Thousands of Accidental Americans living in Europe are not having their right to a bank account compromised by the US Foreign Account Tax Compliance Act.
Under the Payment Accounts Directive, every European Union citizen has the right to open a bank account, but some banks have frozen or refused to open accounts for Americans because they do not wish to comply with FATCA rules.
The rules demand foreign financial institutions inform the US Internal Revenue Services (IRS) each year about any Accounts Controlled By Americans – although balances must exceed certain thresholds for different categories of American taxpayers and businesses.
The problem relates to tax information numbers (TINS) which US taxpayers must give the IRS.
Lack of evidence
Thousands of Americans in Europe do not have them and cannot pass IRS checks because they have always lived overseas and never interacted with the US. Typically, they would have left the States as children.
Most consider they are nationals of the country where they now live – and around 300,000 are in Europe.
But the US raises taxes on citizens regardless of where they live rather than those resident in America.
Despite protests, the European Commission has ruled pacts between the US and EU states are outside the remit of the commission unless they breach EU law.
“To date, there is no evidence of any such breach. Nationality ties, even when acquired by accident, come together with the existence of reciprocal rights and duties, including paying taxes in the United States for US citizens,” said Paolo Gentiloni, Europe’s Economy Commissioner.
“The impact of FATCA on individuals and financial institutions and the lack of full reciprocity have been raised with the US authorities by members of the commission and their competent services on a number of occasions.
“We have seen improvements on the first two issues, ie, the impact on citizens and financial institutions, with additional guidance and information published on US administrations websites, and new relief procedures for individuals who wish to relinquish their citizenship.
“Concerning the respect of the Payment Accounts Directive, the commission has looked into the alleged infringements of the right to a basic bank account as prescribed, but has found no evidence of violation of the EU legal framework in the national measures transposing the directive.”