Once upon a time…
Britain was a great country. Now, Britain has adopted the “Gentiloni Doctrine“. You may recall that the doctrine includes:
1. The United States has the sovereign right to declare who its citizens are; and
2. The United States has the right to impose worldwide taxation on those citizens.
Yes, Britain was a great country that should have stood up to the United States: Love Actually Scene – Hugh grant Speech https://t.co/m5ptkqIsoE via @YouTube
— U.S. Citizen Abroad (@USCitizenAbroad) June 19, 2020
The Tension Between The GDPR, Automatic Exchange Of Information and FATCA and The CRS
The tension is well summarized in this page from the Mishcon de Reya site:
As the exchange of information takes place automatically, the CRS raises fundamental questions concerning its compatibility with the data protection principle that personal information should only be processed to the extent it is “necessary” to achieve the stated objective. As mentioned in the recent Tax Aware article, the House of Lords has warned about the steady accretion of powers in the hands of the tax authorities since 2012. There seems to be little doubt that the introduction of the GDPR in May 2018 has brought to light an inherent conflict between the CRS and individuals’ fundamental rights to data protection and privacy. Whilst tax authorities must be put in a position to fight tax evasion, they must also respect individuals’ fundamental rights and not expose their data to the risk of hacking. Additional concerns exist where individuals live in high risk jurisdictions.
Q. What happens when the privacy guarantees in the GDPR collide with the information exchange rules in FATCA and the CRS?
A. The GDPR protects individuals from governments (as long as those governments don’t themselves need protection from the United States)
From @HelenBurggraf: "Latest in UK FATCA challenge by ‘Jenny’: Complaint not upheld; appeal costs being weighed" https://t.co/QbBknEoWqs pic.twitter.com/A4dp03pCe4
— U.S. Citizen Abroad (@USCitizenAbroad) June 19, 2020
As reported by Helen Burggraf at American Expat Finance:
The decision, which finally was handed down on May 29, more than eight months after the complaint was filed, will have been met with disappointment by Jenny’s hundreds of supporters, many of whom contributed generously to her crowd-funding pot.
As of this week, the 452 pledges Jenny has received totaled £81,698, which Jenny told her CrowdJustice.co.uk supporters on Tuesday was “68% of our stretch target of £120,000”.
As reported here last month, lawyers for “Jenny” – as the complainant in the case is known, to her supporters and the press – had been preparing themselves, and their client, for an unsatisfactory outcome, citing suspicions that the ICO would allow “policy concerns”, alongside such political considerations as the importance to the UK of maintaining good relations with the U.S., to be taken into account when it issued its decision in the politically-sensitive matter.
n her complaint, Jenny, who came to the UK around 20 years ago, and who has been a British citizen since 2010, argued that by providing her personal financial information to the U.S. tax authorities in compliance with the U.S. tax evasion law known as FATCA, HM Revenue & Customs had violated her fundamental rights to data protection and privacy, as set out by the EU’s General Data Protection Regulation (GDPR).
You can read the rest of Ms. Burggraf’s article here.
The ICO has ruled against Jenny. The decision was that the FATCA IGAs, whatever they may be, simply don’t violate the individual rights legislated in the the GDPR. Apparently the decision is not publicly available.
And the prognosis?
On June 16, 2020 Jenny delivered the following message to her supporters:
Update on FATCA & HMRC: breaching my human rights to data protection and privacy
Dear generous supporters,
I just wanted to take a moment to thank you very much for your patience while my legal team finalises their next steps and strategy going forward.
Since the Information Commissioner’s Office (ICO) sent us their response on 29 May, the team have undertaken a huge amount of work to ensure that we are in as strong a position as possible as this challenge enters a new phase. The ICO dithered over our Complaint for nearly seven months, refusing to give us any information about the questions they asked HMRC, or HMRC’s responses, despite my legal team’s numerous requests for the ICO to fulfil their commitment to transparency. So I really appreciate your understanding as my legal team devotes the necessary time to thoroughly analysing the ICO’s response and devising a plan that will take this case to a successful resolution.
You will see on the Mishcon de Reya website that my legal team have published the case correspondence in the public interest (which may give the ICO an idea of what transparency actually looks like). The correspondence demonstrates that my legal team are tackling an unprecedented and immensely complicated injustice in dark circumstances where the government is placing itself above the law and attempting to exploit the very complexity of FATCA and AEOI to obfuscate its violations of our fundamental rights. I’m sure that with the odds already stacked high against us, it would make the ICO and HMRC very happy indeed if we were to shoot ourselves in the foot by sloppily leaking a half-baked strategy and poorly-thought-out analysis of the ICO’s response in a big rush. The ICO’s response showed us that my legal team’s predictions (as reported in the American Expat Financial News Journal on 27 May) were largely correct, and they appear determined to white-wash these violations of our data protection and privacy rights at all costs, even that of their own mission and institutional integrity.
