FATCA and the EU
April 2019
July 2018
06: EU Lawmakers Vote to Kick-Start FATCA Talks With United States
05: Independence Day attempt in European Parliament–the Empire lives well
July 2017
11: Refreshing: @SophieintVeld calls EU answer to plight of #AccidentalAmericans “bullshit”
September 2016
30: #FATCA Came Last to EU, but Mandatory Fingerprinting was First
August 2015
31: Parliamentary Question: Legality of intergovernmental agreements (IGAs) on FATCA
January 2015
10: EU Residents/Citizens: This is For You
September 2014
13: US seeks additional Customs Pre-Clearance locations in the EU
August 2013
24: European Parliament opposes exchanging bank data with the US
June 2013
May 2013
31: Public Hearing on FATCA at the European Parliament in Brussels
23: EU Parliament Hearing on FATCA May 28th
April 2013
04: MEP Sophia In’t Veld discusses FATCA in EU Parliament
March 2013
25: Question and Answer on FATCA in the European Parliament
February 2013
26: EU Tax Chief Urges U.S. Support for Transactions Levy @BloombergNews
April 2012
19: US bullies the EU into sharing passenger data
March 2012
10: Two prominent members of European Parliament raise concern over FATCA five agreement
February 2012
16: Are China, Russia, the EU and Switzerland poised to give in to FATCA?
January 2012
I don’t know how to track all the petition and the reference numbers in order to find out what happened next.
This is from;
EU Tax News
Issue 2017 – nr. 002
January – February 2017
“Spain – European Commission requests Spain to amend its law
implementing reporting obligations for certain assets located outside of
Spain
On 19 February 2015, the European Commission notified the Kingdom of Spain of the
initiation of an infringement procedure (number 2014/4330) following several
complaints brought by different Spanish associations and individuals regarding the
Spanish law of 29 October 2012 (the Spanish law) which implemented reporting
obligations in connection with assets located outside of Spain through the Tax Form 720.
According to the Commission’s letter to Spain dated 23 November 2015, the Commission
announced the commencement of infringement proceedings against Spain with respect
to the compatibility of two aspects of Spanish law with EU Treaties (free movement of
citizens and free movement of capital). These aspects are i) the penalty regime and ii) the
special statute-of-limitation period for the taxation of undeclared assets located outside
of Spain. In March 2016, Spain filed contentions supporting the validity of these two
aspects of the Spanish law.
On 15 February 2017, the Commission issued a reasoned opinion requesting Spain to
amend its legislation regarding the penalty regime implemented due to the absence of
declaration or incorrect declaration of assets located outside of Spain. The Commission
stated that there are significant differences between the penalty regime in case of
infringement of the obligation to declare assets located in other Member States and the
penalties in case of infringement in a purely national situation. In this regard, the
Commission considered that the penalties established are disproportional and much
higher than those applying in a purely domestic situation. Therefore, the Commission
concluded that these provisions are discriminatory and violate EU law.
If Spain does not amend its legislation within the two-month deadline given by the
Commission, the case can be referred to the CJEU”……
https://www.pwc.com/gx/en/tax/newsletters/eu-direct-tax-newsletters/assets/eudtg-newsletter-issue-2017-jan-feb.pdf
“A reasoned opinion
Taxation: Commission calls on SPAIN to ensure that its rules on foreign-held assets are proportionate
The European Commission sent a reasoned opinion to Spain today requesting to change its rules on assets held in other EU or the European Economic Area (EEA) Member States (“Modelo 720″). While the Commission takes the view that Spain has the right to require taxpayers to provide its authorities with information on certain assets held abroad, the fines charged for failure to comply are disproportionate. As fines are much higher than penalties applied in a purely national situation, the rules may deter businesses and private individuals from investing or moving across borders in the single market. Such provisions are consequently discriminatory and in conflict with the fundamental freedoms in the EU. In the absence of a satisfactory response within two months, the Commission may refer the Spanish authorities to the Court of Justice of the EU.
