EU 'Accidentals' cheer, as FATCA on ECOFIN agenda next week

The fact that ECOFIN is planning to consider some of the issues surrounding the Foreign Account Tax Compliance Act, as it's officially known, is being viewed by expat American campaigners as significant because they see it as an indication that European Union lawmakers could at last be beginning to acknowledge the testimony and reports of various EU government and constituent countries' lawmakers over the last few years about these issues, which thousands of dual U.S./EU citizens in particular are said to be having as a result of FATCA. 

As this and other publications have been reporting for years, FATCA has made life particularly difficult for these dual citizens, typically referred to as "accidental" or "unintentional" Americans. These individuals are only considered to be U.S. citizens by the U.S. government because they were either born in the States but grew up elsewhere and never returned, or else they never even lived or worked in the U.S. at all, but had at least one parent who was American.

Such "accidentals" don't consider themselves to be Americans, and often learned that they were considered to be Americans recently, after their bank or another financial entity said that it needed their U.S. "Tax Identification Number" or Social Security Number in order to comply with FATCA.

'Great victory' 

Among those gratified by the news of ECOFIN's plans to address FATCA next Tuesday is Fabien Lehagre, (pictured left, at an EU hearing on FATCA in 2019), president of the Paris-based Association des Américains Accidentels (Accidental Americans Association, or AAA), which he founded in 2014.

"This is a great victory for more than 300,000 citizens in Europe," Lehagre said in a statement on Thursday, referencing an estimate of the number of "accidental Americans" thought to be citizens of one of the EU's 27 member states.

"It is now to be hoped that the American administration will listen to the demands of the European Union."

Lehagre then quoted from what he said was a document, in English, from a government source in the Netherlands – said by some sources to be Dutch Finance Minister Wopke Hoekstra who, as reported, participated yesterday in the latest Dutch governmental hearing into FATCA.

The document is understood to be being sent to ECOFIN members, ahead of next week's meeting.

The document (pictured below right), entitled "Explanatory note on Foreign Account Tax Compliance Act (FACTA), in preparation [for] the informal video conference of the Ministers of Economy and Finance on 16 February 2021", details "two issues" that "the Netherlands would like to call attention to", followed by what the Netherlands would consider to comprise an acceptable "permanent solution".

"The first issue concerns the lack of equivalent reciprocity in the exchange of information between EU Member States and the U.S.," the document begins.

"Secondly, the position of EU citizens who also have U.S. nationality under U.S. FATCA law, and are resident taxpayers in their respective EU Member State, must be addressed. 

"In recent years these EU citizens have been faced with the unnecessary closure of their bank accounts due to lack of certainty about sanctions under U.S. FATCA legislation. Moreover, when these persons want to relinquish their U.S. citizenship they are faced with high renunciation fees and complex procedures."

As for what an acceptable permanent solution would look like, the "explanatory note"  says it would "resolve the banking issues of EU citizens with US nationality," while also "simplify[ing] the procedures to relinquish citizenship and lower renunciation costs."

A "preferred option", it concludes, "would be to propose an exception for this group" – "accidental/unintentional Americans" – "to the U.S. tax obligations and the obligations under FATCA".  

Members of the Nederlandse Accidental Americans (NLAA) also welcomed the news that the ECOFIN Council would be officially looking at FATCA for what is believed to be the first time.

“We hope that the finance ministers of the member states of the EU recognize that accidental Americans are being done a grave injustice by the combination of the U.S.’s citizenship-based tax regime and the FATCA (intergovernmental agreements) they have entered into, and that they will stand up for the rights of their EU citizens,” said NLAA spokesperson Rob Gerretsen.

‘Don’t forget other American expats’

Spokespeople for organizations representing American expats who aren’t, for the most part if at all, “accidental Americans” said they hoped that the ECOFIN council meeting would consider how FATCA also affects them, even though these American expats are not accidentals (though in fact many have also have dual citizenships, and are not intending to return to the U.S., having decided to make their lives abroad or even having come to Europe to retire).

“Any solution would need to address these American expats as well, or at the very least, solutions ought to be found for them too,” said Paul Atkinson, a long-time American expat who currently lives in Paris, and who is a member of the Paris-based advocacy group, the Association of Americans Resident Overseas (AARO).

“Dual nationals aren’t the only ones struggling with the unintended consequences of FATCA, which was aimed at wealthy homeland American tax evaders – not at ordinary, law-abiding, middle-income Americans who just happen to live abroad.”

That said, he added, “we appreciate the elevation of the problems of American expats’ and dual nationals’ access to the financial system being caused by FATCA to a higher level on the political agenda.

“We hope there will be widespread support for meaningful follow-up to this meeting next week across the full EU membership.”

Laura Snyder, a Paris-based American who is one of the founders of a new American expat advocacy group called Stop Extra-territorial American Taxation, echoed Atkinson's comments.

"In the EU, discussions about FATCA are usually focused on its effect on Accidental Americans," she said.

"Without denying the egregious problems they experience, it's a slippery slope. For example, what about persons who emigrated from the United States as adults ten years ago? Twenty years ago? Forty years ago?

"Many of these 'expat' but not 'accidental' Americans are citizens of the countries where they live – and some, like the 'accidentals', also from birth. 

"They are not 'expats' – they are emigrants from the United States. Are they less deserving of the consideration and protection of the European Union's governing bodies, alongside the 'accidentals'? If so, then who will protect them?

"Further, the European Union and its member states are victims of FATCA as wel– the multitude of ways that FATCA infringes upon their sovereignty are well-documented."

Yet another American expat, meanwhile– a self-described "long time observer" of the European political scene – cautioned against Americans of any kind (“accidental, unintentional or otherwise"), expecting too much of next Tuesday’s meeting.

While conceding that on a certain level the fact that a major body like ECOFIN was putting the subject of FATCA on its agenda was “significant”, he added that it would be “important to gain support across a broader range of constituencies as soon as possible – e.g., dealing with privacy, consumer issues – rather than just focusing on the EU's finance ministries.” 

One area he said he was interested to see whether anyone would pick up on would be the lack of reciprocity being offered by the U.S. to its FATCA IGA partners, an issue that was raised as recently as last November in France's National Assembly. 

While some countries, such as Singapore, have recently agreed a reciprocal FATCA agreement with the U.S., few others have, even as most of the rest of the world, apart from the U.S., has agreed to automatically share taxpayer information under an Organisation for Cooperation and Development program known as the Common Reporting Standard. 

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