FATCA and the EU

546 thoughts on “FATCA and the EU”

1. No – I take it back. Apparently Carney has a British wife and is taking up UK citizenship himself. And not a USC, as I thought I had read. Should have double-checked.

2. @ Duality,

   Re:

   “I voluntarily relinquished my US citizenship by registering my birth at the local town hall where my parents had been registered.”

   I agree with Plaxy on this, as registering birth is not one of the potentially relinquishing acts set out in INA, s. 349(a).

   I don’t know your circumstances, though — I take it you were born in the US to UK citizen parents and had UK citizenship since birth; and, if so, you became a UK citizen upon birth, and some time later at the town hall, were registering an existing status as opposed to acquiring that status by registering at the town hall.

3. @plaxy
   Carney holds 3 citizenships, Canadian, British and Irish…. wise man.

4. Duality : “I’ve been trying to relinquish officially at the local US Embassy for several years now, but the stumbling block has always been the fee of $2350. This is serious money for people like myself who are on modest incomes. No court could ever reasonably claim that this is “not that hard”…”

   I agree. In fact Germany does too, from what I’d read here a while back: it rates the US among countries with exorbitant renunciation procedures and thus allows a US citizen to become German without renouncing.

   Actually this can be found on https://en.wikipedia.org/wiki/German_nationality_law#Dual_citizenship

   Dual citizenship is allowed under, among other circumstances:

   “Non-EU- and non-Swiss citizens must usually renounce their old citizenship if they want to become German citizens. There are exceptions made for citizens of countries that do not allow their citizens to renounce their citizenship (e.g., Argentina, Bolivia, Brazil, Costa Rica. P.S.: In case of Brazil it is possible to renounce your citizenship through a requirement made in the Brazilian consulate if you already have acquired another citizenship voluntarily, but it is not required to do so; the following jus-soli countries allow renunciation only if the citizenship was acquired involuntarily by birth there to non-citizen parents: Dominican Republic, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Uruguay), or if the renunciation process is too difficult, humiliating or expensive (e.g., Afghanistan, Algeria, Angola, Cuba, Eritrea, Iran, Iraq, Lebanon, Morocco, Nigeria, Syria, Thailand, Tunisia, USA), or, rarely, in individual cases if the renunciation of the old citizenship means enormous disadvantages for the concerned person.”

   Note the company the US keeps, including Cuba and Syria).

   Which begs the question: if Germany officially recognizes, in the case of its citizenship law, that the US renunciation process is too “difficult, humiliating or expensive” to force someone to go through it to get German citizenship, surely its courts would recognize that one can self-certify renunciation, or even not renounce at all, to go on banking normally.

5. Plaxy: “Suing a bank wouldn’t get you anywhere. They have no obligation to open anything more than a basic payment account. And no obligation to apply the “cure” for US birth.”

   Obviously neither the bank nor the country have an obligation to cure US birth, but both have an obligation to make life livable for all citizens/legal residents.

   The idea here is that one is being discriminated against by not being able to bank normally, like other citizens, based on birthplace.

   Who keeps the USP from banking normally? The bank or the government?

   The government can say hey, this is just a tax treaty, and nothing says you cannot open a bank account, any bank account, invest, save, have a retirement account, etc. Sure, there are reporting requirements, just like CRS (not quite, of course, given CBT, but whatever), but they are not meant to restrict normal banking.

   The bank can say hey, we can’t deal with the complications, we’ll keep USPs away or at least at arm’s length.

   Who do you think has a weak case here? The banks, in my opinion. The courts and government have an easy way out: just ask/order/cajole the bank into letting USPs in. Voilà. No laws to change, no hassle with the US or the EU or the ECJ.

   Also, I believe banks must offer normal services, not just a basic account. In fact that’s what Deutsche Bank did in Belgium: it resumed taking USPs, with exactly the same services as before 2014.

   What could be interesting, at this point, is for some of us based in different countries, to go to new banks and attempt to open accounts, and report how it goes.

6. Fred (B) – “if Germany officially recognizes, in the case of its citizenship law, that the US renunciation process is too “difficult, humiliating or expensive” to force someone to go through it to get German citizenship, surely its courts would recognize that one can self-certify renunciation, or even not renounce at all, to go on banking normally.”

   I should think Germany would have no inclination at all to allow USCs a way out of FATCA reporting, even if they had that power. (German banks wouldn’t deal with USCs if they weren’t allowed to comply with FATCA thus avoiding 30% withholding.)

7. “Obviously neither the bank nor the country have an obligation to cure US birth, but both have an obligation to make life livable for all citizens/legal residents.”

   I don’t think they do, you know. Banks can set their own terms & conditions.

   “Who keeps the USP from banking normally? The bank or the government?”

   The US. The US would probably say it’s the banks but they’d be lying.

   “I believe banks must offer normal services, not just a basic account.”

   The EU only guarantees the right to a basic account.

   “What could be interesting, at this point, is for some of us based in different countries, to go to new banks and attempt to open accounts, and report how it goes.”

   Been there, got the T-shirt. No account unless you hand over your SSN and sign this W9. May be different elsewhere.

8. That’s in fact how I first heard of CBT and FATCA. Couldn’t believe it. But it turned out to be true. Luckily I could afford to renounce, and did so.

9. “The courts and government have an easy way out: just ask/order/cajole the bank into letting USPs in. Voilà. No laws to change, no hassle with the US or the EU or the ECJ.”

   All EU countries have signed IGAs and brought in legislation to require banks to report USC accounts and collect SSNs and W9s. They don’t want to let USCs off the FATCA hook – and couldn’t even if they did want to.

   FATCA doesn’t threaten USCs; it threatens banks. The IGAs don’t put any obligations on USCs – only on banks.

