FATCA and the EU

546 thoughts on “FATCA and the EU”

1. “ If a US-born German national walked into a German bank in Germany requesting a basic bank account, a TIN would not be required under CRS but will be required under FATCA. ”

   If Germany does CRS Wider Approach, a US TIN will be asked for under CRS.

   Why do you think a TIN wouldn’t be asked for under FATCA?

2. @plaxy

   “Of course, if the bank discovers that an accountholder has supplied false information (in any context, not just FATCA), it’s likely their t&c’s state that they can close the account.”

   Like fibbing about one’s place of birth?

3. Duality:

   “From 2020 onwards, with the SSN requirement in mind, would the bank deny basic banking services to the German national, breaching EU law?”

   It wouldn’t be a breach of EU law. The EU Payment Account Directive requires Member States to make sure payment accounts are available, that’s all.

4. “Like fibbing about one’s place of birth?”

   Sadly, yes. If they find out and choose to act.

5. “ If a US-born German national walked into a German bank in Germany requesting a basic bank account, a TIN would not be required under CRS but will be required under FATCA. ”

   If Germany does CRS Wider Approach, a US TIN will be asked for under CRS.

   Why do you think a TIN wouldn’t be asked for under FATCA?

   Apologies, Duality. I misread your post and responded to something you didn’t say. Please ignore the final paragraph.

6. @plaxy

   “If Germany does CRS Wider Approach, a US TIN will be asked for under CRS.”

   As the USA falls outside the CRS regime, it would be asked for under FATCA. CRS members cannot seek data for a non-participant country; it simply does not make any sense (unless I am unaware of some legal mechanism concocted from nowhere)…

   “It wouldn’t be a breach of EU law. The EU Payment Account Directive requires Member States to make sure payment accounts are available, that’s all.”

   Are we sure about that? What is the point if a basic payment account is made available but remains inaccessible due to no US TIN? The Payment Account Directive does not serve a purpose.

   “Sadly, yes. If they find out and choose to act.”
   Sad place, this planet.

7. “As the USA falls outside the CRS regime, it would be asked for under FATCA. CRS members cannot seek data for a non-participant country; it simply does not make any sense (unless I am unaware of some legal mechanism concocted from nowhere)…”

   CRS Wider Approach.

   “What is the point if a basic payment account is made available but remains inaccessible due to no US TIN? The Payment Account Directive does not serve a purpose.”

   It wasn’t drawn up with FATCA in mind. It’s to facilitate freedom of movement – so transient crossborder EU workers can pay money in and take it out. The EC uses it as a figleaf to cover its nakedness when it is asked to do something about the fact that EU citizens are being denied banking services.

8. “CRS Wider Approach”

   Only self-certification is required for citizens from non-participating jurisdictions with a bank account in a participating jurisdiction. TINs are not requested. So, a US TIN is requested because of FATCA.

   “The EC uses it as a figleaf to cover its nakedness when it is asked to do something about the fact that EU citizens are being denied banking services.”

   In which case, like I said previously, European elections are coming up soon. All my affected relatives will be following suit.

9. 27. It would not be efficient for Financial Institutions to later have to re-establish whether an account is reportable each time new automatic exchange relationships are entered into. To minimise these costs a majority of implementing jurisdictions required (or made it possible as an option) that:
   1.
   2.
   Financial Institutions collect and retain the information, ready to report, in relation to all non-residents rather than just residents of those jurisdictions with which the implementing jurisdiction has the CRS MCAA, a bilateral CAA or an exchange basis under EU law in place.
   Financial Institutions collect information and maintain a record, ready to report, in relation to all residents of those jurisdictions with which the implementing jurisdiction has an underlying legal exchange relationship that permits for automatic exchange (e.g. a DTC or other signatories of the Convention on Mutual Administrative Assistance in Tax Matters (the “Convention”), including where a CAA has not been concluded.

   https://www.oecd.org/tax/exchange-of-tax-information/implementation-handbook-standard-for-automatic-exchange-of-financial-information-in-tax-matters.pdf

   There may be some other document I’m not aware of, which says not to ask for the TIN? I’d be interested to know.

10. “There may be some other document I’m not aware of, which says not to ask for the TIN? I’d be interested to know.”

    There is much conflicting or outdated information online regarding CRS and FATCA anyway. Like I always do, shrug shoulders and carry on…

11. @plaxy

    Thanks for the link. I’m unsure whether the handbook makes for bedtime reading…

12. Statement from the European Data Protection Board:

    [..]
    With respect to the European Parliament resolution of 5 July 2018, the European Data Protection Board (EDPB) will pay due attention to the call made to it to review the existing data protection safeguards under the legislation authorising the transfer of personal data to the US IRS for the purposes of the US Foreign Account Tax Compliance Act. It however wishes to highlight that it has initiated work on the preparation of guidelines on some of the tools provided for by Article 46 of the GDPR. More specifically, the guidelines will provide information to interested stakeholders on the elaboration of transfer tools based on Articles 46 (2) (a) and 46 (3) (b) of the GDPR.

    This guidance will include information on the minimum guarantees to be included in legally binding and enforceable instruments concluded between public authorities and bodies (46 (2) (a)) as well as for provisions to be inserted into administrative arrangements between public authorities or bodies which include enforceable and effective data subject rights (46 (3) (b)). It should be noted that legally binding instruments do not require specific authorisation from a supervisory authority whereas the provisions to be included in administrative arrangements are subject to such authorisation from the competent supervisory authority.

