The European Council has sent a letter to Internal Revenue Service (IRS) commissioner Charles Rettig to schedule a meeting between EU member states, financial institutions, and the US regulator.
The Council is pushing the meeting to address the impact that the Foreign Account Tax Compliance Act (Fatca) is having on “EU residents with a double nationality who are faced with unnecessary closure of bank accounts due to the obligations under Fatca”, Martin Kreienbaum, director general of international taxation at the EU Council, said.
The US legislation sets out that any US citizen living abroad is bound, alongside their foreign financial institutions, to report data to the IRS for tax purposes.
The US is one of two countries in the world who has a citizenship-based taxation system, together with Eritrea.
This has resulted in many banks turning down clients who are also US citizens, forcing many to relinquish their American nationality.
Still very complex
Kreienbaum added: “In this meeting, the EU representatives would like to address and illustrate the scope of the problems that EU residents with a double nationality are confronted with.
“Moreover, the representatives of the financial institutions can share some practical examples of the issues they encounter, the number of citizens this affects and what could provide them with greater assurance in refraining from freezing or closing bank accounts.
“Some of the persons affected by the current situation are willing to relinquish their US citizenship. The IRS has already provided relief regarding the tax treatment of these cases.
“The EU representatives would like to bring to your attention that the same persons are nevertheless sill facing high renunciation fees and a very complex procedure that makes it extremely difficult for them to follow through with the renunciation.
“We are aware that the latter issue does not lie within the responsibility of the IRS. However, the EU representatives would highly appreciate your assistance in transmitting these concerns to the relevant US authorities and advocating for measures aiming at further simplifying the expatriation.”
