FATCA hearing: Europe's 'accidentals' unleash frustration over official EU 'ignoring' of their struggles

Dutch European Parliamentarian Sophie in 't Veld, a crusader for so-called "accidental Americans" in her constituency in recent years, also singled out for criticism "the member states [of the European Union] – and of course, when I say “member states”, I clearly make an exception for France and the Netherlands, which have been very actively standing up for citizens rights here".

In 't Veld, who wasn't one of the official speakers at the hearing but who spoke passionately during one of two Q-and-A sessions, then went on to draw applause from the room when she referred in passing to how "the European Commission and most of the [EU] member state governments put transatlantic relations over the interests of EU citizens". 

Officials from the European Commission were also among those testifying, and largely defended the EU's policy with respect to FATCA thus far. They included a representative of the European Data Protection Board, which is being called on by the accidental Americans to do more to stand up to the U.S. over its demands for their personal data, as required by FATCA, formally known as the Foreign Account Tax Compliance Act, as well as a representative of the European Commission's Directorate-General for Justice and Consumers.

FATCA was aimed at cracking down on Americans who made use of overseas bank accounts to hide their wealth from the U.S. tax authorities, but because it relies on non-U.S. banks and financial institutions to provide the data on those of their account-holders who are "U.S. persons" – and because this includes anyone who was born in the U.S., even if they lived their entire lives elsewhere, and in some cases, were even born abroad, to an American parent – it has shone a spotlight on tens of thousands of individuals who have never considered themselves to be American, and who therefore have not been in the U.S. tax system, as they are taxpayers and citizens of other countries. 

As reported, the hearing on "FATCA and its extraterritorial impact on EU citizens" was held by the European Parliament's Petitions Committee (PETI), and is officially the latest in a series of actions that have taken place in response to a petition filed with the European Parliament in 2016 by someone who has officially been referred to until now only as "Mr J.R. (French)."

This petitioner, who is a resident of France, kicked off the hearing with a 10-minute initial statement that detailed what he said had been the European Commission's "ignor[ing of] the issues" he and other EU citizens who happened to have been born in the U.S. struggle with.

"Since I submitted the petition in 2016, we’ve been relentlessly trying to get official positions from the European executive on these issues – whether it’s the Commission, or whether it’s the European data privacy watchdogs, the Working Party Article 29 – now replaced by the European Data Privacy Board," J.R. said.

"Over the course of 2016, 2017, I sent multiple emails and letters in relation to my petition. They were all ignored. Copiously ignored.

"I then had to go to the extent of filing a complaint with the EU ombudsman, to try and get the EU watchdog authorities to give me an official position on FATCA and its compatibility with EU data privacy norms. And on the 8th of February, 2019, I finally managed to get an official response from the Working Party Article 29 – so we’re talking, you know, three years later.

And fundamentally, that response totally side-stepped the matter. They refused to actualy look into the legality of FATCA, and its compliance with European data norms."

Even after the EU General Data Protection Regulation came into force, the petitioner known as J.R. noted, and a report on the matter commissioned and presented, nothing had happened, not even after a resolution supportive of Europe's accidental Americans and their struggles was unanimously approved by the European Parliament. 

'40,000 EU bank accounts at risk'

Other speakers included Fabien Lehagre, the president of the Association des Americans Accidentels (Accidental Americans Association), pictured left during the hearing, who raised what is for many accidental Americans in Europe  is a pressing issue right now: the fact that an existing moratorium on a FATCA requirement for banks to provide the U.S. Social Security numbers of all of their American account-holders comes to an end at the end of this year. 

Because the penalties for failing to comply with this requirement, from the banks' point of view, are severe, EU banks have been warning their American account-holders in no uncertain terms recently of their need to comply, or else risk having their accounts closed down.   

Lehagre cited a letter sent earlier this year by the president of the French Banking Federation in which he estimated that Europe's banks could end up closing as many as 40,000 accounts as a result of these rules, even though, he noted, the IRS had recently pointed out that banks actually have time before they would face sanctions. 

Filippo Noseda, a partner with London law firm Mishcon de Reya, who – as reported – is representing a British and American dual national known as "Jenny" who is crowd-funding a legal case in the UK against HM Revenue & Customs, for what she claims is the mis-use of her personal data in connection with her banks' compliance with FATCA, spoke next, detailing what he said was a major change in the attitude of European Commission officials with respect to FATCA between around 2011 and the present.   

After initially regarding it with concern, he said, "unfortunately it seems to us that a number of European bodies turned a blind eye" to FATCA's potential problems. 

He showed a series of slides of correspodence from as far back as 2011 that he claimed proved his point. One of these was a letter "written to an accidental American" in June of 2011 from the office of the then-European Commissioner for Taxation and Customs Union, Audit and Anti-Fraud in 2011, in which it was acknowledged that "certain aspects of FATCA...are raising concerns within the EU", including "possible issues of conflict with EU and Member States' law, in particular those on data protection".

"The letter ended," Noseda noted – pointing out again that it had been written "eight years ago" – with the observation that the European Commission at the time had been hoping that it would eventually be possible to find a way to make the FATCA legislation "more proportionate and workable". 

This, he went on, was effectively an admission at the time that the European Commission viewed FATCA as "not proportionate".

To see the entire broadcast on the European Parliament's website, click here.  To read an unabridged transcript of the comments made by 'Mr. J.R. [Petitioner]' before Tuesday's hearing on 'FATCA and its extraterritorial impact', the latest official response to his petition of 2016, click the green "Next" box (below right).