EU Sends FATCA Warning to US Government

The European Union is urging the United States to address the issue of FATCA and its impact on Americans across Europe. In a letter sent to Steve Mnuchin, the US Secretary of the Treasury, dated December 3rd, Terhi Jarvikare (Head of Tax Department at Finland's Ministry of Finance), wrote that "we as European Union Member States would like to come back to the matter of FATCA ... these issues have not been definitively resolved over the past years. I therefore write to you as Chair of the EU Council High Level Working party, which discussed the issue recently."

The letter particularly cites the case of many 'Accidental' Americans, who are legally classified as US Citizens because, for example, they were born on US soil. Ms Jarvikare wrote "As a result of FATCA, a considerable number of EU residents have realized that they qualify as US Persons under US national law. Their citizenship may have been a result of birth in the United States (jus soli) or birth abroad to a US Citizen (jus sanguinis). We are receiving an increasing amount of signals that this group is confronted with administrative hurdles. An example of this is the filing of a US tax return as a foreign resident, whilst in the majority of cases no US tax is due. A part of this group is considering to relinquish their US citizenship, but this procedure is lengthy, costly, and complex. The renunciation fee alone is $2,350 on top of which the cost of filing tax returns and any tax liabilities would be added."

Ms Jarvikare also mentions the lack of reciprocity in current arrangements, explaining that "Most of the [EU] Member States have been exchanging financial account information for three years now. We regret to note that the United States is the only major financial centre that has not committed to the Common Reporting Standard."

Closing, Ms Jarvikare says "we as European Union Member States would like to be informed about the actions taken by the Government of the United States in order to further improve transparency and enhance the exchange relationship."

Commenting on the news, Fabien Lehagre, President of Accidental Americans Abroad (AAA), said that "I am delighted that EU governments have become aware of the issue of Accidental Americans, and have decided to defend EU citizen's rights against the extraterritoriality of US legislation. I hope Mr. Mnuchin will indicate immediately that he intends to remedy the problem".

After last week's victory in the UK Election for the Conservative Party, which pledged to "Get Brexit Done", it is unclear how the United Kingdom will react on this matter when the country leaves the European Union. Prime Minister Boris Johnson, a former Accidental American himself, notably described US Tax of overseas citizens as "Outrageous", saying that "I haven't lived in the United States for, you know, well, since I was five years old", when explaining his objection to America's "incredible doctrine of global taxation".

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