   We just get to suffer the consequences.

10. Fred (B) – “if Germany officially recognizes, in the case of its citizenship law, that the US renunciation process is too “difficult, humiliating or expensive” to force someone to go through it to get German citizenship, surely its courts would recognize that one can self-certify renunciation, or even not renounce at all, to go on banking normally.”

    I should think Germany would have no inclination at all to allow USCs a way out of FATCA reporting, even if they had that power. (German banks wouldn’t deal with USCs if they weren’t allowed to comply with FATCA thus avoiding 30% withholding.)

    However I do think it might be possible to self-certify DIY relinquishment. as I suggested to Duality above.

11. As for challenging FATCA/IGA – I still think the national-origin discrimination is the weak point. But who knows if it would ever get to the ECJ, or if the ECJ would overturn it.

    Renounce/relinquish, or live with the reporting – only solutions I can see.

    I’m done.

12. @Fred (B)

    “The courts and government have an easy way out: just ask/order/cajole the bank into letting USPs in. Voilà. No laws to change, no hassle with the US or the EU or the ECJ”

    But USPs must still provide a SSN if their passports indicate a US birthplace; otherwise, no bank account. Everything is centred on the American birthplace; like I said prevously, national origin is a protected characteristic (to enforce Fatca), but residence is not a protected characteristic (to enforce CRS). We need to bear this mind…

13. Duality – “national origin is a protected characteristic (to enforce Fatca), but residence is not a protected characteristic (to enforce CRS)”

    Exactly.

    And not only is national origin a protected characteristic – it’s not even a good proxy for finding accounts held by US tax-residents. Accountholders born in the US aren’t always tax-resident in the UK, while accountholders born elsewhere may be. And it’s impossible to change birthplace, which means false positives can never be corrected.

14. @plaxy

    “Renounce/relinquish, or live with the reporting – only solutions I can see.”

    Yes, but I would leave the judicial avenue open as well. A lawsuit could be launched locally and ultimately reach the European Court of Justice if the lawyer(s) involved (1) are competent enough to understand US taxation and (2) are able to strategically structure the case effectively to nullify not Fatca itself but its enforcement across Europe. It is hoped that the French legal team (should they proceed) will be able to do its best.

    I also understand that there is European legal aid to fund lawsuits, though I am unsure how exactly this works.

    Relinquishing or renouncing US citizenship would relieve the affected European from future IRS reporting requirements. However, the discrimination would carry on, as anyone with a US birthplace would still be targeted by European financial institutions. It is this point that has always frustrated me; unless there is a court order to quell this form of legitimised discrimination, we will always be targeted. Always…

15. @plaxy

    “not only is national origin a protected characteristic – it’s not even a good proxy for finding accounts held by US tax-residents.”

    Precisely.

16. Duality – “unless there is a court order to quell this form of legitimised discrimination, we will always be targeted. Always…”

    Yes, it’s infuriating. Every time I want to open a bank account I have to wait three weeks while the FATCA Compliance Department gets round to challenging me to prove I’m not a tax evader.

    I don’t know what can be done about it though. Wax philosophical, I suspect.

17. @pacifica777

    “I take it you were born in the US to UK citizen parents and had UK citizenship since birth;”

    I will just say that I have many relatives from Greece and Cyprus who are Accidental Americans. They come to me with questions or for updates regarding Fatca, as some of them do not understand English.

18. EU Legal Aid:
    https://e-justice.europa.eu/content_legal_aid-55-en.do

    “If you are in dispute with a company, a professional person, an employer or other person in the country of your residence and you do not have sufficient financial resources to meet a court case, you can apply for legal aid under existing national regulations.”

    Unfortunately we would be in dispute with a government department.

    In any case, the situation is not so rosy in reality as the EU blurb makes it sound. Hardly any civil cases qualify for legal aid in my country. Having a right to legal aid under the Charter of Fundamental Rights is not much use if you can’t afford to bring a case to enforce your charter right to legal aid in order to bring a case to enforce your charter right not to suffer discrimination on the grounds of national origin. 🙁

19. @plaxy

    “Unfortunately we would be in dispute with a government department.”

    Yes, because governments are always immaculate. Therefore, no legal aid, rats.

    I say it’s time for a good old fundraiser…

20. It would be useful to know more about what the French team has learned, before launching a separate effort. Do you know what stage they’ve reached?

21. @plaxy

    “Do you know what stage they’ve reached?”

    I am actively keeping an eye on the situation; no news since their initial announcement however. They are probably waiting to see whether J.R.’s petition at a parliamentary committee will be resolved at the European Parliament (hopeful) or the European Commission (unlikely).

22. @plaxy

    Further to my last comment, after some research, I chanced upon the following article (mais en français):

    https://frenchmorning.com/americains-accidentels-oublies-de-reforme-fiscale-de-trump/

    One section states, “En France, l’Association des Américains Accidentels (AAA) a déposé début octobre un recours devant le Conseil d’Etat visant à rendre la loi inopérante.”

    It appears that the French litigant association, headed by Fabien Lehagre, are working with the Parisian law firm Spinosi-Sureau. In October 2017, they filed an appeal to quell the enforcement of Fatca at the Conseil d’Etat, which is similar to the Συμβούλιο της Επικρατείας (or Council of State) in Greece.

    More importantly, Mr Lehagre states,”Si jamais il botte en touche, on passera au niveau supérieur: la cour de justice de l’Union européenne (CJUE)”

    So their case will be heading to the European Court of Justice should their appeal fail in France. At present, funding does not appear to be an obstacle.

    I must say, this is excellent progress.

23. Excellent indeed, Duality! Thank you for the news – much better than I had expected/hoped for.

    Fingers crossed.

24. Vive la France!

25. Following