The petitions committee in the European Parliament today heard from European citizens whose daily lives and livelihoods have been severely disrupted by US tax law. The US Foreign Account Tax Compliance Act (FATCA) was originally aimed at fighting tax evasion by US resident taxpayers, but in practice the US law has affected a large number of European citizens. The petitioners represent EU citizens raising concerns about the adverse effects of the US laws on these so-called 'accidental Americans', who are nationals of both the US and a member state, and the impact on their non-US family members.
There are around 400,000 'accidental Americans' in the EU, who were born on US soil, but have not worked, studied or lived in the US as taxpayers.. They are facing restricted access to essential financial services such as life insurance, mortgages or pensions and are seeing personal data of family members being shared with the US tax authorities. The petition discussed today raises concerns in particular about the extraterritorial application of US laws in the EU.
By discussing the petitioners in the European Parliament, S&D MEPs are sending a warning that time is running out. In a matter of only a few weeks, the problems facing thousands of European citizens may go unresolved leaving citizens' rights under threat.
S&D coordinator on the petitions committee, Jude Kirton-Darling, said:
“Today S&D MEPs have listened in detail to the unjustified disruption and intrusion that is taking place in people’s everyday lives as a result of the US Foreign Account Tax Compliance Act. With bank accounts being frozen and access to life insurance, pensions or mortgages being restricted, there are too many EU citizens who are finding obstacles in the way of living life normally as a result of this unfair US law.
“While we agree with the initial purpose of FATCA, which is to fight tax evasion, it is now clear that these rules are highly disproportionate and lack a crucial common sense approach. Right now there is a significant amount of pressure on banks in the EU to comply with the US law before the end of 2019, otherwise they risk facing a heavy financial penalty. This means that in 2020 a significant number of European citizens might wake up to find their bank accounts being closed from one day to the next.
“The S&D Group shares the serious concerns that this US law violates fundamental EU rights, such as data privacy and protection and the right to respect for private and family life. GDPR rules, which are in place to protect European citizens, risk being cast aside in this case. The European Commission should be putting the protection of its citizens first. We've listened. Now it's time to act.”
Since the entry into force of the US Foreign Account Tax Compliance Act (FATCA) and the related IGAs concluded between member states and the US, EU financial institutions, under the threat of a 30 % withholding tax, are obliged to disclose detailed information on accounts held by presumed ‘US persons’ to the US Internal Revenue Service (IRS). Financial institutions have until the end of 2019 to comply with FATCA.