MEMO/17/234”
http://europa.eu/rapid/press-release_MEMO-17-234_EN.htm
Sorry all, not trying to hijack this thread, but tried to track what happened in the case with the EU vs. Spain in terms of its Form 720 / Modelo 720 information reporting demands (and related disproportionate penalties, effect on statute of limitations, data protection/data security, freedom of movement, etc.) re assets held outside Spain in case it is of use in application to efforts to fight against FATCA as applied in the EU.
badger – isn’t it likely that that “Reasoned Opinion” of Feb 2017 is the most recent development? As that is also what the Kent University clinic refers to in its case study.
The slowness of the mills of god is nothing compared to the slowness of the European Commission. But note that the Reasoned Statement explicitly states: “While the Commission takes the view that Spain has the right to require taxpayers to provide its authorities with information on certain assets held abroad, the fines charged for failure to comply are disproportionate.”
No Member State requires its USC residents to report assets held abroad, so the Spanish law is not comparable to FATCA IGA Model 1 bilateral agreements, in which the partner country undertakes to require its banks to report resident USC accounts to the local tax agency, which then sends the reports to the IRS. There is no reporting obligation placed on EU residents/citizens who have US citizenship, and no penalties are applied for non-compliance as there’s nothing for the USC to comply with. The effects of the IGA on the USC are indirect.
I said:
“We can all only speculate as to the meaning of the comment [the EC’s comment in response to Sophie in’t Veld’s question to the effect that the EC is exploring with the banking industry possible solutions to the problems of bank access caused by FATCA]]. To me, it implies that the EC may raise the issue, or possibly has already raised the issue, with the EBF. If so, it is at the very least an acknowledgment by the EC that the issue needs to be addressed, and therefore some way of resolving the issue needs to be found.”
Worth noting that in July 2017 the EBF wrote to the IRS about (inter alia) the problems banks faced when a USC customer refused to answer FATCA-based demands for the customer’s SSN. Subsequently, the IRS announced it was relaxing its demands – putting in place more or less the solution that the EBF had proposed. (See https://www.ebf.eu/wp-content/uploads/2017/08/EBF_028279-EBF-Response-to-Treasury-Request-for-Information-published-on-14-June-2017_82-F.R.-27217-1.pdf and https://www.irs.gov/pub/irs-drop/n-17-46.pdf)
This is one reason I’m optimistic that the Commission’s explorations with the banking industry might lead to changes that actually do help ease the problems of bank access in Europe.
Reposting (for ease of reference) the link to the EC’s response, as posted above by Duality:
http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2018-000298&language=EN
Plaxy: thanks. Interesting reading. I’m one of those account holders that throw the yearly FATCA warning from ING into the recycling pile.
Fred – I opted for storming into the nearest branch and complaining loudly. 🙂
Not that it got me anything more than the relief of my rage – they just kept right on asking.
But I hope the EBF letter, and the readiness of the IRS to accept EBF’s proposed solution, may bode well for some progress on the bank access situation, now that the EC has ground itself slowly into acknowledging that there’s a problem.
@plaxy, I had thought that perhaps there might be some angle of leverage in relation to the ‘Reasoned opinion’s reference to disproportionate fines; “..“While the Commission takes the view that Spain has the right to require taxpayers to provide its authorities with information on certain assets held abroad, the fines charged for failure to comply are disproportionate.””. I was thinking of the disproportionate aspect of both the threatened 30% withholding and passthru penalty regime of FATCA re FIs and nonFIs as well as the disproportionate FATCA reporting penalty regime of the form 8938 for individuals (and the draconian effects of the FATCA law on statute of limitations, etc. – which is another category of objection the EU raised re Spain’s Form 720 law).
The comment (and the other previous commentary ) appears to indicate that they recognize at least some type of limitations to what Spain has the right to impose on those it claims as its taxpayers.
