FATCA

FATCA

On 21 October 2020, German Member of the European Parliament (MEP) Engin Eroglu of the Renew Europe Group posed a written parliamentary question to the European Commission:

“EU citizens who were born in the US or who have a parent who is a US citizen are also taxable in the USA. Since July 2014, German banks and credit institutions have been required to notify the US authorities if they have clients who are taxable in the USA. This often leads to banks terminating these clients’ bank accounts to avoid the additional administrative formalities. Switching to another credit institution is often impossible for the same reason.

1. What ways does the Commission see of improving the tax situation of US nationals in the EU?

2. Does the Commission think that FATCA’s provisions are compatible with EU data protection policy?”

On 29 January 2021, Financial services, financial stability and Capital Markets Union Commissioner Mairead McGuinness responded on behalf of the European Commission stating: “Member States negotiated bilateral agreements with the United States (US) on Foreign Account Tax Compliance Act (FATCA).

The Commission is aware that FATCA requires EU banks to provide information to tax authorities about clients taxable in the US. It is also aware of FATCA’s possible implications, such as banks terminating these clients’ accounts and difficulties in switching banks. The Commission regularly informs the European Parliament’s Petitions Committee of any developments on this file.

The Commission has raised this issue several times bilaterally with the US authorities. Following these discussions, the US administration took, in 2019, initiatives aimed at providing assistance to the US nationals and financial institutions concerned. The US authorities clarified the implications for banks of not reporting US Tax or Social Security Identification Numbers and gave support to US nationals abroad on issues such as how to obtain a Social Security Number and how to cease to be a US citizen. The US also adopted a new procedure that makes it more affordable to relinquish US citizenship in cases where tax liabilities are reasonably limited. The German Presidency of the Council wrote to the US Treasury on 8 December 2020 to open a dialogue with a view to possible further initiatives.

National data protection authorities (DPAs) are responsible for monitoring and enforcing the application of EU data protection rules. In 2018, the DPAs identified no grounds to intervene with respect to FATCA. They are currently looking into this issue again at the level of the European Data Protection Board. The Commission participates in these Board meetings and will closely follow any new developments.”

Source: https://www.europarl.europa.eu/doceo/document/E-9-2020-005716_EN.html

Photo Credit : https://pixabay.com/photos/income-tax-calculator-accounting-4097292/

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