FATCA and the EU

546 thoughts on “FATCA and the EU”

1. FATCA is useful to the EU, and will no doubt be protected, unless a case reaches the ECJ and the court rules against the IGAs.

   There doesn’t seem to be any reason for the Commission to want to preserve FBAR (as applied to EU residents’ local accounts). It’s only reason for existence (as far as EU residents’ local accounts go) seems to be, to scare people into semi-compliance with the barbaric US tax laws and deter them from investing their savings in their EU country.

2. Plenary vote on the FATCA resolution currently scheduled for July 4. 😉

   http://parltrack.euwiki.org/dossier/2018/2646(RSP)

3. The PETI Committee has voted to adopt the resolution on FATCA.

   http://www.europarl.europa.eu/website/webstreaming.html?event=20180619-1030-COMMITTEE-PETI

   The video unfortunately starts late and misses off the voting on the first 8 amendments.

   Amendment 9, and amendment 15 (second part) were rejected.

   The other amendments (10 – 15 (first part), and 16 – 19) were adopted.

4. What are those amendments which didn’t pass? The link to the amendments document on the previous page of comments here is not a functioning link.

5. Works for me. Maybe try a different browser.

   http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2F%2FEP%2F%2FNONSGML%2BCOMPARL%2BPE-622.251%2B01%2BDOC%2BPDF%2BV0%2F%2FEN

6. Link absolutely does not work. It is not a document of any sort recognized by my computer, even though uit ought to be a PDF file. However, after some digging I found it as item 14 on this page:

   http://www.emeeting.europarl.europa.eu/committees/agenda/201806/PETI/PETI(2018)0618_1P/sitt-8195073

7. Having read both the resolution and the amendments, it pleases me to see that most of Sophia in ‘t Veld’s amendments passed, making the resolution stronger. Now let’s see if it makes it all the way through the European Commission, and finally someone calls America’s bluff on so-called reciprocity, information security, and CBT itself.

8. If adopted by the Plenary session it becomes the position of Parliament. It doesn’t oblige the Commission or Council to take action.

   It’s a fantastic achievement if it gets adopted. The report, and the Resolution (if adopted) will be on the record to document the many ways in which the IGAs infringe the rights of EU residents/citizens born in the US.

   I hope that eventually a case will reach the ECJ and the Court will rule against the IGAs. At that point (if it comes) the Member States will have to comply with the Court’s ruling.

   Meanwhile, action may result from the Commission’s warning to the US on its lack of transparency. Also, the Commission has reported the US to the Panel on Harmful Tax Practices or whatever it’s called. Have to wait and see if anything comes of it.

9. Cecilia Wikström says (Google translation of https://m.facebook.com/story.php?story_fbid=10155897747637968&id=652257967&__tn__=%2As-R):

   Today, my committee, the Committee on Petitions, has adopted a very important resolution. Resolution on FATCA draws attention to several of the problems encountered for European citizens with US citizenship due to US tax rules.

   Only the United States and Eritrea have a taxation system based on citizenship. For people with citizenship in the United States and another EU country, they imply taxation in the United States, even though they are completely lacking in the country. For example, there are cases where European couples during the holiday have born children in the United States who then fall under the US taxation rules.

   My committee has met petitioners who have testified of the negative effects. They are denied access to European banking services, such as housing loans and pension savings.

   Another problem is that European banks are forced to disclose personal data to the United States.

   Corresponding information exchange does not take place elsewhere and the agreement is therefore very uneven. We demand that the EU Commission investigate if this violates the new data protection regulation GDPR.

   We also request a new EU-US agreement that would replace the bilateral agreements that exist today between each member country and the United States. Together, we get a stronger negotiating position and can secure an agreement where citizens with dual membership do not suffer as hard.

10. So far, so good; there is now a European Parliament resolution. (Think about where we were a year ago.)

    Canada is still ahead of us with a Supreme Court case.

11. Duality,

    Unfortunately, the ADCS-ADSC litigation has a long way to go and more $$$ to be raised before it would be at that step of possibility of going before the Supreme Court of Canada.

12. Duality:

    Not yet, but the chances of adoption look good (or so it seems to me).

    What passed and what was rejected (by the PETI MEPs) seems very telling (though the status of Amendments 1 – 8 is not yet known – minutes will presumably be out soon.)

    The Member States are in the hot seat, or at least the slightly uncomfortably warm seat. It will be interesting to see the Council’s response.

