The European Commission answered questions by Parliament regarding FATCA-implementation in the EU. According to the Commission there is no evidence that FATCA-agreements breach European law; the Commission also thinks the European basic bank account rules are not violated by banks.
In 2019, there was a hearing on the consequences of the American FATCA legislation in the European Parliament in Brussels to discuss FATCA and the resulting problems for European citizens. Parliament raised questions regarding the US FATCA-implementation in the EU.
Accidental Americans and FATCA-agreements
‘Accidental Americans’ is the term used to describe 300 000 Europeans who, while born in the United States, only lived there for a very short while or not at all.
Ever since the vote on the Foreign Account Tax Compliance Act (FATCA) in 2014, they have been targeted by the US Government, which is demanding they pay US taxes on income that is paid to them outside of America.
Prospect of bank accounts being closed
‘Accidental Americans’ who declare their income in the countries of which they are citizens and where they reside have even had to face the prospect of having their bank accounts closed.
Banks have been threatened with having to pay almost 30 % in taxes on all their financial flows transiting through the United States. This state of affairs was placed on hold by an 18-month moratorium.
The European Commission answered questions by Parliament regarding FATCA-implementation in the EU.
No evidence of breach EU law by FATCA-agreements
The impact of FATCA-agreements on individuals and financial institutions and the lack of full reciprocity have been raised with the US Authorities by Members of the European Commission and their competent Services on a number of occasions.
The European Commission concluded that the bilateral agreements between EU Member States and the United States (US) implementing the Foreign Accounts Tax Compliance Act (FATCA) are not within the remit of the Commission unless they breach EU law.
To date, the European Commission found no evidence of any such breach. Nationality ties, even when acquired by “accident”, come together with the existence of reciprocal rights and duties, including paying taxes in the United States for US citizens.
Additional guidance and new relief procedures
According to the European Commission there are improvements on two issues:
- the impact on citizens and financial institutions, with additional guidance and information published on US administrations websites
- new “relief procedures” for individuals who wish to relinquish their citizenship
No evidence of violation Payment Accounts Directive
The European Commission was asked if they would take action to defend its fellow citizens by guaranteeing them access to a bank account and fair treatment on tax, in order to protect them from the arbitrary extraterritorial application of this law.
Concerning the respect of the Payment Accounts Directive, the Commission has looked into the alleged infringements of the right to a basic bank account as prescribed, but has found no evidence of violation of the EU legal framework in the national measures transposing the Directive.
Information with US conditional to mandate Council
The Commission was asked if there are plans to renegotiate the agreement on implementation of FATCA on an EU-wide basis, with identical reciprocal sharing obligations for both sides of the Atlantic?
The negotiation on an EU agreement with the US on automatic exchange of information would be conditional to a mandate by the Council. So far, the European Commission has not received any indication that such a mandate is being considered.
Americans Overseas informs local and European parliaments about the effects and problems that European citizens have with these (recently) introduced laws. By constantly putting the subject on the agenda and giving it attention, various changes have been achieved.
Americans Overseas remains committed to a sustainable solution in national politics.
We started Americans Overseas to help people from all over the world by supplying good information to prevent unnecessary panic and to provide free and no-obligation help. If necessary, we have a network of affordable professionals (accountants) who can help you with your tax obligations.
If you have more questions about the consequences of FATCA-agreements and CBT, you can contact us at Americans Overseas.
Reporting point for US persons
Do you have problems with your bank, financial institution or government institution concerning your status as a US Person? Share your story with Americans Overseas.