The US regime is far more extraterritorial in scope. It is also well known that the US FATCA regime’s penalty structure for FIs and non-FIs, as well as for individual’s has no relationship to any actual tax loss or tax owed. And this is even more pronouced in combination with the FBAR regime for individuals. Add in additional ‘foreign’ information reporting demands and their added layers of penalties such as those imposed on reporting for ‘foreign trusts’ (ex. our local legal registered disability and education savings plans in Canada – the RDSP and RESP) and the whole thing looks much more egregious than Spain’s Form 720.
The US taxpayer advocate has repeatedly criticized FATCA and FBAR’s penalty regimes in application – for their disproportionate aspects, their disconnect from any actual tax assessed or owing and the layering of penalty regimes and complex duplicative reporting demands as applied to the legal local savings of those living outside the US. That would assist in bolstering an EU critique of FATCA as applied to EU residents as to any claim to an unfettered ‘right’ of the US to impose unlimited information reporting and penalty structures on individuals in the EU.
If an EU member state like Spain can be criticized for the disproportionate penalty regime portion of their ‘foreign’ asset information reporting demands, why not the US FATCA’s disproportionate penalty regime’s terms as written for application to EU banks and EU individual taxpayers?
Any parallels between Spain’s Form 720 that drew official written EU criticism and the US FATCA and FBAR regime might be useful.
badger: “The comment (and the other previous commentary ) appears to indicate that they recognize at least some type of limitations to what Spain has the right to impose on those it claims as its taxpayers.”
Yes, but Spain is a Member State. The US, which threatens the banks with FATCA withdrawal fines, is not a Member State and can tax FFIs just as it chooses, as a condition for access to the US financial system.
badger: “Any parallels between Spain’s Form 720 that drew official written EU criticism and the US FATCA and FBAR regime might be useful.”
I should think the EC’s “Official Opinion” is probably part of a process that could culminate if need be, before the ECJ. The US is not subject to EU law, so the ECJ isn’t relevant for the US.
I said: “I should think the EC’s ‘Official Opinion’ [correction: ‘Reasoned Opinion’] is probably part of a process that could culminate if need be, before the ECJ [correction: CJEU].”
Yes – second stage, according to a press release about infringement procedures against Hungary (not tax-related)
http://europa.eu/rapid/press-release_IP-17-3663_en.htm
Plaxy: “Yes, but Spain is a Member State. The US, which threatens the banks with FATCA withdrawal fines, is not a Member State and can tax FFIs just as it chooses, as a condition for access to the US financial system.”
Absolutely. But the EU has the heft to hit back. While not a supporter I was always hopeful that Trump would help us, if only indirectly. The reassuring Obama (and it would have been similar, or worse, with Clinton) always managed to con Europeans into submitting to US legal domination (notable example: Transatlantic Treaty). My hope is that Trump will be a wake-up call for Europe. That and many years of documented FATCA disaster. Not only is Trump frightening, but he is also weak (in the sense that it’s much safer for a foreign power to have Trump rage on Twitter than have an informed, hands-on President Hillary Clinton secretly order cyber warfare or drone strikes or legal entanglement). Also the upcoming “trade war” even if it doesn’t materialize, has shown that the EU, perhaps the best funded, staffed, and organized of bureaucracies in the world (as the hapless British are finding out in their Brexit negotiations) has no shortage of imagination when finding retaliatory measures (including targeting Senate majority leader’s state). So it’s quite possible that at this point in time US application of the 30% withholding of US-sourced bank income would be met with retaliatory EU measures on US banks; enough to make a weakened, disorganized US back off. Although I’m not holding my breath.
Fred – “it’s quite possible that at this point in time US application of the 30% withholding of US-sourced bank income would be met with retaliatory EU measures on US banks; enough to make a weakened, disorganized US back off. Although I’m not holding my breath.”
I largely agree with what you say about Trump, and also about America being weaker. Although I think America’s deterioration and withdrawal has been going on for a long time – Trump being a symptom more than a cause.