    Calgary411 – the long delay, so hard on the plaintiffs and supporters, seems to demonstrate the weakness of the defence. Not long now till the court date.

    The French case is scheduled for next summer I believe.

    On both continents, it’s the courts that can make things change, if they will.

    Fingers crossed.

13. @calgary411 @plaxy

    That shows how little I remember about the Canadian court case, as it has been moving at a snail’s pace…!

14. The Plenary debate is scheduled for 4 July, with the vote scheduled for the 5th.

    http://www.europarl.europa.eu/sides/getDoc.do?type=AGENDA&reference=20180702&secondRef=SYN&language=EN

    Question for oral answer
    to the Council
    Rule 128
    Cecilia Wikström, on behalf of the Committee on Petitions

    Subject: The adverse effects of FATCA on EU citizens and in particular ‘accidental Americans’
    The United States is one of the two countries in the world using a citizen-based taxation system.

    Since the entry into force of the US Foreign Account Tax Compliance Act (FATCA) and the related IGAs concluded between Member States and the United States, financial institutions in the EU have been obliged to disclose detailed information on accounts held by presumed ‘US persons’, implying data protection issues. The extraterritorial effects of FATCA and its related IGAs have affected a large number of EU citizens, in particular so-called ‘accidental Americans’ as well as dual EU/US citizens and their non-US family members. FATCA has resulted in an increasing number of EU citizens being denied access to basic banking services in the EU, which appears to be in breach of the Payment Accounts Directive (Directive 2014/92/EU) and of the Charter of Fundamental Rights of the EU.

    1. How does the Council intend to include the situation of ‘accidental Americans’ in its transposition assessment of the Payment Accounts Directive, and guarantee the right of all EU citizens to have access to a payment account with basic features without discrimination, in accordance with Articles 15 and 16 of the Directive?

    2. Given the significant lack of reciprocity between the US and the EU in the context of FATCA and the non-participation of the US in the Common Reporting Standard of the OECD, what diplomatic and legislative action does the Council intend to take to protect the rights and interests of concerned EU citizens against the extraterritorial effects of FATCA?

    3. Does the Council consider that a joint EU approach is needed to adequately protect the rights of EU citizens and ensure reciprocity, in accordance with the highest international standards on tax transparency? In particular, would the Council reconsider the possibility of negotiating an EU-US agreement on FATCA?

    4. Could the Council carry out a full assessment of the impact of FATCA on EU citizens, and explain whether a serious discrepancy between EU citizens and residents in different EU Member States exists, especially as regards EU data protection and fundamental rights standards?

    Question for oral answer
    to the Commission
    Rule 128
    Cecilia Wikström, on behalf of the Committee on Petitions

    Subject: The adverse effects of FATCA on EU citizens and in particular ‘accidental Americans’
    The United States is one of the two countries in the world using a citizen-based taxation system.

    Since the entry into force of the US Foreign Account Tax Compliance Act (FATCA) and the related IGAs concluded between Member States and the United States, financial institutions in the EU have been obliged to disclose detailed information on accounts held by presumed ‘US persons’, implying data protection issues. The extraterritorial effects of FATCA and its related IGAs have affected a large number of EU citizens, in particular so-called ‘accidental Americans’ as well as dual EU/US citizens and their non-US family members. FATCA has resulted in an increasing number of EU citizens being denied access to basic banking services in the EU, which appears to be in breach of the Payment Accounts Directive (Directive 2014/92/EU) and of the Charter of Fundamental Rights of the EU.

    1. How does the Commission intend to include the situation of ‘accidental Americans’ in its transposition assessment of the Payment Accounts Directive, and guarantee the right of all EU citizens to have access to a payment account with basic features without discrimination, in accordance with Articles 15 and 16 of the Directive?

    2. Given the significant lack of reciprocity between the US and the EU in the context of FATCA and the non-participation of the US in the Common Reporting Standard of the OECD, what diplomatic and legislative action does the Commission intend to take to protect the rights and interests of concerned EU citizens against the extraterritorial effects of FATCA?

    3. Does the Commission consider that a joint EU approach is needed to adequately protect the rights of EU citizens and ensure reciprocity, in accordance with the highest international standards on tax transparency? In particular, would the Commission reconsider the possibility of negotiating an EU-US agreement on FATCA?

    4. Could the Commission carry out a full assessment of the impact of FATCA on EU citizens, and explain whether a serious discrepancy between EU citizens and residents in different EU Member States exists, especially as regards EU data protection and fundamental rights standards?

