So-called "Accidental Americans" in France and elsewhere in Europe expressed disappointment, and in some cases dismay, after France's top administrative court ruled that the current regime under which France provides information to the U.S. under its controversial Foreign Account Tax Compliance Act could stand, and didn't need changing or to be scrapped.
In its decision, published yesterday, the Conseil d'Etat said it saw no legal basis to support claims by the Paris-based Accidental Americans Association that the way France currently implements FATCA violated the privacy of dual French/American citizens.
It also rejected arguments that the reporting regime is one-sided – that is, that it doesn't oblige the U.S. to provide the same amount of information about French citizens living in the U.S., and thus the information flow is one-sided – according to French news reports.
"The [Conseil d'Etat] ruled that the claims by the accidental Americans, that the regulations under which FATCA is enforced in France, lack legal legitimacy, are unfounded," the French news agency, AFP reported yesterday.
It added that the decision was in line with statements made at a hearing on the matter earlier this month by the public rapporteur that the problems having to do with FATCA at most had to do with "technical difficulties of implementation."
Take matter 'to EU Court of Justice'
The Accidental Americans Association (AAA) said it would continue to pursue the matter.
"I am extremely disappointed by this decision, although I was prepared," said Fabien Lehagre, an "accidental" who founded the AAA in 2015, and who has been leading an increasingly visible, Paris-based campaign to rally French and EU support for others like him ever since.
"We lost a battle but not the war.
"Several of our arguments have been completely ignored, including that relating to non-reciprocity -- it is quite clear that there is no reciprocity on the American side, It's [a fact].
"[But] we are dealing with an extremely political subject, and the Council of State would have had merit to show its total independence on this issue.
"We will now take action to bring the case before the Court of Justice of the European Union."
Individual accidental Americans and others weighed in on social media, meanwhile, with one commentator on Facebook saying, "Americans in France need to join the yellow vests. That would help to get the word out."
As reported here last July, members of the European Parliament unanimously approved a resolution supporting the cause of Europe's “accidental Americans” by a resounding 470 votes to 43, with 26 abstentions. Among other things the resolution called on EU member states as well as the European Commission to re-open negotiations with the U.S. over FATCA, which Friday's Conseil d'Etat ruling suggests the French government is not, for the moment at least, likely to seek to do soon.
In a statement responding to the Conseil d'Etat ruling, the AAA also said that it "deeply regretted" the fact that the council had failed to acknowledge its points, and noted that its assessment of the way France currently implements the FATCA regulations was "directly contradicted by various parliamentary reports, as well as by the Court of Auditors."
The AAA response notes that a 2017 Court of Auditor's report that found that the U.S. had transmitted "no information" to the French tax authorities even as they were providing information to the U.S., thus indicating that the information exchange arrangement was one-sided, which the AAA suggested meant that FATCA was enabling the U.S. to exert an "extra-territorial" control over French citizens whom the U.S. regarded as also being American.
French Assembly report
Among the reports the AAA is referring to that yesterday's Conseil d'Etat ruling failed to take on board was one issued by two senior French lawmakers two months ago.
As reported, French Assemblymen Marc Le Fur, of the center-right French Republican party, and Laurent Saint-Martin, pictured left, of the center-liberal En Marche party, called on the French government in their report to engage in further negotiations over FATCA, and if necessary abandon it altogether.
They also said the U.S. needed to create a new role of a “fiscal attaché,” to be based at the American Embassy in Paris, to give dual American/French nationals someone they could go to with their issues, and that it should extend a soon-to-expire moratorium that currently exempts European banks from having to report certain information to the U.S. authorities about their American account holders.
They also called on the U.S. to make it easier and cheaper for French citizens who wished to renounce their American citizenship to do so, including by returning the renunciation fee to its “previous amount of US$400” from its current US$2,350 – and exempting altogether anyone on a low income.
To read and download their report, which is in French, click here.
Unknown numbers of U.S. expats
Although even the U.S. government admits to not knowing exactly how many Americans live outside of the U.S., the latest estimates have been in the neighborhood of 9 million – significantly more than previously believed, even as recently as three or four years ago.
Even less well known is how many of these are “accidentals”. The AAA's Lehagre says there are believed to be more than 300,000 across the EU, and "tens of thousands" in France.
Lehagre adds that a survey of his organization’s members some years ago found the average member had left the States before the age of 3, although he points out that this isn’t a representative sampling of the expat community, or even his own organization now, as it is some years out of date.
The problems for the accidental Americans, and indeed many Americans who live outside the U.S. who don't consider themselves to be "accidental," are widely seen to be the result of FATCA, a 2010 piece of U.S. legislation that was conceived in the wake of a number of high-profile exposes of tax evasion by mainly "Homeland" Americans who had been using overseas bank accounts and other financial structures to hide their wealth and income.
It was designed to work by obliging non-U.S. banks and other financial services companies to report to the IRS on any assets held by any American clients they happened to have, under “intergovernmental agreements” (IGAs) agreed between the U.S. and governments around the world.
Almost from the moment FATCA was signed into law – hidden inside a domestic jobs bill, which meant that there was no discussion of its merits – Americans living outside of the U.S. began to receive notices from their banks and other financial companies that they were no longer welcome as customers, and would need to move their accounts elsewere. The problem is particularly acute for accidental Americans, who often struggle to find financial institutions willing to give them bank accounts, mortgages and other types of financial services, particularly if they are not wealthy.
Click here to sign up to receive the American Expat Financial News Journal's free weekly news bulletin, and occasional breaking news bulletins
- UK's tax authority to reach out to 'hundreds' with possible links to bank in non-CRS-compliant Puerto Rico
- French Senate rejects National Assembly's FATCA reciprocity amendment
- Ross McGill: ‘FATCA isn’t the problem: CBT is’
- France's National Assembly approves FATCA reciprocity amendment, citing 'accidentels'
- John Richardson: 'The CRS ≠ FATCA'