updated 2:57 PM CEST, Sep 21, 2023

Accidental Americans reel after Dutch court says bank may close account of retired KLM pilot

Spokespeople for organizations that represent so-called accidental Americans – long-time citizens of other countries whom the U.S. regards as U.S. expatriates and taxpayers, even though they themselves don't consider themselves to be U.S. citizens – were reeling on Thursday from the news that a court in the Netherlands has ruled that a Dutch bank may close the account of such an "accidental," who has refused to enter into the U.S. tax system.

However, they added that the decision had not been unexpected, given the years of similar decisions by politicians, political organizations and others that, they said, had placed "political considerations" and a desire not to antagonize the U.S. ahead of the rights of individual citizens and taxpayers of other countries, when it came to America's efforts to tax such individuals. 

"This is a major setback for all accidental Americans in the Netherlands, but especially for him," said Jet Barendregt, a member of the board of the Netherlands Association of Accidental Americans (NLAAA). "It's not the Christmas gift he had hoped for." 

Ronald Aries 2 croppedBarendregt  was referring to Ronald Ariës, the retired KLM pilot who went to court to challenge the assertions of his bank, a division of De Volksbank, that he needed to obtain a "tax identification number" from the U.S. and otherwise make himself known to the U.S. authorities in order to maintain his account with the bank.

Ariës is considered by the U.S. to have tax reporting obligations because he was born there, even though he's lived all but the first of his 62 years in the Netherlands. 

Accidental Americans like him have been under pressure from their banks, which have been told that beginning on Jan. 1 of this year that they are responsible for providing the U.S. with the "tax identification numbers" (TINs) of all of their American-citizen account-holders, in order to comply with a 2010 U.S. tax-evasion-prevention law known as FATCA (Foreign Account Tax Compliance Act). The European Banking Federation has estimated that there are nearly 300,000 accidental Americans in the EU, of which around 40,000 are thought to live in France. 

As reported, Ariës, pictured left, in the cockpiit of an A330, told the American Expat Financial News Journal in October that he wasn't happy about having to speak out publicly about his situation, but that he thought it was important to take a stand, because it was "hurting everybody, from the top to the bottom [of the income scale]."

Added Barendregt: "This court ruling emphasizes all the more that the Dutch government as well as the rest of the EU member states need to amend their IGA [FATCA intergovernmental agreements] and tax treaties with the U.S. as soon as possible, if they wish to protect their own citizens from the extraterritoriality of the U.S. tax regime that they [the Dutch and EU governments] signed up to, when they agreed to enable the U.S. to implement FATCA.

"As the bank and the judge both pointed out, the bank's responsibility towards all of its clients takes precedent over the interests of a small group of clients, such as the accidentals."

Indeed, towards the end of his verdict, the judge – identified in the court papers as R.A. Steenbergen – acknowledged that the situation in which accidental Americans like Ariës were finding themselves, with respect to their banks, was problematic.

And according to an English translation of the document, he went on to note that a "subject of broad social (international) debate" was whether the situation was "desirable," or whether "consultation" might be urged, "from various quarters between the the authorities involved, to see whether a solution can be found."

But he then added: "These proceedings and the legal context that the issue has been given within them do not offer any room to contribute to the desirability of that debate and those developments.

"[As] the judge  [in this matter I am] bound by applicable law, and within that framework the judgment must be as considered above, regardless of [the desirability of] the intended solution."

As for De Volksbank, a company spokesperson said in a statement that it had "taken note of the court's decision" and added: "We are not happy or relieved by the (considered) decision of the judge. The problem has not essentially been solved.

"And as a bank, we simply have no choice but to let the interests of our 3 million customers prevail over the interests of a relatively small group of customers or an individual." (By this, the bank is understood to be referring to the fact that if it were to be found not to be in compliance with FATCA, the significant penalties that it could be forced to pay could cause disproportionate harm to the institution and thus potentially affect the accounts of its other clients.) 

The accidental American plaintiff in the matter, Ariës, didn't immediately reply to a request for comment. However, he told a Dutch media organization, NRC.nl,  which has been covering his case closely, that he was considering his options. (In addition to his own costs, which he has not been hugely successful in finding crowd-funding backing for, he has been told he will have to reimburse KIFID (The Key Financial Services Complaints Tribunal), a Dutch entity that he brought into the matter early-on, in hopes of avoiding having to go to court an amount totalling €1,636.)  

According to NRC.nl, Ariës is pleased that the judge had decided that he could keep his pension products with BLG Wonen (another De Volksbank subsidiary), but added: "if I want to have it paid out, to which account should that be?"

Years of talks aimed at addressing
FATCA's unintended consequences

As this publication and others have been reporting for years, the French and Dutch governments as well as the European Union have repeatedly held hearings and voted on the question of FATCA and what should be done to address the banking problems FATCA has been causing, not just for accidental Americans but ordinary American expats. Various individual politicians have also proposed a range of measures, none of which have yet managed to make it into law.

FATCA was introduced mainly to prevent Homeland Americans from hiding their wealth in overseas financial institutions, but what the U.S. lawmakers who conceived it failed to anticipate was that America's citizenship-based tax regime would make it hugely burdensome for Americans who lived outside of the U.S.

Such Americans would normally be paying tax returns annually to the countries in which they were resident, but with the help of FATCA, the U.S. was suddenly able to come after such expats for tax in a way that it had never done before, because it didn't know who they were, or where they were, or how much income they had – all of which FATCA gives them, with the help of the non-U.S. banks and financial institutions that are obliged, under FATCA, to provided it.

Even before FATCA came into force, but was on the table, U.S. citizenship renunciations began to soar, with 2020 set to be a record-breaking year, in spite of the fact that the U.S. consulates and Embassies individuals normally need to work with in order to renounce have been closed in most countries since March. 

In 2018, research carried out by the Democrats Abroad found some 97% of a cross-section of almost 10,000 American expatriates it surveyed reported that they had been having "serious problems addressing their U.S. tax filing obligations" every year. A few months later, a survey carried out by Greenback Expat Tax Services found that more than one in five U.S. expatriates reported they were "seriously considering renouncing their citizenship" as a result of the complex package of tax issues they face as a result of being an expat.

Earlier this month, the Paris-based Association of Accidental Americans (AAA), along with 20 so-called accidental Americans of 10 different nationalities, filed a complaint  against the U.S. State Department over the US$2,350 fee that the U.S. currently charges those wishing to renounce their American citizenship – one of the options open to accidental Americans wishing to extract themselves from the U.S. tax system – arguing that it violates the U.S. Constitution and international law.

The AAA's founder and president, Fabien Lehagre, told the AXFNJ today that although he understood the reasoning behind the judge's decision, he nevertheless found it "inadmissible."

He added: "If this accidental American actually does lose his bank account, it will be the full responsibility of the Dutch government."

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