15. Interestingly, a debate on a resolution on “Adequacy of the protection afforded by the EU-US privacy shield” is scheduled for the 4 July meeting also.

    Whether it might have implications for the IGAs, I do not know.

    Comment from a law firm:
    https://www.linklaters.com/en/about-us/news-and-deals/news/2018/june/european-parliament-questions-adequacy-of-eu-us-privacy-shield

16. Uncle Tell – Ironic, isn’t it? I too get free money from the US: a monthly SS pension payment, not large, but wholly disproportionate for the few years I worked there before I escaped. And taxed not by the US but by my home country, I’m pleased to say. 🙂

17. Oops – accidentally sent that to the wrong thread.

18. @plaxy

    “[FBARs] only reason for existence (as far as EU residents’ local accounts go) seems to be, to scare people into semi-compliance with the barbaric US tax laws and deter them from investing their savings in their EU country.”

    So US-born EU citizens living in, say, Spain should be offshoring their money into US-based savings and retirement accounts to avoid FBAR compliance, possibly FATCA as well. At the same time, in Spain, they would appear suspicious for offshoring money to the States. Damned if you do, damned if you don’t…

19. Duality – my thought was, it would be interesting to see what answer the Commission would give if asked, e.g. whether the EC considers that in handing USC account details over to the IRS, thus fingering for the IRS those USCs who are not filing FBARs, unencrypted, over insecure internet, under threat of life-changing punitive fines, the Member States are helping to stamp out financial crime or are helping the IRS to trample all over the data protection rights of the EU citizens affected.

20. “So US-born EU citizens living in, say, Spain should be offshoring their money into US-based savings and retirement accounts to avoid FBAR compliance, possibly FATCA as well.”

    Indeed. US-based savings and retirement accounts are not foreign accounts, for a USC.

    “At the same time, in Spain, they would appear suspicious for offshoring money to the States. Damned if you do, damned if you don’t…”

    I don’t think there’s anything suspicious about a USC in Spain having US-based savings, as long as they sign the W-9. There may be some restrictions.

21. @plaxy

    Technically speaking, there is no issue. But why would modest US-born Spanish citizens who have been living in Spain all their lives (e.g. a civil servant) want to open financial accounts in the States? Unless I had a strong link to the States, I wouldn’t. The Americans need to mind their own business within their own borders…

22. @plaxy

    “my thought was, it would be interesting to see what answer the Commission would give if asked”

    A European Careerist (… sorry Commissioner), like Moscovici would say yes to FBAR enforcement. The European Commission had no qualms for Member States to enforce FATCA, so why would it be any different with FBAR?…

23. “Technically speaking, there is no issue. But why would modest US-born Spanish citizens who have been living in Spain all their lives (e.g. a civil servant) want to open financial accounts in the States?”

    I’m not advocating it, obviously. It’s an option which some USCs choose, presumably because they can’t or don’t want to renounce, but do want to be able to retire someday.

24. “The European Commission had no qualms for Member States to enforce FATCA, so why would it be any different with FBAR?…”

    GDPR has been carefully designed to permit AEOI; FBAR has no such protection.

    I wouldn’t say the EC had no qualms about the bilateral IGAs. They did try to get the Member States to let them negotiate an EU-wide agreement instead. The Council refused. The resolution asks the Council to reconsider that refusal.

    I suspect due diligence in an agreement negotiated by the EC would be more in line with due diligence under CRS Wider Approach, which carefully avoids the birthplace discrimination that makes the IGAs potentially vulnerable to an adverse ECJ ruling.

    Not that it matters, since it’s unlikely either the Council or the US would agree to such a renegotiation. IMO.

25. @plaxy

    “FBAR has no such protection.”

    This can easily be overlooked and enforced under the guise of tax enforcement. Perhaps another IGA or two for each country. Then let the affected go to their courts afterwards.

    “They did try to get the Member States to let them negotiate an EU-wide agreement instead.”

    We are where we are now. Let us hope that common sense will prevail in the Council.

    “The resolution asks the Council to reconsider that refusal.”

    Fortunately, the resolution puts clarity to the problems associated with CBT and FATCA. If the resolution does not prompt the Council to reconsider the entire matter (especially the IGAs), then judicial recourse would be our only hope.

    “Not that it matters, since it’s unlikely either the Council or the US would agree to such a renegotiation. IMO.”

    Yes, I feel the same way at the moment.