THE TRANSATLANTIC MAGAZINE
THE TRANSATLANTIC MAGAZINE
In a financial summit in February, the European Union will urge the United States to help for ‘accidental Americans' with their tax situation, reports Bloomberg Tax.
Andrea Liesenfeld, the European Commission's deputy head of retail financial services, said that at the February 7-8 meeting of the EU-US Financial Regulatory Forum, the commission (the executive arm of the EU) will “ask about the possibility for a more permanent solution” to problems created by the 2010 US Foreign Account Tax Compliance Act (FATCA).
Accidental Americans are technically citizens of the United States because they have a US parent or because they were born in the US, although they those that have never lived or worked in the US. Because of the US's system of Citizen Based Taxation, under which citizens are taxed on their income wherever they live in the world, and the requirements that the US government puts on non-US banks to provide information to the IRS on accounts held by US citizens, many US citizens – including ‘accidental' ones – find it extremely difficult to obtain financial services in their overseas country of residence. (CBT is an almost unique form of taxation – only Eritrea has a similar system, most countries use Residence Based Taxation.)
Liesenfeld said the EU would ask why Treasury Department guidance relaxing some of the FATCA obligations on foreign banks applied only to bank accounts that already existed in 2014. The limited relief “of course doesn't fully solve the problem,” Bloomberg said.
The US Treasury Department declined to comment on the issue, who also quoted Kosma Zlotowski, a Polish Member of the European Parliament as saying “The US authorities we met have told us there is no problem because it has nothing to do with their electorate, but with ours.”
Yana Toom, an Estonian lawmaker who headed a Petitions Committee delegation to Washington last year to discuss FATCA, explained that the 2024 European Parliament and US presidential elections could delay action: “Next year, in January, everybody will be campaigning,” she said. “If we do not act now, I mean tomorrow, then this will delay for three more years.”