However, when it comes to FATCA, I don’t think the European countries signed up to the IGAs out of fear of the fines. They wanted the reciprocal reporting, and they wanted to crack open the banks. Of course they want to get full reciprocity, but the limited reporting they get from the US under the IGAs is proving very fruitful, and they’ve also managed to ditch privacy rights for accountholders. What’s not to like, from the governments’ point of view?
As for the EC, it appears to me that the EC absolutely adores crossborder AEOI. It was the EC that started this train down the tracks to global information exchange, by trying to establish AEOI between Member States. And in addition, unfortunately, the EC does seem to be technically correct when they keep responding to petitions and questions about bank access by stating that no EU law is being broken as long as PAD is adhered to. I obviously don’t agree with that – I think treating place of birth as evidence of foreign tax-residency is an abomination – but as far as I can see, the EC is legally entitled to take that view until / unless the ECJ says otherwise.
I do think they’re all (Member States and Commission) very perturbed about the US tax bill. It seems to me there’s a change in tone, in the most recent response. I hope it will lead to changes that will help with the problem of bank access, and I also hope they might be considering the way in which America’s taxation-based-citizenship has facilitated America’s extraterritorial tax laws (such as Subpart F, CFC, etc); and the consequent claiming by America of the right to tax outrageously and retroactively and prospectively the European income of European-resident individuals and corporations designated unilaterally by America as “US Persons”.
Fingers crossed.
I don’t myself see that the Spanish tax case has a bearing.
Fred – “targeting Senate majority leader’s state).”
Are they? What have they done?
Plaxy: the EU is contemplating tariffs on Kentucky Bourbon (message to Mitch McConnell) and Harley-Davidsons (Paul Ryan’s district).
https://www.politico.com/story/2018/03/02/trump-tariffs-world-response-382959
Indeed agree that EU is all about information exchange. Probably very happy with FATCA… ugh.
Request from the French petitioner for EU citizens to contact MEPs asking them to support the petition, which is apparently expected to be considered by a plenary session of the Parliament.
https://m.facebook.com/groups/334650186701060?view=permalink&id=965821330250606&_ft_=qid.6539792749333637640%3Amf_story_key.965821330250606%3Atop_level_post_id.965821330250606%3Atl_objid.965821330250606%3Asrc.22&refid=18&ref=group_header&__tn__=%2C%3B
About EP plenary sessions:
http://www.europarl.europa.eu/aboutparliament/en/20150201PVL00011/How-Plenary-works
Find your MEP:
http://www.europarl.europa.eu/meps/en/map.html
Could remind the Green members that our Green Party head Elizabeth May opposed FATCA;
https://www.greenparty.ca/en/media-release/2015-09-22/elizabeth-may-urges-canadian-government-stop-transfer-canadians%E2%80%99-private
http://elizabethmaymp.ca/publications/backgrounder/2013/01/28/backgrounder-canada-and-fatca/
BI Nexgard Webinars
https://www.greenparty.ca/en/media-release/2015-09-22/elizabeth-may-urges-canadian-government-stop-transfer-canadians%E2%80%99-private
badger – Sorry, I’m not with you. Do you mean you’re reminding USC members of EU Member State Green Parties that Canada’s Green Party head opposes FATCA?
Or do you mean you’re reminding EU Member State Green Party MEP’s that Canada’s Green Party head opposes FATCA?
Or something else that I’ve not understood? Sorry if I’m being slow.
Latest EC response to the petition (13/02/2018):
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2f%2fEP%2f%2fNONSGML%2bCOMPARL%2bPE-607.954%2b02%2bDOC%2bWORD%2bV0%2f%2fEN
Note that in this latest response, the Commission says:
It occurs to me that the categories “Born in the US but never requested US citizenship” and “born in the US but believed they had relinquished US citizenship” might both be viewed as questionable, for identifying “US Person” accounts; as both are examples of unwanted US citizenship and unwanted US tax residence being imposed on the EU citizen by US law.
@Admins, pls take the unrelated typo out of my comment above at http://isaacbrocksociety.ca/fatca-and-the-eu/comment-page-13/#comment-8187848 . Not sure how that got into my paste.