[RD] Europe to Dictate US Citizenship Laws

[BvBPL]

The European Parliament recently passes resolution 2018/2646(RSP), a measure that, in part, paves the way to redefining who is and who is not a citizen of the United States. The resolution calls upon the European Union to open negotiations with the United States with the goal of permitting US citizens to revoke their citizenship with significantly greater ease.

The avowed goal of this measure is to ease banking restrictions imposed upon dual US-EU citizens by financial institutions. Many such parties face difficulty banking because financial institutions must comply with FATCA, a US law that requires reporting on the financial assets of US citizens. Many banks are choosing to limit the number of US account holders they take on, or even close accounts of current holders, rather than comply with the reporting requirements of the law.

I feel for these people. However, the citizenship-revocation solution purposed as part of the resolution is an unnecessary overstep by the EP. The more effective means for European government to ensure these dual citizens can easily do business with European banks is to, wait for it, regulate European banks. European banks are in the EU’s territorial influence, so having the EU say that these banks should simply ease the restrictions on US account holders is the most appropriate course of action; the EU need not resort to attempting to dictate the citizenship of US citizens. What’s more, telling the US what to do in terms of its own citizens isn’t a particularly productive course of action in the best of times.

If you think that dual US-European citizens should be able to avail themselves of the banking services provided to others then I encourage you to write to your MEPs. Encourage them to examine laws and regulations aimed towards ensuring local banks are acting in a non-discriminatory fashion regardless of joint citizenship.

 

[SS-18 ICBM]

You might want to think deeply about the fact that you are trying to dictate European banking laws.

 

[BvBPL]

If the issue is with banking laws than the solution should be a banking law solution, not a citizenship one.

 

[Kyriakos]

You might want to think deeply about the fact that you are trying to dictate European banking laws.

Indeed, who does he think he is? Germany?

 

[Hrothbern]

a US law that requires reporting on the financial assets of US citizens

Why does the US government require this ?

 

[civvver]

But revoking one's us citizenship is voluntary is it not?

 

[BvBPL]

Why does the US government require this ?

To ensure assets aren’t hidden from the tax man. The same reason why Europe requires it through its own Common Reporting Standard, which fulfills the same function as US FATCA and was based upon FATCA. Which is a hypocrisy that sticks in one’s craw, that the EP moans about FATCA but European-driven CRS is basically the same thing (but with worse enforcement, which is why compliance is easy for banks).

 

[Arwon]

Wait why is it bad that people be able to relinquish their citizenship

 

[Cheetah]

Why does the US government require this ?

I hadn't heard of this before, but it does sound like a good thing.

The issue at the heart of the matter is that the United States are anal retentive about controlling the world's finances. Which is obviously a good thing when they finally get around to sanctioning bad guys™, but can be a real bother for people who just run a small company or have to unfortunate situation of being or having been citisens of the United States.

But revoking one's us citizenship is voluntary is it not?

Yes, but not quite as easy as one would expect. It's hard and expensive enough that American expats are trying to create political pressure to help solve the problem, instead of just "doing it".

The Wikipedia section for renunciation of citisenship from the United States is pretty big, and according to that, there is a non-trivial cost involved: $2,350 USD in fees!

However, the citizenship-revocation solution purposed as part of the resolution is an unnecessary overstep by the EP. The more effective means for European government to ensure these dual citizens can easily do business with European banks is to, wait for it, regulate European banks. European banks are in the EU’s territorial influence, so having the EU say that these banks should simply ease the restrictions on US account holders is the most appropriate course of action; the EU need not resort to attempting to dictate the citizenship of US citizens. What’s more, telling the US what to do in terms of its own citizens isn’t a particularly productive course of action in the best of times.

What are you on about??

Banks and other services don't want to deal with US expats because the regulations of the United States are anal retentive. We can't regulate European banks to break US law, nor should we require banks to take on customers which carry an exhaustive cost with them. The ball is really with the US, which could make it easier and cheaper to renounce ones citisenship, or to be less crazy about the reporting.

