Editor: the following is a letter sent to the European Parliament on behalf of many of us, by Lucy Laederich of FAWCO. This letter has been posted on the FAWCO website.
May 24, 2013
Sophia in ‘t Veld
European Parliament
Bat. Altiero Spinelli - 10G317
60, rue Wiertz / Wiertzstraat 60
B-1047 Brussels
Re: Public hearing on “The fight against tax evasion - FATCA as a step towards international automatic exchange of information”
Dear Ms in ‘t Veld,
I work with two organizations of Americans abroad: FAWCO (Federation of American Women’s Clubs Overseas), with over 15,000 members in 40 countries worldwide, and AARO (Association of Americans Resident Overseas), with some 1,000 members, the vast majority of whom reside in the European Union, where an American law is having a direct and growing impact on EU citizens. Our organizations and their partner organizations represent the estimated 6-7 million Americans living and working abroad and have considerable experience, as you can imagine, in dealing with what we realize are the unintended consequences of the Foreign Account Tax Compliance Act you will be discussing on Tuesday afternoon.
Obviously, the population we have been hearing from for the last three years, with increasing distress, is Americans who clearly must have “foreign” financial accounts in order to live, pay their bills, plan for retirement and conduct normal business in the countries where they reside.
However, there are two groups equally affected who deserve your attention, I believe, as you and your colleagues explore the ramifications of FATCA implementation.
The first are the European spouses and domestic or business partners of Americans living in the EU.
Because of FATCA reporting requirements, these people are seeing their personal and business accounts, if jointly held with the American, reported to a foreign government. Not only does this raise serious questions of privacy but, as I know from experience in the organizations I represent, it generates major discord in marriages and partnerships. The worrisome results range from divorce or dissolution of joint business ventures to renunciation of nationality on the part of the American to protect the European spouse/partner, and dangerous financial vulnerability for Americans removed from joint investment and retirement accounts.
The second are the “accidental” Americans, many of whom may even be unaware that in legal terms, they are or could be considered Americans. These are the children born in the United States during temporary stays on the part of their parents, or children of dual-national couples who have then been brought up in Europe and may never even have possessed an American passport. For these individuals to be required to comply with reporting requirements that have nothing to do with them, and for their banks to be required to investigate, for example, whether a parent was American or where the child was born, is again a major breach of privacy but also an absurd waste of time and human resources.
One of the possible solutions advocated by the two organizations I represent is to redefine the concept of “foreign” in the FATCA context. If, as an American living in France, I hold a bank account in the United States to receive my US pension and pay my US taxes, this account is not “foreign”, because I am American. Also, if I hold an account in Bordeaux, where I live, in order to pay my bills and taxes and to save for my retirement, this account is not “foreign” because I am legally and fiscally domiciled and pay taxes in France. If, however, I hold an account in Luxembourg for investment purposes, or in the Cayman Islands for tax evasion purposes, this account is clearly a “foreign” account that should be reported, not only to the French authorities but to the IRS.
We urge you and your colleagues to consider the adverse impact of FATCA implementation on many EU citizens and to work with the IRS and Treasury Department not to repeal FATCA, which was justifiably designed to prevent tax fraud, but to step back and correct its many unintended effects on perfectly law-abiding citizens of both the United States and, most importantly for you, the European Union.
Very sincerely,
Lucy Stensland Laederich, FAWCO U.S. Liaison and AARO President
No comments:
Post a Comment