FATCA and the EU

546 thoughts on “FATCA and the EU”

1. ‘EU Public Hearing on FATCA’ on May 28 in Bruxelles ( video here http://www.europarl.europa.eu/ep-live/en/committees/video?event=20130528-1530-COMMITTEE-ECON )
   https://youtu.be/zRoU-JNFhr0
   https://youtu.be/eEmxooUYX-8

   And see description at;
   http://thefranco-americanflophouse.blogspot.ca/2013/05/eu-public-hearing-on-fatca.html
   and
   http://thefranco-americanflophouse.blogspot.ca/2013/05/a-day-at-european-parliament-in-brussels.html

2. Thanks to Duality ( http://isaacbrocksociety.ca/2015/08/31/parliamentary-question-legality-of-intergovernmental-agreements-igas-on-fatca/comment-page-1/#comment-6453968 ) for alerting us to this:
   http://www.sophieintveld.eu/parliamentary-question-legality-of-intergovernmental-agreements-igas-on-fatca/

   “31 aug 15
   Parliamentary Question: Legality of intergovernmental agreements (IGAs) on FATCA

   Member of the European Parliament Sophie in ‘t Veld (ALDE/D66) tabled written questions to the European Commission about the legality of intergovernmental agreements (IGAs) on the Foreign Account Tax Compliance Act (FATCA).”………….

   See text of questions at link above.

   See also:

   http://www.sophieintveld.eu/commission-discloses-documents-on-us-tax-agreements-with-eu-member-states/
   20 aug 15
   Commission discloses documents on US tax agreements with EU Member States

   Member of the European Parliament Sophie in ‘t Veld (ALDE/D66) requested the European Commission in March 2012 to publicly disclose all documents and correspondence regarding the American Foreign Account Tax Compliance Act (FATCA). FATCA is US legislation against tax evasion and tax fraud. Every bank, insurance company or investment agency with activities in the US are obliged to give information of their clients whom reside outside the US, to the US authorities. Refusal will be sanctioned with a fine. FATCA has extra-territorial effect and is directly applied on EU-territory.

   Personal information of EU-citizens, for example Europeans with a double nationality or with financial ties to the US because of study, work or family are being shared with the US without a proper justification, and without the possibility to object.

   The European Commission refused to provide the relevant documents to In ‘t Veld, asserting initially that it would be too much work to scrutinise all relevant documents before disclosure and that In ‘t Veld needed to specify which documents she deemed relevant. As it is impossible to make a selection as long as the documents are not disclosed, In ‘t Veld referred to the European Ombudsman with a complaint. In February 2014, the Ombudsman recommended that the Commission would reassess In ‘t Veld’s request. After more than a year, the Commission responded with the letters below. The disclosed (parts of the) documents should follow suit.

   FATCA – COM reply confirmatory application – Part I http://www.sophieintveld.eu/download/getFile/1986
   In’T VELD – PART II – Decision – Part II
   http://www.sophieintveld.eu/download/getFile/1987

   FATCA – COM List of documents – Part I
   http://www.sophieintveld.eu/download/getFile/1985

   List of Documents PART II
   http://www.sophieintveld.eu/download/getFile/1988

3. How might these negotiations/agreements between the EU and the US interact with the data mandated and to be collected and transmitted and store under FATCA? Might the agreements help to pose an obstacle to FATCA in EU member countries? Or did the US get special status/exemptions for FATCA data?

   http://www.globalpolicywatch.com/2015/09/eu-us-umbrella-agreement-about-to-be-concluded-towards-a-transatlantic-approach-to-data-protection/

4. The long-awaited EU Fatca documents are now being uploaded here:
   http://www.sophieintveld.eu/commission-discloses-documents-on-us-tax-agreements-with-eu-member-states/

   This may be an ongoing process, so keep an eye on this page for further updates.

5. More documents have been uploaded…
   My fellow Europeans affected by this nightmare should praise Sophie for accomplishing this.

6. Duality,

   …and praise for Sophie from those outside the EU too.

