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
My prediction is that each country will eventually protect their citizens from the US yoke, but they won’t be protected if they should leave that country and love in yet another.
In the case of Mexico just think about how many millions of people have crossed the border to live and work in USA then become ensnared into the system (enslaved). Like us, they found work and perhaps love and had children. Some of these people will return to Mexico to live and they are welcome, but what about the ones that were born in the US and not Mexico? how will their life be affected here without being able to bank? They will obviously have a problem and once it becomes a large enough issue with many people affected, the Mexican government will do what’s right for their citizens. I think other countries will do it too.
Duality – https://www.lesechos.fr/idees-debats/editos-analyses/0301220197621-le-cauchemar-fiscal-de-ces-francais-nes-aux-etats-unis-2150401.php
(Link posted on American Expatriates FB site)
If I understand it correctly (not sure I do), it seems they are arguing that the French IGA is illegal under French law because of the lack of reciprocity.
Unfortunately the lack of reciprocity doesn’t make the IGA illegal under my country’s laws. I’ve heard before about this French law, but my country has no equivalent. Not sure a French victory would apply Europe-wide.
It would certainly be a positive development for EU-resident USCs and former USCs though.
Post by Anonymous on the Franco-American Flophouse site:
http://thefranco-americanflophouse.blogspot.com/2013/02/fatca-comes-home.html?showComment=1360086409276&m=1#c6199447397128043182
@plaxy
“it seems they are arguing that the French IGA is illegal under French law because of the lack of reciprocity.”
The French team need to kill the enforcement mechanism, which is the IGA itself. Their lawyers would know best which approach to take; it might be that a technical issue such as reciprocity might be more effective than discrimination, I just don’t know.
“Not sure a French victory would apply Europe-wide.”
No, it would just be a French victory. The American extraterritorial tax system resembles the Lernaean Hydra; the French might succeed in chopping off one head, but another might grow in its place. This will not be an easy fight.
“it might be that a technical issue such as reciprocity might be more effective than discrimination.”
Or that the lawyers are aware that a case based on discrimination would be unlikely to succeed.
“Or that the lawyers are aware that a case based on discrimination would be unlikely to succeed.”
Perhaps… jurisprudence is a strange realm.
“Unfortunately the lack of reciprocity doesn’t make the IGA illegal under my country’s laws.”
It would be interesting to see how many Member States across the European Union actually require such reciprocity. This law could just be uniquely French.
“This law could just be uniquely French.”
Indeed.
Only a win on the grounds of national-origin discrimination could restore EU bank access as it used to be. Probably not going to happen. If it could’ve it would’ve, by now.
@plaxy
“Only a win on the grounds of national-origin discrimination could restore EU bank access as it used to be. Probably not going to happen. If it could’ve it would’ve, by now.”
I’m an optimist. Let us see how J.R.’s open petition pans out at the European Parliament. I will provide an update should I hear anything…
Just saw this latest from Sophie in’t Veld re FATCA:
http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=E-2018-000298&format=XML&language=EN
Bravo and kudos to the tenacity of MEP in’t Veld! We owe her a great debt of gratitude for her efforts on this issue.
“Parliamentary questions
19 January 2018
E-000298-18
Question for written answer
to the Commission
Rule 130
Sophia in ‘t Veld (ALDE)
Subject: Implementation of Payment Accounts Directive (PAD) and FATCA
The Payment Accounts Directive (Directive 2014/92/EU) establishes the right of access to a payment account with basic features for all consumers legally resident in the Union. However, as has been reported repeatedly to the Commission and to national authorities, so called ‘Accidental Americans’, many of them EU citizens, are increasingly facing difficulties caused by many banks refusing to accept them as customers as a consequence of FATCA.
This is a clear breach of the terms of the PAD. In its reply to Written Question E-005680-16, the Commission indicated it would assess the implementation of the PAD following the expiry of the deadline for its transposition (September 2016) and launch infringement proceedings where necessary.
