Liberty and justice for all United States persons abroad

The Isaac Brock Society

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I am reproducing a post by Jude Ryan from the Facebook group Accidental Americans” in the event some may not be aware that there is movement in countries outside Canada and the U.S. against FATCA.

I know there has been a lot of work done by the Australians and wish to mention it even though it was not included in the post I am reproducing.

A recap on ongoing domestic actions

To the extent we have have other nationalities present on this page (I know we do) please feel free to use this information to put pressure on your domestic politicians.

FRANCE

The lower House of Parliament, the Assemblee Nationale, has set up a fact finding mission to investigate the extraterritorial reach of US laws and in particular the invidious position French “Accidental Americans” find themselves in.
The mission statement of this commission is as follows: The commissions for foreign affairs and finances of the French Parliament (Assemblee Nationale) decided to form a joint fact finding mission regarding the extraterritoriality of certain US laws, which held its inaugural meeting on Wednesday 2 March 2016. The president of the mission is Mr Pierre Lelouche (Republican Party, Paris) and his rapporteur is Ms Karine Berger (Socialist Party, Hautes-Alpes). Several recent events have highlighted the propensity of the US courts and the US administration to purport to impose sanctions against foreign corporations and foreign individuals in respect of events occurring outside of US territory: these range from the record penalty one of France’s largest banks agreed to pay to the US administration (for a failure to comply with a US imposed embargo) to the acquisition of Alstom by General Electric against a backdrop of anti-corruption claims brought by the US authorities against senior managers of Alstom and including the US IRS pursuing French citizens living in France but born on US soil and therefore “Accidental Americans” for US income taxes. Based on the feedback of a wide array of experts, the fact finding mission will attempt to define the contours of US extraterritoriality, exhaustively identify all cases of extraterritorial application of US laws, assess their impact and in particular their impact on fair competition and the economic losses suffered by French companies as a result, and to study ways in which to counter such practices both at a national and European level. The mission hopes that its findings will lead to concrete implementation measures. The longstanding and deep ties that exist between France and the US in no way justify that the US should seek to assert legal imperium outside of its borders.

A hearing of French “Accidental Americans” was held on 8 June 2016 and at which issues raised by FATCA and the US practices of

Citizenship Based Taxation, particularly as regards “Accidental Americans” were discussed. The mission questioned and heard testimony from five accidental Americans.The mission will issue its report late August / early September following which concrete legislative proposals will be issued to French Parliament.

The issue of Accidental Americans has now been brought up on several occasions in French parliamentary discussions and in particular by Messrs les deputes Mariani and Lefebvre on 2 separate occasions

1ère séance : Droit des étrangers (suite) (Article premier, adt 7 à article 10, adt 341) (Article 2, Thierry Mariani)

In addition the French Collective of Accidental Americans has organised meetings with the Director of the French Ministry for Foreign Affairs. The Director indicated that they will be speaking with the US Embassy in Paris about the issue of Accidental Americans who are also French citizens.

Last, but not least, the French Parliamentarian Seybah Dagoma wrote to the President Holland’s office drawing their attention to the issues faced by French citizens who are also Accidental Americans. In her letter deputee Dagoma denounced the unintended consequences of FATCA, the absurdity of Citizenship Based Taxation, the extraterritorial reach of US laws and and the living nightmare French Accidental Americans and their families are enduring.

ITALY

Massimiliano Fedriga, leader of the parliamentary Lega Nord group recently posed a question to the Italian government regarding the situation of Accidental Americans and in particular how the Italian government proposes to safeguard Italian citizens caught up in this mess (in addition to questions regarding infringement of Italian sovereignty, compliance costs and related matters).

Senator Comarloi for the Lega Nord is apprised of the situation and is also looking into this and Matteo Salvini (member of the Lega Nord and fellow MEP) has also been informed of the issues.

