In December, the EU wrote a letter to the American government to address the problems that Americans overseas experience through American (tax) legislation. This is a summary of the answer by the American government.
The Americans express their appreciation for the cooperation between the US, EU member states, and European financial institutions for the exchange of financial bank account data of individuals. America needs to have a TIN, also known as an SSN (Social Security Number), included in the information sent yearly by European banks to the United States, so that the IRS can better enforce U.S. tax rules upon Americans living overseas.
There has already been a broad transition period, during which no fines were imposed, for banks and individuals. The Americans have decided therefore not to honor the request of the EU to extend the transition period after the end of 2019. Banks do not need to close or block accounts immediately, for fear of fines, if the TIN is missing. There is still enough time for banks (until the next reporting deadline) to fulfill their agreement to make the best effort to be compliant.
The letter written by the EU states that large numbers of US citizens who live in Europe either do not have TIN or have not supplied one. The Americans have expressed their concerns in this matter.
The fee for renouncing the US citizenship ($ 2,350) is imposed following US guidelines. This requires the government to ensure all costs are covered for certain groups of taxpayers. In addition, according to the US substantial relief is offered by the relief procedure whereby one can renounce the US citizenship without a TIN. An individual still needs to file (5 years) of returns and pay the renunciation fee. (Note Americans Overseas: There are many risks and disadvantages to relief procedure).
The US praises itself as a leader in taking action against tax evasion. FATCA is cited as an inspiration for the European CRS system.
On February 11, 2020, the EU was asked to give its position on the problems for Americans outside America with the banks and US tax laws. The EU states that FATCA is not an EU issue but that of individual countries. For the part that is EU-related, the EU states that no problems or violations have occurred by banks (such as the wrongful closing or blocking of accounts). You can read the whole question and the answer of the European Commission.
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.
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 Department of the Treasury FATCA EU letter and the consequences of FATCA and CBT, you can contact us at Americans Overseas.
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Glossary
1 FATCA = Obligates all financial institutions outside of America to provide account information about US persons.
2 IGA = abbreviation for Intergovernmental Agreements. Agreements between governments to exchange information.
3 FFI = abbreviation for Foreign Financial Institutions. In this case, this encompasses all financial institutions outside of America, including but not limited to; banks, insurers, pension funds and investment institutions
4 TIN = Tax Payer Identification Number. This is a citizen service number used to identify individuals by the government. An example of a TIN is the SSN (Social Security Number).
Understanding the US tax system, the obligations, and all the additional terms can be difficult. Especially if one lives outside of America. Is your question not answered? Contact us.
U.S. citizens and resident aliens who live abroad are generally required to file a federal income tax return and pay taxes on their worldwide income.
Read more... about Who is required to file taxes in the US?Yes, US citizens are required to file taxes on their worldwide income, regardless of where they are living.
Read more... about Do US citizens living abroad still have to file taxes in the US?Received an American check? You can cash your check in the following ways: cash the check at your own bank, transfer to another person (endorsement), cash checks using an online service or cash the check by another bank.
Read more... about How can I cash my US check?US citizens living abroad may be required to file Form 2555 and/or Form 1116 to claim the foreign-earned income exclusion.
Read more... about Are there any special tax forms required for US citizens living abroad?FBAR (Foreign Bank Account Report) filing is the requirement for certain U.S. individuals and entities to report their foreign financial accounts to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury. The FBAR filing requirement applies to U.S. persons who have a financial interest in, or signature authority over, one or more foreign financial accounts if the aggregate value of those accounts exceeds $10,000 at any time during the calendar year.
Read more... about What is FBAR filing?