THE TRANSATLANTIC MAGAZINE
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On April 7, EU Commissioner Paolo Gentiloni responded on behalf of the EU Commission to a question on the bloc's response to US FATCA regulations. In his response, Mr Gentiloni explained that "The bilateral agreements between EU Member States and the United States (US) implementing the Foreign Accounts Tax Compliance Act (FATCA) are not within the remit of the Commission unless they breach EC law. To date, there is no evidence of any such breach. Nationality ties, even when acquired by ‘accident’, come together with the existence of reciprocal rights and duties, including paying taxes in the United States for US citizens."
The response has dissapointed advocacy groups for overseas Americans, and will be a particular worry for overseas Americans who are known as 'accidental Americans' - many have never lived on US soil for lengthy periods of time, but have acquired citizenship due to being born on US soil.
One of the surprises in the response is it seemingly conflicts with the robust critique of FATCA offered by the EU last year, when Terhi Jarvikare (Head of Tax Department at Finland's Ministry of Finance), wrote a letter to Steve Mnuchin, the US Secretary of the Treasury, saying 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."
In her letter in December 2019, Ms Jarvikare wrote 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." Mr Gentiloni's response on behalf of the EU Commission explains that "The impact of FATCA on individuals and financial institutions and the lack of full reciprocity have been raised with the US authorities by Members of the Commission and their competent Services on a number of occasions. We have seen improvements on the first two issues, i.e., the impact on citizens and financial institutions, with additional guidance and information published on US administrations websites, and new ‘relief procedures’ for individuals who wish to relinquish their citizenship."
However, on the difficulty that many Americans and accidental Americans face in terms of signing up to basic banking facilities, Mr Gentiloni's response said that "the Commission has looked into the alleged infringements of the right to a basic bank account as prescribed, but has found no evidence of violation of the EU legal framework in the national measures transposing the directive."
The answer will be leaving a number of overseas Americans and accidental Americans dissapointed by the EU's apparent relaxation on its actions against FATCA. It is yet to be seen how the UK may respond to the problem in the aftermath of its exit from the European Union.
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