1. Has the Commission carried out the announced assessment of the PAD and when will it publish the results?
2. Has the Commission included the situation of Accidental Americans in its assessment and can the Commission name those countries where there are reports of Accidental Americans encountering difficulties in obtaining access to financial services?
3. Has the Commission launched any infringement proceedings against Member States and if so against which?
Last updated: 2 February 2018″
@badger
Many thanks for the update. We owe Sophie in’t Veld lots of gratitude for her tenacious support.
@Duality, I do a search for info on MEP in’t Veld’s activities re FATCA from time to time. I also see that this site tends to follow her
https://twitter.com/USAccidental
This initiative of MEP in’t Veld and colleagues reaches right into the US via an amicus brief submitted to the US Supreme Court re data protection of EU citizens / residents, though it is not in the context of US extraterritorial FATCA;
http://www.sophieintveld.eu/in-t-veld-provides-advice-to-us-supreme-court-to-respect-eu-citizens-privacy/
19 jan 18
‘In ‘t Veld provides advice to US Supreme Court to respect EU citizens’ privacy ‘
See the Amicus brief submitted by her and colleagues;
BRIEF OF
AMICI CURIAE
JAN PHILIPP
ALBRECHT, SOPHIE IN ’T VELD, VIVIANE REDING, BIRGIT SIPPEL, AND AXEL VOSS,
MEMBERS OF THE EUROPEAN PARLIAMENT
IN SUPPORT OF RESPONDENT MICROSOFT CORPORATION
https://www.supremecourt.gov/DocketPDF/17/17-2/28328/20180118155453076_17-2%20bsac%20Jan%20Philipp%20Albrecht.pdf
@badger
Subject: Implementation of Payment Accounts Directive (PAD) and FATCA
After reviewing the Written Question issued by Ms in’t Veld to the European Commission, I am still wondering how a US-born EU national can open a “payment account with basic features” if it would still be subject to the terms of the Member State’s FATCA IGA. At least to my knowledge, the IGAs do not exclude “payment account[s] with basic features” and would therefore still be subject to IRS reporting. For example, if an affected EU citizen does not have (or is unwilling to provide) an SSN, then how can such an account be guaranteed if it cannot be opened under the relevant IGA? The Payment Accounts Directive will therefore be rendered invalid and superseded by the IGA, no? If so, this incompatibility would need to be resolved by the European Commission or, failing that, at the European Court of Justice.
“I am still wondering how a US-born EU national can open a “payment account with basic features” if it would still be subject to the terms of the Member State’s FATCA IGA.”
Some types of account (including, in the EU, basic payment accounts) are exempt. Exempt accounts are listed in Annex II.
The MEP’s question refers to “reports of Accidental Americans encountering difficulties in obtaining access to financial services“.
The assessment of the PAD is only likely to ask about basic payment accounts, so sub-questions 2 and 3 are in effect rhetorical.
Correction. Should have said:
“sub-question 2 is in effect rhetorical.”
I don’t see how the difficulties of access to financial services can be fixed by appeal or challenge to legislation. Banks can’t be ordered by the state to accept risk that has been created by the state. It’s the due diligence requirements that need to be addressed, since it’s the due diligence that flags applicants as risky. (Risky to the bank due to suspected US citizenship.)
@plaxy
“Some types of account (including, in the EU, basic payment accounts) are exempt. Exempt accounts are listed in Annex II.”
Do we know whether this applies to every IGA across Europe? (Not fun reading, to say the least). Generally speaking, Annex II makes reference to tax-efficient and retirement accounts. Perhaps “basic payment accounts” are included as well, but how are these accounts offered by the banks? Do affected EU citizens simply walk into any bank and ask for a “FATCA-exempt-without-SSN basic payment account with a 5€ overdraft?” I suppose this is why Ms in’t Veld is asking the question.