In any case, the EU is intending to negotiate with the US, simply because they have some responsibility for European citisens who also happen to be US citisens. There's no overstepping anything here.

 

[BvBPL]

Wait why is it bad that people be able to relinquish their citizenship

I don’t think anyone here is saying that it is bad. (well, yet. I guess. I mean, someone could make that case.)

What should be avoided, however, are countries interfering with the citizenship laws of other countries to fix a problem that can be resolved without resort to such changes. The core problem is how European banks treat dual US-European citizens. The EP is well within its powers to regulate the behavior of those banks. The laws of US citizenship are generally beyond the purview of the EP. As such, the EP should focus its efforts on banking regulation to ensure equal access to those services, rather than fooling around with US citizenship laws.

 

[BvBPL]

We can't regulate European banks to break US law...

That's why mandating that banks provide equal access to their services while complying with the law is the better solution.

...nor should we require banks to take on customers which carry an exhaustive cost with them.

Close regulation of banking is a pretty critical role of government. That said, accepting your statement arguendo the solution should be addressed towards compliance costs, not citizenship.

 

[Hrothbern]

To ensure assets aren’t hidden from the tax man. The same reason why Europe requires it through its own Common Reporting Standard, which fulfills the same function as US FATCA and was based upon FATCA. Which is a hypocrisy that sticks in one’s craw, that the EP moans about FATCA but European-driven CRS is basically the same thing (but with worse enforcement, which is why compliance is easy for banks).

Could also be terrorist data.

Regarding tax
This FATCA US law is of July 2014. The Dutch government and the US have made an Intergovernmental Agreement on that and the real issue here is that a US citizen needs a so called US-TIN number that the Bank needs to report the figures to the US. However the procedure for US citizens to get their US-TIN number seems not to work that well and in July 2017 this was still so much of an issue that Dutch Association of Banks and the Dutch Minister of Foreign Affairs have again asked the US tax department to clarify.

So.. that is the track record so far on this issue between the US and a small well organised country that has always had an excellent political and practical relation with the US, and also BTW the first country in the world to recognise the USA.
EDIT come to think of it: this recognising the USA was reason for the UK to declare war on us,

That is not exactly encouraging for some other members of the EU27 that have less practical interest in such an exchange and less affinity.

 

[BvBPL]

The solicitation of the TIN is a key issue. A great number of banks did not obtain TINs from account holders when the accounts in question were opened. Now, FATCA requires that banks obtain and report those TINs. Many banks have attempted to solicit the TINs but have not yet obtained them in all circumstances. Probably some portion of the banks have not been diligent in soliciting the TINs.

Failing to report a TIN where required is nominally out of compliance for FATCA. However, the US has provided numerous means by which an out of compliance bank can avoid any problems. What’s more, many countries, including the Netherlands, have provided domestic work arounds for the TIN solicitation issue.

Where compliance with FATCA may be an issue for the banks, it is within the power of the European governments to establish means by which the banks can avoid penalties. A compliance problem demands compliance solutions; those solutions are available without telling another state what its laws on citizenship should be.

(and, by the way, solicitation of TINs is also required under CRS.)

Regarding the breadth of FATCA agreements, basically all of Europe has agreed to it and signed treaties to that effect.

 

[Kozmos]

Why don't your write your representatives and make them relax your stupid laws. Thread title is also totally misleading. Nobody is being forced to do anything.

 

[Hrothbern]

Why are the Cayman Islands, etc excluded from this US-TIN ?
Not the procedural excuse in the quote, but the reason.