7. @calgary411 : Yes, agreed 🙂

   Unfortunately, many disclosed pages are still, more or less, redacted; so, this makes me wonder about the level of transparency within Brussels bureaucracy. It is disingenuous of them to talk about transparency and democracy for all citizens of the European Union whilst carving out an exception for those ones with US-ness for the purpose of enforcing Fatca. We are referred to as “US Persons” in those documents, NOT “EU citizens” or “nationals of EU member states”.

8. A copy of what we have here in Canada, Duality. Different countries, same definitions — *US Persons* or *US citizens who happen to reside in XXXX*.

9. Safe Harbour is finished…
   http://www.sophieintveld.eu/ecj-confirms-personal-data-not-safe-under-safe-harbour/

10. Abstract from presenter to upcoming International Conference on Taxpayer Rights
    in Washington, DC, convened by The National Taxpayer Advocate of the
    U.S. Internal Revenue Service:

    ‘The Right to Confidentiality and Privacy in an Age of Transparency’ – Philip Baker QC
    “The purpose of this paper is to explain some of the background from a European perspective to taxpayers’ fundamental rights, and to the restrictions they impose on State action in the realm of cross-border exchange of information. It argues that insufficient attention has been paid by some States to respect for taxpayers’ fundamental rights in designing systems for exchange, and that a potential clash needs to be averted by greater sensitivity to taxpayers’ rights. This does NOT mean that systems of exchange are unworkable, but merely that they need to respect procedural and substantive rights. That is a desirable objective of itself, since it should improve voluntary compliance.

    There is a history of more than 50 years of protection of fundamental rights in Europe, largely through the European Convention on Human Rights, and latterly through the European Charter of Fundamental Rights and Freedoms. The starting point is the right to privacy, supported by the right to a fair trial. However, in recent years this has taken more concrete form in the data protection directive. This restricts the use, retention, and – most relevant – transmission to third states, of personal data. Data may not be shared with third states if they have inadequate provisions for data protection.

    This paper will also discuss the results of the International Fiscal Association General Report on the Practical Protection of Taxpayers’ Rights. That Report identifies best practice and minimum standards, including in respect of exchange of information. One specific aspect is the right of the taxpayer to be notified of potential exchange of information relating to him, and to challenge that exchange. The paper will discuss the recent attempts by the OECD to limit these rights, and will challenge the legitimacy of those attempts.

    The paper concludes that inadequate attention has been paid to these fundamental rights in the design of systems for automatic exchange, which is a position that needs to be reversed.”

    The author:
    Philip Baker QC
    Field Court Tax Chambers; London University
    London, UK
    “Philip Baker is a barrister and QC practising from Field Court Tax Chambers in Gray’s Inn. He was called to the bar in 1979, began practising in 1987 and took silk in 2002. He is also a Senior Visiting Research Fellow at the Institute for Advanced Legal Studies, London University and was responsible for the MA in Taxation programme there. From September 2015 he is visiting professor in international taxation at Oxford University. ”

    Perhaps something from his work might help to inform an EU based challenge to FATCA – particularly in the area of privacy rights?

    More about his area of expertise and interest:
    http://www.fieldtax.com/articles/philip-baker-qc/
    Ex.
    http://www.fieldtax.com/wp-content/uploads/2015/08/2009-9-October-What-Governments-do-to-People-and-How-to-Restrict-It.pdf
    ‘WHAT GOVERNMENTS DO TO PEOPLE,
    AND HOW TO RESTRICT IT’
    International tax specialist Philip Baker QC traces
    the human rights thread running through his career
    for Sarah Perrin

11. Parliamentary questions
    23 September 2015
    P-013027-15
    Question for written answer
    to the Commission
    Rule 130
    Sophia in ‘t Veld (ALDE)

    Subject: Postponement of the implementation of the Foreign Account Tax Compliance Act (FATCA)
    Answer(s)

    The preparations for the implementation of the intergovernmental agreements (IGAs) on the Foreign Account Tax Compliance Act (FATCA) afford examples of discriminatory practices towards so-called ‘accidental Americans’, i.e. dual citizens who may be unaware that they are considered to be US citizens, either owing to a lack of awareness of the principle of jus soli applicable in the USA or because they believe they have previously expatriated themselves. Last week the US Inland Revenue Service (IRS) issued Notice 2015-66, which postpones the deadline of 30 September 2015 for countries which have signed Model 1 IGAs to exchange information on US taxpayers’ accounts. The relaxing of the deadline should give partner jurisdictions more time to implement information exchange systems(1).