Question Time Camera del giorno 15/06/2016 (see 36th minute)

TUTELARE GLI “ACCIDENTAL AMERICANS”: FEDRIGA (LNA) INTERROGA GENTILONI E PADOAN

EUROPEAN UNION

As you are already aware we wrote to a number of MEPs and also the EU Commission. Despite several requests Commissioner Moscovici never responded to us. Instead we were informed by the Commission’s Department for Tax Affairs that the Commission seeing as the initial request to handle FATCA related matters on behalf of al member states was declined and that IGAs were negotiated bilaterally by each member state, accordingly our entreaties must be made at a member state level. If you would like copies of the correspondence exchanged please let me know.

HOLLAND

Government starting to look into the issues.

ISRAEL

Two actions are ongoing in Israel.

The first is an appeal to Israel’s supreme court, contesting the right of banks to transfer information pertaining to local accounts of dual citizens to the IRS. If this appeal is successful, the problems of accidentals will also be solved. See article below:

Why is the Republican Party coming to the Israeli High Court for help?

The second revolves around banking problems faced by the many small charities popular in Israels ultra orthodox communities. These charities rely on foreign donations. Requiring them to report on all donaters will effectively ruin them. This issue is being discussed by the finance committee in the Israeli parliament. This committee also promised to discuss the Accidental Americans issue:

Haredi Party Spearheading Effort to Protect Israeli Religious Charities from US Tax Authorities

CANADA

In Canada, the Alliance for the Defence of Canadian Sovereignty has initiated a lawsuit against the Government of Canada legislation that enables the FATCA IGA “agreement” between Canada and the United States. The Defendants in the lawsuit are Canada’s Attorney General and Revenue Minister. The Plaintiffs are two women from Ontario, Canada, both born in the United States, but who left the United States at an early age and have no meaningful ties with United States — yet they are deemed by the United States to be “tax citizens”. The Plaintiffs Claim that the legislation violates Canada’s Charter of Rights and Freedoms, Constitution, and it sovereignty as a nation. The trial is likely to take place in Canada Federal Court later in 2016.

Plans are also afoot to mount a legal challenge in the US courts to the US practice of Citizenship Based Taxation.

UNITED STATES

There is a well documented ongoing case, championed by Republican Overseas and Senator Rand Paul, to challenge the legality of FATCA in the US courts. We are in touch with the team working on this and are informed that an appeal by the plaintiffs will likely be brought soon.

Whilst the US Authorities have failed to offer any constructive solutions or open any meaningful dialogue with the overseas populations affected by FATCA, the issues raised by FATCA (particularly as regards Accidental Americans) have now been officially recognised. Indeed the existence of Accidental Americans is expressly referenced in President Obama’s 2016 and 2017 Green Books and the National Taxpayer Advocate’s 2015 Report to Congress.

Pressure needs to be brought on the US Government by all its partner countries to (i) officially recognise the shortcomings of FATCA and (ii) find constructive solutions.

General Explanations Fiscal Year 2016
General Explanations Fiscal Year 2017
TAS Annual Report to Congress 2015

 

24 thoughts on “Pushback to #FATCA in France, Italy, Holland & Israel”

  1. And in Britain, the most likely next PM is himself a victim of FATCA/CBT, and famously called it ‘outrageous’, so it is possible that he will do the right thing and get rid of that terrible IGA. Boris I hope you are listening.

  2. Tricia: All of this is very, very welcome news. Thank you for sharing it. I’m looking forward to seeing the French mission’s report later this summer.

    Jenny: I don’t hold out much hope where Boris is concerned. He may have called his tax bill “outrageous” but, from what I understand, he caved in and paid it. Someone in his position could have gotten this issue on the front page of every newspaper in the world by refusing to pay and shaming the US government into dealing with their nonsensical tax policy. As it is, he has helped the US government to prolong the agony that all of us are experiencing. That being said, if he does become Britain’s next PM he has another opportunity to “do the right thing”.

  3. Most recent posts’ definitions of Accidental Americans apply to those born on US soil. I hope these efforts when successful will help to free those who are born outside of the US to one US parent…..and who have no meaningful ties to the country that claims ownership of them.

  5. This is excellent news. Thank you for reporting, Patricia. Even a single country ruling FATCA implementation illegal will help bring down the edifice. Surely that will happen in at least one of them…and the sooner the better!

