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European Parliament. European Parliament. Photo © Jan Beckendorf.

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FATCA may violate new EU Laws
The winds of change are blowing against the Foreign Account Tax Compliance Act
Published on May 15, 2018

A study by the European Parliament has explored the impact of FATCA (the Foreign Account Tax Compliance Act) on US citizens abroad, and has raised key points which could indicate FATCA violates new EU legislation.

The study, conducted by the Parliament's Policy Department for Citizens' Rights and Constitutional Affairs at the request of the Committee for Petitions, highlights some of the problems faced by American citizens residing in the EU which have been caused by FATCA, including those known for some time such as the denial of "banking services" as well as issues such as the "onerous compliance which is not proportionate to their actual situation of law-abiding citizens". A particularly interesting quote from this section of the study notes that "there is ample evidence that European financial institutions are systematically identifying customers whom they believe may be US Persons for the purposes of FATCA" and "denying them banking services for fear of being subject to FATCA reporting".

Even more interesting is the study's response to potential conflicts between FATCA and a new EU legislation known as GDPR. GDPR (the General Data Protection Regulation) is set to be rolled out on May 25, and enshrines values of data privacy and security into EU law. You may have already received e-mails from companies you've worked with / contacted before asking you for permission to continue contacting you - this is one consequence of the new GDPR rules. The study points out that for FATCA to continue to be applied, the process by which data is shared by EU financial institutions with the US government must comply with GDPR. A direct quote from the study says "data transfer under FATCA to the US requires an adequate level of protection through substantial provisions in IGAs (intergovernmental agreements)".

Although the UK is set to leave the European Union in 2019, the UK Government has already confirmed its intention that GDPR will form part of UK law following Brexit. This opens the possibility that if FATCA isn't able to catch up with the new GDPR rules, it could be under threat in the UK as well as within the European Union. Perhaps not the way many expected FATCA to be fought, especially after key figures in the Republican party made public comments against the much maligned law last year, but this report does indicate that ongoing efforts by organizations in the UK and Europe, particularly in France, are catching up with the reality of the problems that have been facing Americans in Europe for many years.

You can read the study in full here: http://www.europarl.europa.eu/RegData/etudes/STUD/2018/604967/IPOL_STU(2018)604967_EN.pdf.

UPDATE: Thank you to AARO (American Association of Residents Abroad) for also noting this petition on the European Parliament website against FATCA in Europe: Click Here.



Tanager Wealth Management

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