European Union

From SEAT Wiki

History

  • Apr 2011 The EU Commission, France, Germany, the United Kingdom, Italy and Spain initiate talks with the United States to enforce FATCA in a way that is less burdensome for financial intermediaries, avoids breaches of data protection and other laws of Member States and benefits EU tax administrations
  • 11 Feb 2012 US Treasury Issues Joint Statement From the United States, France, Germany, Italy, Spain and the United Kingdom in Connection With the Issuance of Proposed FATCA Regulations
  • 09 Apr 2013 Pierre Moscovici, French Minister of Finance, and his British, German, Spanish and Italian counterparts sent a letter to the commissioner responsible for taxation in which they jointly requested that a European FATCA be established. This system of agreements on the exchange of tax information sought by the United States is principally based on the notion that natural persons should be taxed according to their nationality and not their country of residence.
  • 17 Sep 2014 Directive 2014/92 entered into force to ensure that at least one payment service provider in their territory offers a payment account with basic features to consumers legally resident in the Union, irrespective of the consumer's EU place of residence or nationality.
  • 22 Sep 2020 Data transfers to the US in the framework of FATCA and the GDPR
  • 28 Sep 2017 The Commission does not monitor nor collect information on FATCA implementation. No bilateral intergovenment agreement has been found to be in breach of EC law. [1]
  • 08 Dec 2020 The German Presidency of the Council wrote to the US Treasury on the continuing challenges EU residents with U.S. citizenship are encountering in connection with the application of the FATCA-Exchange of Information under Intergovernmental Agreements by the EU Member States.[2] [3]

Intergovernmental Approach

Since April 2011 the Commission and France, Germany, the United Kingdom, Italy and Spain have been in talks with the United States to see ‘if the objectives of FATCA could be achieved in a way that is less burdensome for financial intermediaries, avoids breaches of data protection and other laws of Member States and benefits EU tax administrations’ (letter of 22 February 2012 from Commissioner Semeta to Sophia in ’t Veld) . In a joint statement(1), all parties agreed to ‘an intergovernmental approach’ and to ‘explore a common approach to FATCA implementation through domestic reporting and reciprocal automatic exchange and based on existing bilateral tax treaties’. [4]

As the flow of information from EU financial institutions directly to the IRS that is required by FATCA would violate a number of laws in the EU, the US has requested changes to these laws and EU Member States sought to accommodate these requests in the form of IGAs. Since IGAs are International Agreements they become a part of the domestic laws of the Member States, and indirectly are subject to EU law constraints. As a consequence, the extraterritorial nature of FATCA, in addition to conflict with local laws, also triggers systemic conflicts with different levels of EU law. [5]

Reciprocity

13 Jan 2021 Notes the unequal playing field between countries adhering to the OECD Common Reporting Standard and the US Foreign Account Tax Compliance Act (FATCA); considers, therefore, that the lack of reciprocity of the US FATCA should be examined under the transparency criterion [6]

Taxation

European systems, unlike the United States' system, are traditionally based on taxation according to country of residence rather than nationality.[7]

In the absence of harmonisation at EU level, direct taxation essentially falls within the competence of each Member State. Each Member State is, therefore, free to define the criteria to link a person to its territory with a view to exercising its taxation powers. The only limitation to Member States' fiscal sovereignty lies in the fact that, in the exercise of their respective competencies, they must respect their Treaty obligations and are not, therefore, allowed to discriminate on the basis of nationality or to apply unjustified restrictions to the exercise of the freedoms guaranteed by the TFEU.[8]

Data Protection

03 Nov 2010 The EU Privacy Data Protection Directive of 1995 has been implemented into German law and would impose significant penalties in the case of the unlawful transfer of data. An unlawful transfer of data could include transfers of data for accounts even where waivers have been collected, since the related consequence of closing an account or withholding 30 percent on an account may result in the waiver being deemed to have been signed under duress, therefore resulting in an invalid waiver. [9]

21 Jun 2012 Currently there is no legal basis within EU or national law of a Member State to ensure lawful processing of the data within the scope of FATCA. If this remains the case on the entry into force of FATCA, EU/EEA data protection authorities (DPAs) may consider prohibiting the data processing in question. [10]

European Commission

29 Jun 2011 There are certain aspects of FATCA which are raising concerns within the EU... there are possible issues of conflict with EU and Member States laws, in particular those on data protection. In addition the compliance costs that this legislation would involve for EU financial intermediaries are worrying.[11]

12 Sep 2011 We wish to ensure that the operation of FATCA does not conflict with EU and Member States' laws, including those on data protection. It is for this reason that the European Commission together with the Presidency and some EU Member States, is currently engaged in a dialogue with the US on how to achieve the objectives of FATCA in a way that is cost-effective, business-friendly, adn compatible wtih EU and Member States' Laws... it may be possible to work out solutions that would make FATCA more proportionate and workable for EU residents. [12]

14 Dec 2011 the Financial Account Compliance Act (FATCA) that provides for the exchange of non-resident financial account information [13]

Resolutions

  • 2018/2646(RSP) Resolution on the adverse effects of the US Foreign Account Tax Compliance Act (FATCA) on EU citizens and in particular 'accidental Americans' [14] [15]

Submissions

Petition 1088/2016 The petitioner’s grievance mainly concerns the US’ Foreign Account Tax Compliance Act (FATCA) - as well as the intergovernmental agreements implementing it in the EU - which obliges European and other foreign financial institutions to report to the US tax authorities all holdings of their “US persons” customers. In his view, this law violates various fundamental principles of European law (including the right to respect for private and family life, the prohibition of discrimination and data privacy,) as well as the Payment Accounts Directive.While FATCA was purportedly targeted at fighting tax evasion by US resident taxpayers, the petitioner states that in practice it has affected a large number of European citizens and in particular so-called ‘accidental Americans’, citizens who are nationals both of the US and a Member State, as well as their non-US family members. Because non-compliance with the requirements imposed by FATCA results in heavy fines for financial institutions, many of them responded by avoiding all commercial business with customers presenting any US connection, whether actual or not. The petitioner states also that the extraterritorial application of US laws comes at a very high price for the EU’s economies and companies. He mentions, in this respect, the case of BNP Paribas, which was fined $8.9 billion by the US in 2014, even though it had not breached any French or European laws. The petitioner also expresses his concern about the fact that the exchange of information is not reciprocal and that the use by EU firms of US consultants and accountants is economic espionage under the veneer of legality. [16]

Petition 1470/2020 The petitioner, a pensioner in the Netherlands who changed his bank in November 2018, indicates that he then began to have problems with the Foreign Account Tax Compliance Act (FATCA) and that the Committee on Petitions failed to take any action, despite the fact that the matter had been discussed before it since November 2020. He also refers to Petition No 1088/2016, which was discussed in committee on 10 November 2020 without, in his view, producing any effective results, like a letter to the German President of the Council requesting an update. He calls for the issue to be put back on the agenda of the US Biden administration and for more to be done than seeking a letter from the EU Presidency.

Discrimination

Directive 2014/92 obliges the Member States to ensure that consumers legally resident in the EU are not discriminated against by reason of their nationality or place of residence when applying for or accessing a payment account. To this end, the directive obliges Member States to ensure that at least one payment service provider in their territory offers a payment account with basic features to consumers legally resident in the Union, irrespective of the consumer's EU place of residence or nationality. [17]

Public Hearing

04 Jul 2018 The adverse effects of the US Foreign Account Tax Compliance Act on EU citizens [18] [19]

12 Nov 2019 FATCA and its extraterritorial impact on EU citizens [20]