    1. In its talks with the USA on FATCA, did the Commission consider those EU citizens who are regarded as ‘US persons’ and are thus unfairly affected by FATCA and the associated IGAs, and what instruments does it have available to redress the situation?

    2. Was the Commission officially informed about the postponement of the deadline for the implementation of IGAs? If so, what were the reasons stated?

    3. Would the Commission consider proposing a new initiative for an EU-US agreement instead of the bilateral IGAs, which may be contrary to EC law and violate the rights of EU citizens?

    (1) http://taxcontroversywatch.com/2015/09/18/fatca-update-treasury-relaxes-september-30-deadline-for-model-1-iga-jurisdictions-to-exchange-tax-information

    Last updated: 30 September 2015

    Parliamentary questions
    19 November 2015
    P-013027/2015
    Answer given by Mr Moscovici on behalf of the Commission

    1. The intergovernmental agreements (IGAs) implementing the US Foreign Account Tax Compliance Act (FATCA) to which the Honourable Member refers are concluded at national level between EU Member States and the US. As indicated to the Honourable Member(1), the Commission has no competence to intervene in these bilateral international negotiations. Therefore it is for the relevant Member States to consider the implications of the FATCA IGAs for their citizens who are regarded as ‘US persons’ and to take action where necessary.

    2. The Commission was not officially notified of this postponement; as it is not a party to any IGA with the US in relation to FATCA, there is no requirement for any such official notification.

    3. In view of the Member States’ decision to conclude bilateral IGAs with the US, as they are entitled to do, the Commission has no grounds at this stage to seek a mandate to launch negotiations on an EU-US agreement in relation to FATCA. The bilateral IGAs must not breach EC law or violate the rights of EU citizens; it is for the relevant Member States to ensure that this is the case. A citizen can submit a complaint to the Commission or seek remedy before the national court of the relevant Member State if he or she believes that his or her rights under EC law have been violated by an IGA.

    (1) See answer to Written Question E-2760/2012 — http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=E-2012-002760&language=EN

    Last updated: 23 November 2015
    http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=P-2015-013027&language=EN

12. Posted by calgary and JC;
    http://www.keepcalmtalklaw.co.uk/accidental-americans-the-us-citizenship-conundrum/

    “…..Inability to Open Bank New Accounts: Many foreign financial institutions are refusing to allow US citizens to open replacement bank accounts for identical reasons to that of the bank account closures. Indeed, until the European Payment Accounts Directive comes into force in late 2016, there is no right to a bank account in European law, whilst for non-European ‘Accidental Americans’, this right may never come into existence. Others have had their inheritance blocked as banks have refused to open the necessary probate accounts..”….

    “..The negative financial effects are not just restricted to the ‘Accidental Americans.’ Their countries also suffer, as FATCA represents a raid on resources which European states have encouraged their citizens to save so as to be able to be financially independent in old age. The double tax treaties do not recognize European tax breaks, so the financial support which European governments give their citizens will now be transferred to the US coffers. The burden of filling things such as pension gaps will fall to the European states in which these people are resident and to which they have contributed. Commonwealth countries are also being adversely affected in a similar way, among them Canada and Australia…”

13. EU Parliament FATCA questions:
    http://www.europarl.europa.eu/portal/en/search?q=fatca

14. Questions about the il/legality of FATCA in the EU context:

    See a paper by Leopoldo Parado, highlighted by Prof. Allison Christians on her blog; “….Parada’s article goes further in the analysis and lays out a number of enduring difficulties. It seems to me that governments are simply ignoring these difficult issues as inconvenient barriers to desired outcomes and courts will face the same temptation. But I don’t think these issues go away with time and gradual acceptance of FATCA as an institution. Instead, I think the issue will cause systemic problems going forward, both in terms of raising endless conflicts of law, and in terms of the precedent set for international tax relations by the failure of states to challenge US exceptionalism even as it tramples on law and legal process throughout the world….”
    quoted from;
    http://taxpol.blogspot.ca/2016/02/parada-legal-questions-surrounding.html

    The article by Parada raises issues such as the legal nature of the FATCA IGAs, etc.