    I have just read The Hidden Wealth of Nations by Gabriel Zucman, an excellent book, even if he doesn’t understand the implications of FATCA. (Who does, aside from Allison C.?) He explains that Switzerland (and other tax havens) signing FATCA IGAs will make almost no difference in stopping tax evasion. Swiss banks will now be obliged to identify the beneficial owners of these previously secret accounts. However, tax evaders are now setting up shell companies in a variety of Caribbean countries, and the Swiss accounts are being shifted over to them. None of these bear US indicia. And on the other hand, the beneficial owner of a company in say Bermuda will be inaccessible to the US because it is simply a company, not a bank account. If the author is correct, FATCA is unlikely to turn up ANY tax evasion it is ostensibly intended to catch.

  6. Hmm. The Canadian government’s efforts exist only to the extent that it’s fighting us in court. Pretty sad considering how many Canadians this affects.

    @NorthernShrike

    Gabriel Zucman doesn’t mention anything about tax haven USA?

  8. @Bubble

    No, Zucman does not discuss the US as a tax haven…or Delaware or whatever to be more specific. He does note that secret accounts in Switzerland are rarely “bank” accounts, they are rather investment accounts. Much of the holdings are in Luxembourg-based mutual funds, which invest in stocks, bonds, etc. around the world, many of them presumably in the US.

    It’s a short book. What is interesting is that he has developed methodologies to quantify tax evasion. Other books, e.g. Treasure Islands by Nicholas Shaxson, are more anecdotal. Also of interest: Zucman is French (although he teaches at LSE) and has a continental perspective. Most other writing I have seen has been Anglo-American.

    I intend to write to him about FATCA.

  9. @NS

    FATCA is probably better at causing renunciations than tracking down offshore tax evaders. But even if it was good at it, they would eventually run out of tax evaders, whereas renunciants will only increase in volume – until of course they run out of those too.

  11. @Jenny
    I read that Brexit has opened the pathway for England to get even closer to its “5 eyes” allies. So the bond between England and America can grow stronger, not weaker.

  12. @ Tony Simmons
    Absolutely! And there’s another class of non-meaningful, non-US-born victims who have been deemed “US persons for tax purposes”, simply because at sometime in their past they lived in the USA as “resident aliens” and didn’t know there was a specific way to exit the US tax system when they returned to their homeland. These “non-meaningfuls” are seldom mentioned but they exist and even though their birthplace will not betray them at their banks, they have been in the US tax system so the IRS has their number.

  13. In terms of growing pushback, or potential for pushback in terms of public media mention of lack of US ‘reciprocity’ raised again, this time in Argentina;
    “….. For a country to formally agree to FATCA, it has to sign an intergovernmental agreement (IGA) with the US, which Argentina now seeks to negotiate. Former AFIP head Ricardo Echegaray tried to sign a deal over the last few years but was only willing to do so if it was reciprocal — something the US rejected.”…….
    ….
    “..“The US doesn’t care about helping Argentina to locate undeclared bank accounts of Argentines. The big players will always find a way to hide their funds,” Juan Valerdi, La Plata University economist specialized on money laundering, told the Herald. “Reciprocity with the US is impossible, you can’t force its banks to start looking at the funds of Argentines.”

    Automatic exchange

    As the US implemented FATCA and forces country to hand over bank data, it has rejected taking part in a similar initiative launched by the Organization for Economic Co-operation and Development (OECD) — which is pushing for countries to automatically start sharing fiscal data starting next year…”…….
    Monday, June 27, 2016
    ‘Assets agreement with US not quite ‘reciprocal’
    http://www.buenosairesherald.com/article/216923/assets-agreement-with-us-not-quite-%E2%80%98reciprocal%E2%80%99

  14. @MuzzledNoMore
    I have the same opinion of Boris Johnson. In my books, he went from hero (“Outrageous!”) to zero (Tax Me, USA) either by stupidity or by design. He was, I believe, the controlled opposition in the BREXIT-BREMAIN debate and he’s already backpeddling on his avowed eagerness to get the UK out of the EU. There’s no rush he says now, knowing full well that if this exit isn’t pursued soon and with great vigour, it will likely not happen.

