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 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.
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.
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