Eleven years ago today, in the Rose Garden of the White House, President Obama signed the Foreign Account Tax Compliance Act into law – buried inside a domestic jobs bill known as the HIRE Act.
There's not much to say about FATCA that we and others didn't last year, when we marked the anti-tax evasion law's 10-year anniversary, as not a lot has changed about it since then.
However, as we've noted at various times over the past 12 months, there has been a growing push-back against what some claim is the law's data-provision over-reach; the banking difficulties it's causing some so-called "accidental Americans", particularly in Europe; and its failure to provide those countries that mandate their banks and financial institutions comply with FATCA's U.S. client information requirements with comparable information about the accounts held in U.S. institutions by these countries' own citizens.
In October of last year, for example, a Court of Justice of the European Union (CJEU) judgment concerned two related cases originating in Luxembourg, known as "Joined Cases C-245/19 Luxembourg State v B and C-246/19 Luxembourg State v B and Others", was seen as represented a potential "game changer" for FATCA's future in Europe, alongside another CJEU ruling a few months earlier, dubbed "Schrems II," which struck down the main mechanism used by the EU to protect the personal data of EU citizens when it's transferred to the U.S.
As for FATCA's effects on accidental Americans – many of whom have been claiming that they're being forced to obtain U.S. "Tax Identification Numbers" and/or go through an expensive and time-consuming process to renounce U.S. citizenships they, being life-long citizens of other countries, don't consider themselves to have – the push-back has come from several quarters, including government officials in countries like the Netherlands and France, as well as certain individuals themselves.
As reported here in October, a retired Dutch KLM pilot took his Dutch bank to court, in an effort to force it to allow him to keep his bank account without having to enter the U.S. system in order to comply with the bank's need for tax information data, in order to comply with FATCA. (As also reported, a few months later, the court ruled in favor of the bank and against the pilot just days before Christmas.)
At last report the pilot, 62-year-old Ronald Ariës, was understood to still be considering whether to attempt a crowd-funded appeal.
Another way in which other governments are challenging FATCA is over what they regard as the law's lack of reciprocity on offer by the U.S. to its FATCA IGA partners.
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, most currently do not benefit from FATCA "reciprocity", and the subject appears to be being mentioned more often by foreign government officials.
However, as UK-based FATCA expert Ross McGill noted last November, after the French Assembly decided not to include in a finance bill under discussion a proposed amendment that would have called on the U.S. to begin a reciprocal exchange of data on U.S. accounts held by French citizens – anyone expecting major changes to the FATCA regulations in the near future, including a significant increase in reciprocity on the part of the U.S., would be almost certain to be disappointed.
While he foresaw "some room for movement in 2021," McGill said it was unlikely to come in the form of "a country-by-country pushback, unless it were possibly from a jurisdiction that's a tax evasion hot-spot for the U.S. – which France is not."
McGill also noted that, given presidential candidate Joe Biden's pledges that if elected, he would tax wealthy individuals and corporations more than the Trump administration had done, the then-soon-to-be-sworn-in president-elect "might be expected to enforce the intergovernmental agreements more aggressively" rather than less – although this could also "give those jurisdictions that have existing FATCA IGAs with the U.S. some leverage with respect to demanding full reciprocity, in return for any additional enforcement measures."
Not just the Foreign
Account Tax Compliance Act...
Meanwhile, apart from its other achievements over the past eleven years (whatever people think of them), it seems that the Foreign Account Tax Compliance Act has established itself firmly as the undisputed, No. 1 reason people use the FATCA acronym, according to AcronymFinder.com.
FATCA is far less-frequently used, the acronym-finding website reports, to refer to the "Federación Argentina de Trabajadores Cerveceros y Afines" (Argentina Brewers and Allied Workers Federation); the Federal Air Traffic Control Authority; or the Finnish Air Traffic Controllers Association.
(Readers who are aware of any other uses for the acronym FATCA are urged to get in touch with us.)
- 'Unintentionally American' ex-KLM pilot now takes his fight to keep his Dutch bank account to EU Parliament
- April 13 deadline for 29 Swiss banks to forward U.S. client data under FATCA, Switzerland tax authority warns
- Questions being asked, after info request revelations of Canadian FATCA transfer data
- New paper to show 'high-income US tax avoidance far larger than thought'
- l’Assn des Américains Accidentels sounds alarm as BNP Paribas warns of account closures