  15. “He explains that Switzerland (and other tax havens) signing FATCA IGAs will make almost no difference in stopping tax evasion.”

    “No, Zucman does not discuss the US as a tax haven”

    He explained that FATCA IGAs won’t stop tax evasion, but he didn’t explain the biggest reason?

  16. “The lower House of Parliament, the Assemblee Nationale, has set up a fact finding mission to investigate the extraterritorial reach of US laws”

    Maybe France should remind itself of the accomplishment France had by its extraterritorial meddling in the affairs of the UK. Sure those overseas Brits, taxed but not represented, and excessively abused, wanted to exit from that union. But they wouldn’t have been able to accomplish it without contributions from France.

    Now the cow excrement has come home and France reaps the reward of the Frankenstein’s Monster that it helped create in the middle latitudes next door to Canada.

  17. If France really got their act together they’d demand that the Statue of Liberty be returned.

  18. My sense is there is a real divide in the tax justice community as to whether to call the US a “tax haven.” Some have been quite open and willing to in the last few months especially people like Shaxson and Richard Murphy. On the otherhand others like Zucman presumably for political and media relations reasons are not willing to.

    I would argue in the scenario of someone having an investment account in Switzerland invested in Luxembourgish mutual funds invested in US stocks and bonds it is in fact the US which is the biggest tax haven of the three.

  19. Also remember some US states like Nevada take a lot of pride in there bad boy reputations(What happens in Vegas stays in Vegas). Nevada is generally not as easy to shame as Luxembourg or Switzerland.

  20. Jenny: Boris Johnson has now proven what seemed pretty obvious before. He is purely an opportunist, interested only in his own personal glory, and not at all about others, or his country. That he stands out among professional politicians, and dwarfs even David Cameron in this aspect, is no small accomplishment. He is truly top of the class in this respect.

    He will do absolutely nothing to help us vis à vis FATCA. Indeed, given his recent behavior, it is highly likely that he would throw fellow US persons under the bus more than gleefully if he found that useful to his career. Figuring that as PM he would desperately need US support…

    In fact the current situation underlines how weak individual countries are facing the powerful US. Although the EU is flawed it does have the clout to check some US tendencies to rule the world. I believe only an EU reaction will at one point restrict FATCA invasiveness. No single country can currently stand up to the US but the EU can, and has, in several matters.

  21. I see no reason to attribute base motives to Zucman. His short (113 p.) book is tightly organised around his statistical analysis of tax havens and his proposals for reigning them in. I am mystified that he should have anything to gain by covering up US government involvement in tax evasion.

    I am unaware of what Shaxson may have said in the last few months, but his book Treasure Islands was published in 2011. It does indeed take the US (and Delaware etc.) to task, as well as the City of London. I haven’t read Richard Murphy. Shaxon’s book is more wide-ranging than Zucman.

    The divide I see in the tax justice community is between those who favour FATCA (and similar legislation) and those that do not.

    I am not picking a quarrel here, you know. It’s just a discussion. My point of view.

  24. Thanks for noticing that @seniorexpat.

    Helpful to read that whole PDF for important context, but for convenience, here is the extract that mentions FATCA;
    ‘Financial matters subgroup’
    “The subgroup will continue its work on the following topics:
    automatic exchange of data for tax purposes, OECD Common Reporting Standards, FATCA, the implications on data protection of
    International Organisation of Securities Commissions and Multilateral Memorandum of Understanding concerning consultation and cooperation and the exchange of Information, and the implications on data protection of Directive 2014/65/EU (so-called “MIFID 2”) and Regulation (EU) 600/2014 (so-called “MAR”).

    The subgroup will also analyse the following topics:
    Account aggregators, the vast use by banks of data
    related to their clients for commercial profiling and the draft Regulation of the European Central Bank concerning the collection of granular credit and credit risk.

    The subgroup will consider whether previous opinions need to be updated in light of the Regulation. ”

    from page 4 of the European Union’s new “Work Programme of the Article 29 Data Protection Working Party” http://ec.europa.eu/justice/data-protection/article-29/documentation/opinion-recommendation/files/2016/wp235_en.pdf

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