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EU hiding behind ‘bureaucratic excuses’ on Fatca

The EU Commission (EC) has no jurisdiction over the Foreign Account Tax Compliance Act (Fatca), the European commissioner for economic and financial affairs has acknowleged in his response to a letter from the US Treasury.

Paolo Gentiloni said that unless the legislation goes against EC law, the Commission has no remit in opposing it. 

“To date, there is no evidence of any such breach,” Gentiloni wrote. “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. 

“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. 

“The negotiation on an EU agreement with the US on automatic exchange of information would be conditional to a mandate by the [European] Council.  

“So far, the Commission has not received any indication that such a mandate is being considered,” he added. 

Harsh critiques 

But not everyone was satisfied by Gentiloni’s account of the situation. 

Dutch member of the European parliament (MEP) Sophie in ‘t Veld wrote to the commissioner to highlight the struggle faced by so-called ‘accidental Americans’, who acquired US citizenship either directly from their parents or because they were born in the United States. 

“Following extensive correspondence with the Commission over the last eight years on all aspects of Fatca and its negative consequences for accidental Americans, who are EU citizens; I have so far unfortunately not noticed any feeling of compassion with their situation,” in ‘t Veld said. 

“Despite the fact that their bank accounts are being – [or] threatened to be – closed down by banks afraid of the penalties imposed by the US, the Commission very regrettably pretends that there is no problem at all, hiding behind bureaucratic excuses.” 

Ensuring protection 

The MEP continued that issues regarding data protection had already been raised, and that the European Data Protection Board stated in February 2019 that guarantees should be put in place. 

In ‘t Vold added: “[The Board] announced the publication of guidelines on the minimum guarantees to be included in international agreements with non-EEA countries which, once published, would be ‘a useful tool also for the evaluation of intergovernmental agreements between member states and the US government on Fatca to ensure their compliance with the [General Data Protection Regulation (GDPR)]’. 

“These guidelines were adopted on 18 January 2020 and give important minimum safeguards for international agreements on data transfers, which are also highly relevant in the context of intergovernmental agreements between the member states and the US.” 

The guidelines state: 

  • Any transfer of personal data to third countries or international organisations must, in addition to complying with chapter V of the GDPR, also meet the conditions of the other provisions of the GDPR. 
  • Principle of data minimisation: data transferred and further processed must be adequate, relevant and limited to what is necessary in relation to the purposes for which they are transmitted and further processed. 
  • Transparency obligations: information about available redress mechanisms and contact details for submitting a dispute or claim. 
  • Independent supervision mechanisms must be provided. 

Different treatment 

In ‘t Vold argued that none of the agreements that the EU has with the US respect the data protection principles and that member states should revoke them as a result. 

Gentiloni’s belief that ‘nationality ties’ have consequences, did not sit well with in ‘t Vold either, who criticised the Commission for treating accidental Americans as US citizens first, and Europeans second, by offering them “less protection”. 

It is high time that the Commission, which has the role of protecting EU citizens’ rights, finally takes the problems severely affecting accidental Americans seriously and acts,” she added. 

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