    This set of guidelines, which should be adopted by the EDPB before the end of 2019, will be a useful tool also for the evaluation of intergovernmental agreements signed between Member States and the US government on FATCA to ensure their compliance with the GDPR.

    https://edpb.europa.eu/sites/edpb/files/files/file1/edpb-2019-02-12-25-fatca_statement_en.pdf

    Emphasis mine.

13. Previously I’ve expressed optimism that the French anti-IGA legal action might get as far as the ECJ and might even result in a ruling against the Member State laws implementing the IGA provisions.

    I no longer think this is likely.

    a) the GDPB statement makes it clear that the transfer of the information to a third country is not considered a breach because it is legally required (though additional subject-rights safeguards may be advised for the administrative arrangements).

    b) The reciprocity issue, as argued in the legal case, is a purely national issue.

    c) The birthplace issue may not be determinative. EU law permits discrimination by immutable trait (age, disability – hence also, perhaps, national origin) if it can be objectively justified as a proportionate means to a legitimate end.

    It appears to me this goose is cooked.

    The options (for a US-born European resident with banking-services problems) seem to be three: lie (if possible); renounce (if possible); or sign the W-9.

    Just my personal opinion.

    Just my personal (revised) opinion.

    Just my personal opinion.

14. Regarding the three options, depending on the country, signing a W9 may not resolve banking service problems, in that the US-person customer can still be prevented from opening certain types of accounts. In which case lying and renouncing are the only paths forward.

15. Indeed. Confirming one’s US citizenship by signing the W9 clearly won’t help one open an account for which a US citizen is not eligible.

16. For example: T&C’s on one UK broker’s website state:

    Our dealing terms … apply to all deals in shares or units in funds. You are not permitted to hold or deal in funds if you are, or become, a US Person (under Regulation S of the US Securities Act 1933). The fund may also place restrictions as to who can purchase units. For example, US Persons are generally prohibited from purchasing units in funds which have not been registered in the US, and there may be restrictions on purchasing Irish domiciled funds if you are an Irish resident. Companies and charities are not permitted to purchase Property Authorised Investment Funds within the Fund & Share Account. You should read the relevant fund’s prospectus to ensure you are an eligible investor. If your residency or citizenship status alters whilst you hold investments with us, you agree to notify us immediately, review the investments held in your Account and dispose of any investments you are no longer eligible to hold (either pursuant to these Terms or the relevant fund’s prospectus).

    Not a consequence of the UK IGA.

    Some accounts however may indeed be closed to US Persons as an indirect consequence of the UK IGA. It might not be easy to find a provider (in the UK) who is willing to open a stocks-and-shares ISA or JISA for a US citizen.

    Renunciation, if affordable, is undoubtedly the best option for those who don’t want or need to keep their US citizenship. If renouncing is unaffordable or unwanted, signing the W9 does at least make it possible to open more than a payment account. Quite a lot of USCs who don’t yet have citizenship in the residence country, have no choice but to do exactly that.

17. @Plaxy

    FYI, the Regulation S definition of a ‘US person’ is subtly different from the usual definition:

    https://en.wikipedia.org/wiki/United_States_person#Securities_market_regulation

    Section 902(k)(2) further defines some persons who are explicitly not US persons.[2] Unlike other definitions of US person, the Regulation S definition of US person does not include US citizens not resident in the US.

18. “the Regulation S definition of a ‘US person’ is subtly different from the usual definition”

    Whatever. The point is, some accounts are not available to US citizen expats, due to one US regulation or another. Yet signing the W9 form does at least allow a US citizen to open accounts which are available to US citizens (provided s/he signs a W-9 form).

19. And some accounts are not available to US person for reasons having nothing to do with US regulations directly, but banks being overly cautious (i.e. paranoid).

20. @Nononymous

    It’s always that. Nothing in FATCA or the IGAs prevents a bank or similar from opening or holding an account for a US person. Some simply don’t want to, either through fear or just unwillingness to spend the money on useless compliance for what would be a tiny proportion of their customer base.

    The T&C segment that plaxy quotes has been in UK platform docs and fund prospectuses for a long time, likely well before FATCA, and applies only to fund holdings, not shares or bonds. By itself it does not prevent anyone from opening or holding an account. What is new is some companies now simply rejecting all US citizens purely on citizenship, noted (if present) in a different part of T&Cs. That’s a commercial decision though, and not forced by any regulation.

21. Correct, some banks don’t want USC customers. Some will accept USC customers provided they sign the form.

22. The harsh reality for anyone domiciled outside the US who has a US place of birth on their documents is, “all roads lead to renunciation.”

23. Not in Canada actually. Most roads lead to lying to your bank or completely ignoring the situation.

24. “The harsh reality for anyone domiciled outside the US who has a US place of birth on their documents is, “all roads lead to renunciation.” “

    Actually, roads may instead lead to keeping the citizenship and organising financial affairs around US investments, US tax breaks, et cetera – avoiding locally tax-advantaged investments.

    Alternatively, there’s nothing harsh about renouncing US citizenship if you don’t want the citizenship and can afford the fee. A sound investment in one’s future, like obtaining citizenship in the resident country.

25. I said:

    The options (for a US-born European resident with banking-services problems) seem to be three: lie (if possible); renounce (if possible); or sign the W-9.

    Actually, thinking further, in an IGA1 country there seem to be four possible paths — each of which may or may not be possible or practical depending on circumstances:

    1. To renounce US citizenship and comply only with residence-country tax laws.

    2. To keep US citizenship, comply only with residence-country tax laws, but sign a W9 when necessary.

    3. To keep US citizenship, comply only with residence-country tax laws and avoid signing a W9.

    4. To keep US citizenship, complying with the tax laws of both countries.