@plaxy
“Banks can’t be ordered by the state to accept risk that has been created by the state.”
Precisely!
Belgium’s IGA seems to exempt quite a few types of accounts, but of course defers to local financial institutions wanting to report them anyway… In other words, banks are, from what I see, treating everything as reportable, or at least asking the usual W8/W9 questions. Remains to be seen whether this CYA attitude results in actual reporting of non-reportable accounts to authorities, and then if the authorities actually judge if what is reported to them should then be passed on to the IRS, and then what does the IRS do with all this… From all the stuff that is exempted, the Belgian bureaucracy may have been more efficient than Australia’s in shielding a vast range of local retirement accounts/systems.
So in theory any bank here could take as customers US Persons who are under the $50000 threshold with reporting, no identifying, etc. But as Einstein (?) may have said: in theory, practice and theory are the same. In practice they are different.
From the Belgian IGA:
ANNEX I
DUE DILIGENCE OBLIGATIONS FOR IDENTIFYING AND REPORTING ON U.S.
REPORTABLE ACCOUNTS AND ON PAYMENTS TO CERTAIN
NONPARTICIPATING FINANCIAL INSTITUTIONS
…
III. New Individual Accounts. The following rules and procedures apply for purposes of
identifying U.S. Reportable Accounts among Financial Accounts held by individuals and opened
on or after July 1, 2014 (“New Individual Accounts”).
A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless the
Reporting Belgian Financial Institution elects otherwise, either with respect to all New
Individual Accounts or, separately, with respect to any clearly identified group of such
accounts, where the implementing rules in Belgium provide for such an election, the
following New Individual Accounts are not required to be reviewed, identified, or
reported as U.S. Reportable Accounts:
1. A Depository Account unless the account balance exceeds $50,000 at the
end of any calendar year or other appropriate reporting period.
2. A Cash Value Insurance Contract unless the Cash Value exceeds $50,000
…
ANNEX II
The following Entities shall be treated as exempt beneficial owners or deemed-compliant FFIs,
as the case may be, and the following accounts are excluded from the definition of Financial
Accounts.
Funds that Qualify as Exempt Beneficial Owners. The following Entities shall be treated
as Non-Reporting Belgian Financial Institutions and as exempt beneficial owners for
purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code.
A. Treaty-Qualified Retirement Fund. A fund established in Belgium and described in
Subparagraph 1(k) of Article 3 of the Convention between the Government of the
United States of America and the Government of the Kingdom of Belgium for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes On Income (the “Income Tax Treaty”), done at Brussels on November 27, 2006,
provided that the fund is entitled to benefits under the Income Tax Treaty on income
that it derives from sources within the United States (or would be entitled to such
benefits if it derived any such income).
B. Belgian Savings Funds. A collective investment fund contemplated by Article 145/16
of the Income Tax Code 1992 (Code des impôts sur les revenus 1992), established for
the investment of monies through a so-called collective savings account as part of a taxfavoured
pension savings scheme.
C. Broad Participation Retirement Fund. A fund established in Belgium to provide
retirement, disability, or death benefits, or any combination thereof, to beneficiaries that
are current or former
D. Narrow Participation Retirement Fund.
E. Pension Fund of an Exempt Beneficial Owner.
F. Investment Entity Wholly Owned by Exempt Beneficial Owners.
III. Small or Limited Scope Financial Institutions that Qualify as Deemed-Compliant FFIs.
The following Financial Institutions are Non-Reporting Belgian Financial Institutions that
shall be treated as deemed-compliant FFIs for purposes of section 1471 of the U.S. Internal
Revenue Code.