    Free fulltext is available via SSRN: http://ssrn.com/abstract=2720182

    See;
    Parada, Leopoldo, Intergovernmental Agreements and the Implementation of FATCA in Europe (June 24, 2015). World Tax Journal Vol. 7, No. 2, 2015. Available at SSRN: http://ssrn.com/abstract=2720182

    …………”2.4. The legal nature of the IGAs
    Are the intergovernmental agreements truly international agreements?Following the analysis of the general
    characteristics of IGAs Model 1 and 2, the author estimates that there are important arguments, in form and in substance, to consider that the new IGAs lack the characteristics of an international agreement, at least for one of the parties involved: the United Sates.[27]

    Formally speaking and contrary to the normal process of approval of international agreements in the United States, the IGAs follow the proceedings of an internal law coming into play as “executive agreements”.[28] This means that the agreements do not contemplate any process of ratification,as is normally required in the United States for international agreements.[29] Then, a simple written notice between the parties is deemed sufficient, provided that the domestic proceedings in each country have been accomplished.[30] Furthermore, the IGAs do not contemplate normal mechanisms
    of reform in comparison with other international agreements.[31]

    Additionally, and substantively speaking, there are two specific characteristics of the IGAs themselves that permit to support the idea that they would not be proper international agreements for any of the parties involved………………”

15. Not sure how this development intersects with FATCA’s infringement on data privacy in the EU. And since we know that data that goes to the US is subject to the Patriot Act and Homeland Security, then how could this possibly trump those laws? And an ombudsman inside the US? Seems unlikely that anyone could rely on the word of the US. And why should an EU citizen have to look to an ombudsman in the US for recourse and redress?
    http://www.canadianlawyermag.com/5920/Shield-or-sword-The-new-EU-U.S.-Privacy-Shield.html
    http://europa.eu/rapid/press-release_IP-16-216_en.htm

16. More re the US-Eu “Privacy shield” ;
    “….Despite the assurances, skeptical data privacy advocates are planning to challenge Privacy Shield in court once it’s in effect. “It’s not a ‘Privacy Shield,’ it’s an accountability shield. Never seen a policy agreement so universally criticized,” Snowden tweeted..”
    http://www.newsweek.com/fbi-fight-apple-over-encryption-may-erode-european-trust-privacy-shield-428804
    https://www.theparliamentmagazine.eu/articles/news/eu-us-privacy-shield-unlikely-hold-court-warns-eu-parliament
    http://www.nytimes.com/2016/02/04/technology/european-privacy-regulators-want-more-details-on-us-safe-harbor-data-deal.html?_r=0

17. And, more on the ineffectiveness of the “Privacy Shield”;
    “………It looked to a judgment by the High Court of Ireland, holding said that “the revelations made by Edward Snowden had demonstrated a ‘significant over-reach’ on the part of the NSA and other federal agencies.”

    In particular, the Irish court was concerned that European citizens “have no effective right to be heard” by U.S. courts if the privacy of their data is breached by security agencies because the breach takes place in secret..”

    ….”.All this means is that there’s plenty of room for the ECJ to find that Privacy Shield is inadequate like its predecessor. But will it?

    That depends in part on how strongly the EU rates its negotiating position. No one in the European political elite really wants to give up on Facebook or Amazon. And no EU bureaucrat really thinks the U.S. will change its national security laws to please the EU.

    The new agreement is a pragmatic compromise meant to preserve legal formality and the fig leaf of data privacy without upsetting national security either for the U.S. or for European intelligence services that might like a chance to see their own citizens’ data.