Thank you for the contributions that you have made to the campaign within the past couple of weeks, which have taken us up to 452 pledges totalling £81,698. This is 68% of our stretch target of £120k. It’s incredible that this campaign has now been live for 280 days! I am so grateful to you all for your commitment to justice and for building the profile of the campaign in readiness for the next stage of this challenge.
What does this really mean?
Individual Americans are the biggest problem …
The real tragedy is NOT the decision of the ICO. The real tragedy is the shockingly small number of people willing to support Jenny’s lawsuit. Governments do respond (in varying degrees) to public pressure. The perception of the need to redress public grievances is directly proportional to the perception of how important the issue is to the general public. When those who are directly affected, won’t support initiatives for change, there is no reason for governments to take these lawsuits seriously. The United States is a serious problem. Other governments (including Canada and the UK) are serious problems. But the MOST SERIOUS problem is the failure of individuals affected, to stand up for themselves and support those who fighting for change! If people are unwilling to stand up for themselves, why do they think that governments will take them seriously?
Comments from Facebook about Jenny’s initiative include:
What this proves is that Accidentals are a rather pusillanimous bunch.
We are unable to channel our indignation, rage and fear into something positive.
We feel overwhelmed by the notion of taking on states and wrongly conclude that David cannot beat Goliath. We cling to the hope that hiding is the best solution.
We meekly support those of our members who are willing to take on the fight and defend our common interests.
Nothing will ever change whilst we are stuck in this paradigm. Our domestic authorities will ignore us unless and until we reach critical mass. The US will never do anything for us, they have no reason to. This is why the EU judiciary is our best solution but without passive support in form of funding there is nothing our less timorous members, such as JB Web, can do.
Yes it is shocking that Jude’s petition has been open for YEARS, and very widely publicised with multiple EU Parliament hearings, and it does not cost a penny to sign it, and yet it has still not even reached 1,000 signatures. I can’t understand why people would choose to just complain and mouth off instead of actually DOING something about an atrocious injustice that is harming hundreds of thousands of ordinary individuals and families.
What is it about Americans living outside the USA that they are happy to shoot themselves in their feet? If all 6900 members of American Expatriates gave £10 or equivalent, there is £69000. If we each gave another £10 this grows to nearly £140000! Together we can be strong – otherwise we lie down on a motorway and let speeding juggernauts squash us.
As of today, there are only 453 donors to Jenny’s cause. Those impacted by FATCA just don’t care enough to support the principles at stake. The real story of Jenny’s lawsuit and other initiatives is that Americans either:
1. Don’t think that FATCA and citizenship-based taxation are problems (they are citizens of “The Land Of The Free”); or
2. Don’t have the courage to stand up for themselves (they are citizens of the “Home Of The Brave”).
The longer term implications …
Apparently it hasn’t occurred to governments and administrative agencies, that by upholding the FATCA IGAs, they are really endorsing the right of the United States to impose worldwide taxation on THEIR OWN RESIDENTS. FATCA and all things related to FATCA, are actually about turning all people in the world into US tax subjects.
An inconvenient truth, but a truth nevertheless!
Perhaps Jenny should seek funding from the British public in general …
Appendix – Jenny’s Description Of Her Objective
What follows is Jenny’s description of her objective. Notice that the approach is NOT that FATCA (and CRS) are wrong per se. Rather the approach is that they go further than is necessary to facilitate the objectives … Her legal claim is based on the GDPR which makes the case very different from the FATCA Canada lawsuit.
Why I am taking HMRC to court and need your help
Hi, I’m Jenny. I am a US-born British citizen. I moved to the UK nearly 20 years ago, when I was 22 years old. I am married and I work with deaf students at the local university where I am a research associate. I have a UK bank account where I receive my salary and pay my taxes on my earnings.
Like many Americans, I have found myself caught up in a piece of legislation called FATCA (Foreign Account Tax Compliance Act). You may not have heard of it before, I hadn’t either until I received a letter from my bank out of the blue saying that I “may have tax obligations in the US” and that the bank was going to send information about me to the Internal Revenue Service (IRS). Under FATCA, banks are required to send all of my personal and financial information – and that of all those like me – to US authorities on an annual basis.