A. Financial Institution with a Local Client Base. A Financial Institution satisfying the
following requirements:
1. The Financial Institution must be licensed and regulated as a financial institution
under the laws of Belgium;
2. The Financial Institution must have no fixed place of business outside of Belgium.
For this purpose, a fixed place of business does not include a location that is not
advertised to the public and from which the Financial Institution performs solely
administrative support functions;
3. The Financial Institution must not solicit customers or Account Holders outside
Belgium. For this purpose, a Financial Institution shall not be considered to have
solicited customers or Account Holders outside Belgium merely because the
Financial Institution (a) operates a website, provided that the website does not
specifically indicate that the Financial Institution provides Financial Accounts or
services to nonresidents, and does not otherwise target or solicit U.S. customers or
Account Holders, or (b) advertises in print media or on a radio or television station
that is distributed or aired primarily within Belgium but is also incidentally
distributed or aired in other co
B. Local Bank.
C. Financial Institution with Only Low-Value Accounts.
D. Qualified Credit Card Issuer. A Belgian Financial Institution satisfying the
following requirements…
V. Accounts Excluded from Financial Accounts. The following accounts are excluded from
the definition of Financial Accounts and therefore shall not be treated as U.S. Reportable
Accounts.
A. Certain Savings Accounts.
1. Retirement and Pension Account. A retirement or pension account maintained in
Belgium that satisfies the following …
2. Non-Retirement Savings Accounts. An account maintained in Belgium (other than an
insurance or Annuity…
C. Account Held By an Estate. An account maintained in Belgium that is held solely by
an estate if the documentation for such account includes a copy of the deceased’s will
or death certificate….
D. Escrow Accounts. An account maintained in Belgium established in connection with
any of the following:
1. A court order or judgment.
2. A sale, exchange, or lease of real or personal property, provided that the account
satisfies the following requirements:…
Duality – My mistake. Basic payment accounts aren’t listed as exempt in Annex 2. I checked out a couple of banks and the online applications do take you through the FATCA/CRS due diligence but the t&c explicitly state that the bank has the right to close accounts without stating a reason, except basic bank accounts.
“Do affected EU citizens simply walk into any bank and ask for a “FATCA-exempt-without-SSN basic payment account with a 5€ overdraft?”
I don’t think you’d get an overdraft facility with a basic bank account. As for applying, for the banks I looked at the accounts are just called badic bank accounts and you can apply online or in branch.
“I suppose this is why Ms in’t Veld is asking the question.”
The question doesn’t ask about Accidental Americans’ access to basic bank accounts; it asks about Accidental Americans’ access to financial services. The PAD assessment will be interesting to see, but there’s little reason to expect it to discover that USCs are being denied basic bank accounts.
1. Some FIs try to avoid all USP customers – I believe that was the case with the Dutch bank, which settled the dispute by changing its policy.
2. Some FIs may deny USPs access to particular accounts, usually investment accounts.
3. Some FIs may close existing accounts if the suspected USC does not supply CLN/TIN (they’re not supposed to do this) or refuse applications from US-born applicants who don’t produce a CLN, or provide SSN and W9.
Those are the only bank-access problems I’ve seen reported from Model 1 countries.
Duality:
And therefore the state can’t order a bank to offer investment accounts to USCs.
Ms in’t Veld:
I would think this would be grounds for a discrimination complaint, as with the Dutch bank, rather than a breach of the terms of the PAD.
Fred(B):
Yes. Different question from access. Confidentiality rights are history, I think.
@plaxy
“The question doesn’t ask about Accidental Americans’ access to basic bank accounts; it asks about Accidental Americans’ access to financial services.”
The European Commission could simply visit this website; it has countless assessments to sift through 🙂
“As for applying, for the banks I looked at the accounts are just called badic bank accounts and you can apply online or in branch.”
This would depend on the Member State in question. Some banks I looked at do not appear to provide “basic payment accounts” per se. Those who do will have to follow their due diligence by asking for either a CLN or an SSN from affected Europeans. If you have neither, then no payment account. I doubt that the Directive can “guarantee” a basic payment account to US-born Europeans, given the requirements posed by the IGAs. Something has to give way…