Washington’s long arm frightens the US citizens in the Netherlands (NRC)

According to Daan Durlacher of Americans Overseas, the Dutch government should provide unity and clarity about how banks and financial institutions execute the FATCA agreement. In their FATCA agreement with the US, Luxembourg, and Switzerland have obliged the banks to keep their clients informed meticulously. There is no obligation like that in the Netherlands.

Because of the new rules, twenty percent of the clients of Americans Overseas had to terminate their investment accounts because these fell outside US supervision. Because of the administrative burden, investment bank Alex does not do business with US clients anymore. Alex wrote to an American client, informing them that they are terminating all services to US persons and closing investment accounts because “in line with a big part of the Dutch banks, they have chosen not to cooperate with the FATCA regulations any longer”.

Obligation to declare

The obligation to declare what banks have is meant to trace dirty money and it has been established for the ‘big fish, the clients who have over 50,000 dollars’ worth of accounts. However, according to the agreement, banks are also free to pass information on to all US persons in their records, including the ones who have less money in their possession.

So in practice, Dutch banks read the rules in a variety of ways. The Rabobank, for example, reports all US persons to the Tax Authority. The Rabobank clients in question have received an additional questionnaire from their bank.

ING and ABN Amro limit themselves to US persons with 50,000 dollars and many other assets. Everyone who is on this list receives a written notification from the banks. In this case, the clients with less than 50,000 euros hear nothing. This is confusing because clients in this group have first been asked if they are a US person.

A lot of confusion

Clients of Americans Overseas say that the staff members of the banks that they are in contact with are often not well-informed about the matter at hand. An unspecified number of Americans have not heard from their banks at all and have not received a questionnaire either. And even among Americans who have indeed corresponded with their banks, there is often still a lot of uncertainty.

Although the reporting obligation in the FATCA agreement starts to apply with 50,000 dollars, US persons living abroad are already obliged to declare their taxes in the US from 10,000 dollars’ worth of income onwards.

Unlike other countries, the US imposes a tax liability on all their citizens living abroad. The income tax returns paid elsewhere can usually be deducted from the amount due so that someone without a lot of equity and a yearly income lower than 100,000 dollars usually does not have to pay extra taxes.

A version of this article appeared on Monday 17th August 2015 in NRC Handelsblad.

Copyright NRC Media BV and/or the author