Most financial institutions were caught off-guard when regulations published in December essentially required re-documentation of all US accounts by the end of 2017 [!!!]. While IRS officials had indicated that this requirement would be modified, Notice 2017-46 provides very welcome, clear relief. Most importantly, withholding certificates signed before 1 January 2018, will not be deemed invalid simply because they do not contain an FTIN or a reasonable explanation for the FTIN’s absence (reasonable explanation). Furthermore, no FTIN (or reasonable explanation) will be required for accounts held by residents in jurisdictions that do not issue FTINs (identified in the Notice as Bermuda, the Cayman Islands and the British Virgin Islands1) or accounts held by residents in jurisdictions with which the US does not have an in-force agreement for the exchange of tax information.

https://www.ey.com/gl/en/services/t...in-and-report-taxpayer-identification-numbers

I believe very much in a tight international financial control on tax evasion
and more shady areas like corruption, terrorism financing, etc.. (should add meanwhile influencing the democratic election process).

But that should cover ALSO the palm tree and other tax paradises !!!

Look at the money flow from US investors to some of these dots, especially the Cayman Islands.

 

[civvver]

I mean I don't really see an issue here, renunciation is voluntary and cumbersome right now, if the EU is trying to negotiate with the US to speed that up who really cares.

 

[Farm Boy]

Ok, so we should regulate the thieves there as well as in Europe? Sounds pretty legit.

 

[BvBPL]

Cayman Islander banks are not excluded from reporting US TINs or FATCA responsibilities generally. Instead, the Cayman Islands, unlike most nations, does not issue TINs to its citizens. Where a FATCA-reportable account may be owned by a Cayman Islander account holder, say when the account is held jointly by a US national and a Cayman Islander, then the TIN of the Cayman Islander cannot be reported as it does not exist.

 

[BvBPL]

I mean I don't really see an issue here, renunciation is voluntary and cumbersome right now, if the EU is trying to negotiate with the US to speed that up who really cares.

People should care because changing the renunciation rules isn’t the right fix for the problem. The purposed change to the renunciation rules only resolves the problem for those parties who are interested in renouncing their US citizenship. The same problems will continue to exist for those dual citizens who choose not to renounce their citizenship; the renunciation change would do nothing for them. Requiring that parties renounce their citizenship to make banking easier is a ridiculous solution by any stretch. It's government by the absurd.
--
Imagine that fleas on dogs were transmitting a disease that was making dog owners in town sick. The renunciation change being called for is like the town deciding that everyone can choose to shoot their dogs without being fined for discharge of a firearm. People who choose not to shot their dogs will probably still get sick. The better solution is to treat the actual problem, that being fleas or the difficulty in obtaining banking services.

 

[uppi]

People should care because changing the renunciation rules isn’t the right fix for the problem. The purposed change to the renunciation rules only resolves the problem for those parties who are interested in renouncing their US citizenship. The same problems will continue to exist for those dual citizens who choose not to renounce their citizenship; the renunciation change would do nothing for them. Requiring that parties renounce their citizenship to make banking easier is a ridiculous solution by any stretch. It's government by the absurd.

If you had actually read the resolution, you would have noticed that this is exactly what the resolution calls for, as the second point, no less:

2. Calls on the Member States to ensure the full and correct transposition of the Payment Accounts Directive, in particular Article 15 and Article 16 thereof, and to guarantee the right for all EU citizens to have access to a payment account with basic features, irrespective of their nationality;

It is only the last point you seem to be somehow hung up on:

10. Calls on the Council to mandate the Commission to open negotiations with the US on an EU-US FATCA agreement, with a view to ensuring the full reciprocal exchange of information, upholding the fundamental principles of EU law, as well as the Payment Accounts Directive, and allowing EU ‘accidental Americans’ to relinquish their unwanted US citizenship on a no‑fees, no‑filings, no‑penalties basis;

The resolution wants to comprehensively solve the problem. One part of that is to regulate banks. Another part is to implore the US to end this insidious practice to make it extremely hard to renounce American citizenship for people who have never lived, worked or studied in America, who don't have any of the US identification numbers, might have limited English language skills, and whose children cannot apply for US citizenship. Those people aren't Americans at all, except for having an American parent and the US only considers them citizens, because it may be able to extract tax money from them.