Prologue: Retired Dutch 'accidental' pilot celebrates FATCA court victory — But: … https://t.co/SYaNmlHuSE via @YouTube
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) September 11, 2022
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The world as of September 2022 … The following tweet (which generated a very lively discussion) references a letter sent by US Treasury to the Dutch Government.
Aug 29/22 letter from US Treasury and paragraph reinforcing US support for @citizenshiptax and #FATCA as enforc tool. #Americansabroad who are serious about solving "the problem" instead of "their problem" must aggressively support end of #CBT. Stop thinking "carveouts" will do. pic.twitter.com/C5JSqRIeu1
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) September 9, 2022
The letter includes statements that bear on:
– the Dutch banks and their FATCA obligations
– FATCA
– Citizenship taxation
– the US commitment to imposing US taxation on Dutch residents who happen to be US citizens.
The main point of the letter seems to be to give the Dutch banks a “Blessing From Their US Overlords” that a notice of FATCA non-compliance will not presumptively follow from allowing US citizens (who live in the Netherlands) to have basic depository accounts (to receive pay and pay bills).
But, let’s get real. Under no conceivable interpretation of the FATCA IGA could the fact of having US citizen customers (with or without SSNs) cause the Dutch banks be in noncompliance with their FATCA obligations.
The Dutch banks simply do NOT want to deal with US citizen clients.
This sentiment is entirely reasonable and is a natural consequence of US regulatory overreach. The letter from Treasury is asking that the Dutch banks accept the worst of both worlds. First, to allow Dutch residents, who happen to be US citizens, to have a bank account at a bank of their choosing. Second, to behave in a way that is contrary to the business interests of the bank (as having US citizen customers certainly is). The arrogance displayed in Treasury’s letter is sufficient reason to be wary of having US citizen clients period.
The FATCA IGAs don’t require the Dutch banks to close “US Accounts”
1. As per the clear terms of the US/Netherlands FATCA IGA, Dutch banks are perfectly free to exempt all “depository accounts” with balances of less than $50,000 USD from FATCA obligations.
2. Even if the Dutch banks were in breach of FATCA obligations, the breach is of no consequence unless US Treasury (A) notifies the Netherlands of that non-compliance and (B) gives them 18 months to cure the noncompliance. (It’s perfectly obvious that Treasury can simply issue a proclamation that residents of the Netherlands are exempt from FATCA. But, history indicates they are not willing to do this!) In other words: FATCA noncompliance is not the problem. It’s Treasury’s reaction to FATCA noncompliance that is the problem.
Therefore, it’s clear the reluctance to have US citizen customers is not principally motivated by a concern of FATCA noncompliance. It’s because the US Government has ensured that US citizens are “toxic (taxic) carbon life forms” and it’s better to avoid them. The “toxicity” (taxicity) is caused by US citizenship taxation – specifically the US attempt to impose worldwide taxation on US citizen Dutch residents who live and pay tax in the Netherlands. In other words: the problem is caused by US citizenship taxation and not by FATCA.
Note that the following updated sentence reflects a change from the original sentence to reflect the comment below
Nevertheless, the threat of bank account closures and the need to respond to the immediate harmful effects of US citizenship taxation (including FATCA), have caused many Americans abroad including accidental Americans in the Netherlands, France and elsewhere to concentrate on the effects of citizenship taxation (FATCA) rather than on citizenship taxation itself. (See the comment below …)