network from a European political decision maker trying to get more background upon this case, in relation to our cause.
@garbo999
This victory against Dutch banks is a double edged sword, it seems. The banks are forced to discriminate against USP’s only so far as to force them to hand us over to their tax authorities, but not enough to allow the banks to rid themselves of us. The US Treasury said that some countries would have to change their privacy laws to accommodate FATCA, but it seems that FATCA’s enforcement is dependant on these countries being able to significantly bend their discrimination laws – without breaking them. The US will have its cake and eat it too – all with the help of foreign governments.
@Mark Twain:
The complete decision of the Netherlands Institute of Human Rights is at this link:
http://www.mensenrechten.nl/publicaties/oordelen/2014-40/detail
Oordeelnummer 2014-40 (Judgment number)
Datum: 02-04-2014
Grond: Nationaliteit (Reason)
Terrein: Leveren van en toegang tot goederen en diensten (Coverage: Supply and access to goods and services)
got it
@garbo999
Well, maybe the banks will start fighting against the costliness of rooting out U.S. persons once they find that they can’t dump us and something sensible will develop.
Some off the dumping has been incredibly brutal: at the very end of January this year, AXA France gave its clients just 15 days to prove that they were not American and then extended it to all of 1 April to allow time for renunciation or finding another bank. That letter, which makes the discrimination very clear, are in the link below. I feel sorry for very Daniel in the story because I think that he will unwittingly end up being a covered expatriate.
http://www.lepoint.fr/economie/axa-banque-ferme-les-comptes-de-ses-clients-americains-en-france-06-02-2014-1788961_28.php
The Netherlands Institute of Human Rights’ website presents an overview of its anti-discrimination decision in the Binckbank/ Alex case at the below link. Although not directly related to FATCA, this passage might also be noteworthy:
“It is expected that the Netherlands will conclude agreements with other countries in the coming years on the exchange of financial information. As a result, people of other nationalities also run the risk that banks will exclude them in the future. For this reason, the Institute brings this judgment to the attention of (Finance) Minister Dijsselbloem, the Financial Markets Authority and the Dutch Association of Banks.”
Dutch:
http://mensenrechten.nl/berichten/alex-sluit-amerikanen-uit-van-beleggingsrekening
English translation:
http://translate.google.com/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fmensenrechten.nl%2Fberichten%2Falex-sluit-amerikanen-uit-van-beleggingsrekening&edit-text=
Each court decision prohibiting discrimination against Americans due to their nationality and FATCA drives another nail into FATCA’s coffin and puts another chink in its proponents’ shining armor.
A member of the Dutch parliament, Arnold Merkies, sent a list of questions regarding the BinckBank human rights decision and the FATCA IGA to the Finance Minister. Translation below:
“Second Chamber of Parliament
Questions from the parliament member Merkies (SP) to the Finance Minister the report that BinckBank excludes Americans from brokerage accounts (submitted April 4, 2014) .
Question 1
What ist your reaction to the news that BinckBank excludes Americans from investment accounts?
Question 2
Is the application of the IGA dated December 18, 2013 and IRS FATCA definition of “US Person” valid? If so, are residents who have been naturalized also included?
Question 3
Do you believe that the IGA and FATCA provide a justification to make for discrimination on grounds of nationality when offering banking services? If so, can you explain this?
Question 4
Do you share the view of the Institute for Human Rights Protection (CRM) that BinckBank discriminates for residents (of the Netherlands) with US nationality?
Question 5
Are you familiar that other financial institutions deny services to residents under the IGA and FATCA residents? If so, can you give an overview of these conditions? If not, are you willing to examine financial institutions for these conditions?”
From his questions, MP Merkies appears concerned that residents of the Netherlands, who are considered US Persons according to the FATCA/ IRA definition, are being discriminated against for banking services as a result of FATCA and the IGA.
Questions in Dutch are at this link:
http://www.tweedekamer.nl/kamerstukken/kamervragen/detail.jsp?id=2014Z06179&did=2014D12254
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Swedish media have been following an employment discrimination incident against a 16 yo Swede, born in Iraq, who was denied employment as an intern/ apprentice at GKN under US export regulations. GKN (formerly Volvo Aero) is subject to US export regulations apparently because it produces jet engines under license from US General Electric and possibly other products. US export regulations prohibit employment of individuals born in some countries such as Iraq.
This past week the Swedish “Discrimination Ombudsman” ruled against GKN because, under Swedish law, companies may not discriminate against a prospective employee based on national origin (article in Swedish):
http://www.expressen.se/gt/blev-nekad-skolplats–do-anmaler-skolan/
The Obama administration, which actively preaches anti-discrimination regarding gays and others, needs to understand that many countries also have anti-discrimination laws that cannot be cast aside just because the US government wants to ignore them.