Under FATCA, banks are required to send all of my personal and financial information – and that of all those like me – to US authorities on an annual basis.
I am bringing a claim against HMRC for sharing my personal and financial information with the IRS because:
1. The sharing of all my personal and financial information is a violation of my fundamental human rights to privacy and data protection. My information is irrelevant to the objective of FATCA which is to collect tax from those evading it. I am not liable for tax under FATCA as I earn less than the $104,000 income tax exemption for Americans living abroad.
2. The sharing of my personal and financial information is in direct breach of GDPR.
3. This sharing of my personal and financial information with the US government exposes me and countless others to a potential hack throughout the data processing chain (bank, HMRC, IRS).
4. There is the significant unintended consequence that other US-born British citizens like me are unable to open local bank accounts, or are seeing them be closed down, due to the cost implications on banks of compliance with FATCA.
Nobody should evade tax. My problem is not with FATCA’s objective but the disproportionate nature of the measure to achieve its objective.
(For more information and background on FATCA click here)
Why support this claim
Like me, you believe nobody should evade tax. You recognise that the problem is not with FATCA’s objective but the disproportionate nature of the measure to achieve this objective.
a US citizen concerned about the direct implications of FATCA in the UK on you – the systematic and generalised processing of your personal and financial information, or;
a US or non-US citizen who is concerned with the growing trend of encroaching on basic human rights to privacy and data protection via systems of automatic exchange of information and public registers operated by governments, often against the advice of data protection authorities.
Sometimes it takes an ordinary person to defend individuals’ fundamental rights when public authorities seek to achieve honourable public objectives through disproportionate means.
As I am one individual defending a principle that affects many, I need the support of those who share my concerns.
What we can do with your help
A legal challenge of this type requires an enormous amount of work. It is complicated and untested which means it is hard to predict how it will develop. I have instructed Mishcon de Reya who are leaders in data protection and privacy issues. Dealing with HMRC, without going to Court, is costing several hundred thousand pounds.
I have been advised by my lawyers that because of the novel nature of the case, the costs through to a final conclusion are difficult to predict. I will, of course, share regular updates on how the case is progressing and what stage it has reached together with updates on how much more I need to raise.
In addition to providing me with the necessary funds, your donations will show the amount of public support for this cause. On 10 September, I set myself an initial target of £50,000 to be met within 30 days. The supporters of this case were so generous and enthusiastic that we exceeded this target in just 28 days. Now I am working toward a stretch target of £120,000 to cover the costs of the case work as it progresses toward litigation
I read many saudis, Gulf expats were having this issue early since 2010 when this whole FATCA nightmare by Obama the one who wanted to make US a tax haven for foreigners and hunt down every one of US citizens holding bank accounts overseas and and even expats and dual nationals living in other countries. He wanted to all international banks to give him info and wanted his own banks to get all the money in the world. What a serious hypocrite. As I recall the author of this bill even had not thought hurting expats or dual nationals but he was trying to get US citizens holding overseas account and living in US. Mostly Swiss money and Cayman money they all cared about. But their figures were terribly off as they thought people had trillions to give to US govt. Not even close to a billion but a few millions. The rich like Mitt Romney had stored everything in an offshore Cayman Company legally with less taxes which everyone screamed about always at his campaign speeches. Anyways, US citizens living overseas are now paying for a few thousands who had stashed it vs millions who are actually living in other countries are impacted. Thanks to Obama and his crusaders while they are openly challenging CRS, OECD we will not ever sign on to your treaties as we need money in our banks. Not to mention a lot of trust, foundations which belonged to foreigners moved to USA from Switzerland after Switzerland banks were targeted as EU hated them too for not sharing info. I know a lot of foreigners who are opening up their LLCs in USA and their bank account in USA as that is the only reputable country now which does not require a lot of paper work and also your account is not reported to any govt. They are very happy that they are getting US to do business as for them its tax free.
Mike I think as soon as Covid 19 is over most of us are going down to renounce, I know I am as US is just not that attractive anymore. But with renunciation there is a big Red target on our heads. Why this person is suddenly renouncing now. Lets look at his house, his place of work, business etc make a profile for him and see if it has a tree where they can shake some $. Frankly speaking I feel I should have renounced in 2010 when this law came out finally. This was the biggest problem as I saw HK residents standing in long lines in front of US embassy in news wanting to renounce asap to get out of tax mess.
Do you think it’s possible that the US could one day subject nonresident aliens to taxation on their non-US source income? In other words, could tax residents of other countries who have no US ties at all eventually be taxed in the same way as US citizens and permanent residents (especially if things go south in the US)? What are your thoughts?