    The ECJ may not want to upset this delicate balance. In that case, it can assess the new agreement generously. That would solve the practical problem. Bu the disparity between European and American conceptions of privacy will remain.”
    http://www.bloombergview.com/articles/2016-02-02/europe-s-new-privacy-shield-looks-leaky

18. Another chapter in EU MEP Sophie in’t Veld’s brave and dogged pursuit (so far stretching since well before 2013, to today in 2016) of the truth about the FATCA ‘negotiations’ and process between the US and the EU:

    Case: 1398/2013/ANA
    Opened on 13 Aug 2013 – Recommendation on 03 Dec 2014 – Decision on 31 Mar 2016
    Institution(s) concerned: European Commission
    Field(s) of law: General, financial and institutional matters,External relations
    Types of maladministration alleged – (i) breach of, or (ii) breach of duties relating to: Requests for public access to documents [Article 23 ECGAB]
    Subject matter(s): Dealing with requests for information and access to documents (Transparency)
    http://www.ombudsman.europa.eu/cases/decision.faces/en/65927/html.bookmark

19. Further to my comment above, see also the very very interesting comment contained in #51 re data protection issues – DESPITE IGAs enacted and enabled by several member states.

    from #51;
    “….the data protection aspects of these agreements are still controversial and subject to ongoing internal discussion and supervision by the national data protection authorities. “……..
    http://www.ombudsman.europa.eu/cases/decision.faces/en/65927/html.bookmark

    Is there an opening for an EU challenge to the IGAs and FATCA enabled by some EU member states on the basis that they do not conform with EU data protections and the relevant laws of those member states?

20. Not sure how this might relate to the transmission of personal and financial data under the FATCA IGAs with EU countries, and also to the OECD CRS?

    Wed Apr 20, 2016 10:17am EDT
    ‘U.S. reluctant to change data pact after EU watchdogs’ concerns’
    By Julia Fioretti

    ……”..Last week, the EU’s 28 data protection authorities – known as the Article 29 Working Party – published a non-binding opinion on the framework which called for more reassurances over U.S. surveillance practices and the independence of a new U.S. privacy ombudsman.

    Leaving some of the regulators’ concerns unaddressed could increase the chances of the Privacy Shield being challenged in court by privacy advocates, much as its predecessor was.

    “By doing so, it (the Privacy Shield) will be open to significant attacks by the public, and a court challenge is all but guaranteed,” said Aaron Tantleff, partner at law firm Foley & Lardner LLP.

    The previous data transfer framework, Safe Harbour, was struck down in October by a top EU court on concerns about U.S. mass surveillance practices..”…

    ‘http://www.reuters.com/article/us-eu-dataprotection-usa-idUSKCN0XH1PF

21. Is anyone aware of this?

    http://www2.assemblee-nationale.fr/14/missions-d-information/missions-d-information-communes/mission-d-information-commune-sur-l-extraterritorialite-de-la-legislation-americaine

22. Further to above, the following page refers to several items discussed in a meeting held in March. The French government appear to be embarking on something promising for individuals affected by extraterritorial taxation (though it is still too early to say).

    http://www2.assemblee-nationale.fr/14/missions-d-information/missions-d-information-communes/mission-d-information-commune-sur-l-extraterritorialite-de-la-legislation-americaine/a-la-une/reunion-constitutive-du-mercredi-2-mars-2016

23. Duality….that whole short article is music to my eyes. I knew that the arrogance of the fine against BNP Paribas (insinuated, but not directly mentioned) would not go down well with the French. What I don’t understand in the article is how high up in the government is this discussion taking place. Is this some small insignificant committee, or are we talking higher up in their government?
    Keep us posted. Thank You.

24. @PierreD

    It appears to be a ministerial meeting (or sub-committee?). The phrase that caught my eyes was the following:

    “…, mais aussi étudier les moyens de contrer ce type de pratiques au niveau national et européen.”

    I will investigate this further…

25. Pierre, could you provide what it says in english….a short version?