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Monday, November 18, 2013

A Review of the France/US FATCA IGA

FATCA is an American law that requires all foreign financial institutions to turn over lists of people with connections to the U.S. (US Persons) and their financial information.  Generally, this kind of thing is illegal in most countries and a clear violation of basic privacy rights assured by many nation-state charters and constitutions. The intergovernmental agreements (IGA's) were necessary to making FATCA fly outside the U.S. because they set up a governmental framework that mitigates some (not all) of FATCA's problems AND offers at least some level of reciprocity - information exchange going in both directions and not just from the rest of the world to the United States.  

Well, it finally happened.  Was there really any doubt?  Last week France finally signed a FATCA Integovernmental Agreement with the United States to implement FATCA (Foreign Account Tax Compliance Act) in France.  I believe that brings the number of IGA's signed to a grand total of 10 out of the 190+ countries in the world.  Not a great score for a system that is being touted by the U.S. as THE worldwide model for information exchange.  But I'm sure Treasury broke out the champagne anyway because before France signed things were looking pretty bleak.

One step forward, two steps back.  Citizens in two countries are pushing back:  Canada (still negotiating an IGA) and Switzerland (they signed a Model II agreement).  In Canada organizations like the Isaac Brock Society have been organizing protests and articles about FATCA are starting to appear in the mainstream media:  there was this article in Macleans and this segment on CBC's The Current.  Will they succeed in stopping FATCA in Canada?  Who knows, but they are having a great deal of success in raising awareness in Canada and they are keeping the heat on the politicians responsible for negotiating with the US.

In Switzerland  another citizen organization, le Lobby des Citoyens, has started a referendum movement to repeal the Swiss FATCA IGA.  This is one to watch closely.

Now that we have the context, let's have a look at the French IGA.  What follows here comes from my notes after a careful reading.  I've been immersed in this subject for some time now and I can tell you that I still don't understand everything I read here.  Where I am unsure, I raise the question in the hopes that someone reading will help clarify. In any case, please bear in mind that I am not an international tax lawyer and you should not simply take my interpretation as gospel.  Seek other sources as well.

This document, this intergovernmental agreement, lays out a framework for an automatic exchange of bank account information between the two countries. In the first section both countries affirm their common interests and frame this agreement as an extension of the tax treaties that already exist.

Reportable Accounts 

"Reportable Accounts" are the accounts that fall under this agreement.  There is one definition for accounts in the U.S. and another for the accounts in France:

In France a U.S. Reportable Account is "a Financial Account maintained by a Reporting French Financial Institution and held by one or more Specified U.S. Persons or by a Non-U.S. Entity with one or more Controlling Persons that is a Specified U.S. Person."

This means all the accounts in France held in French financial institutions that are owned by US Persons (US citizens, US residents and immigrants, Green Card holders and others) or that are held by an entity (like a company) and there is at least one US Person with authority over that account.  Some examples:

A checking account held by a US citizen living in France.
A checking account held by a French person living in the United States
A company account owned by a French company that has a US Person in management or as a partner who has authority over the account.

In the U.S. a French Reportable Account is "a Financial Account maintained by a Reporting U.S. Financial Institution if: (i) in the case of a Depository Account, the account is held by an individual resident in France
and more than $10 of interest is paid to such account in any given calendar year; or (ii) in the case of a Financial Account other than a Depository Account, the Account Holder is a resident of France, including an Entity that certifies that it is resident in France for tax purposes, with respect to which U.S. source income that is subject to reporting under chapter 3 of subtitle A or chapter 61 of subtitle F of the U.S. Internal Revenue Code is paid or credited."

A "Depository Account"  is a basic commercial checking or savings account.  These accounts become  Reportable Accounts if over 10 USD is paid out in interest to a resident of France over the course of a year.  For other kinds of financial accounts these are reportable if the individual holding the account is either a resident of France or an entity that is a French tax resident.

The language is a bit confusing here.  Nowhere do I see a definition of "resident" or "resident for tax purposes." Are they the same thing or does this paragraph treat people and entities (which I assume are companies) differently?  

The Data

On the U.S. side American financial institutions will provide: name, address, French taxpayer identification number, date of birth, account number, the identity of the financial institution and the interest, dividends and US source income credited to the account.  Not all the income will be reported.  The IGA cites two US laws which limit what the US can legally provide to the French:  Chapter 3 of subtitle A (witholding for Non-resident Aliens or Foreign Corporations) and Chapter 61 of subtitle F of the U.S. Internal Revenue Code.   

On the French side French financial institutions will provide:  name, address, US taxpayer identification number, the account  number, the identity of the financial institution, the account balance or value at the end of the calendar year, the interest paid and (this was a real surprise):

"the total gross proceeds from the sale or redemption of  property paid or credited to the account during the calendar year or other appropriate reporting period...."

and

"in the case of any account not described in subparagraph 2(a)(5) or 2(a)(6) of this Article, the total gross amount paid or credited to the Account Holder with respect to the account during the calendar year or other appropriate reporting period with respect to which the Reporting French Financial Institution is the obligor or debtor, including the aggregate amount of any redemption payments made to the Account Holder during the calendar year or other appropriate reporting period."

So the US asked for and got reporting on all property sales in France that involve US Persons and information on loans made to such persons.

Again, I'm not a lawyer or a tax expert but it seems that the United States did much better in the negotiations than the French.  That is quite a lot of information that French banks will be handing over, and what the French government is getting in return is, well, it's something but not anywhere near full reciprocity.  The US will not be providing account balances and will not give information on all US source income - just certain kinds within the limits of US law. 

On the other hand the The French fisc is pretty smart (and very efficient) and I predict that they will make the most of the information they get.  It is not hard, for example, to extrapolate from an interest payment, roughly how much is in that account.  If it looks tempting then the French simply ask the Americans for more information about that particular account using the standard information exchange provided for under the existing tax treaty. 

Timing

On the French side only the basic account information (name, address, account numbers and balances) are required for 2014. The rest is due in 2015/2016.  On the US side all the information will, in theory, be provided starting in 2014.

The big question right now is whether or not the US will actually be in a position to start the information exchange next year.  There is growing domestic political opposition to FATCA reciprocity.  There is a lawsuit by a banking association and some American politicians are not pleased at the idea that the banks in their jurisdictions will be having to gather this information for foreign governments.  Impossible to know what will happen but it does introduce an element of uncertainty and the American political process being what it is today, this could be a major problem.

Confidentiality

A lot of concern about this information falling into the wrong hands.  Bank personnel will be responsible for compiling the data into lists which will then (under the Model I government-to-government agreement) be passed along to the tax authorities who will then send that information to the other country's revenue service.

Granted the banks already do this kind of reporting to their local tax authorities.  However, this information is destined for a foreign government so there are legitimate concerns about  how to safeguard the data and worries that the data will be used for purposes other than tax compliance.  The IGA does address this:

"All information exchanged shall be subject to the confidentiality and other protections provided for in the Convention, including the provisions limiting the use of the information exchanged."

What is this Convention?  It's the tax treaty between France and the US.  Article 27 Exchange of Information says:

"Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment, collection, or administration of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by this Convention. Such persons or authorities shall use the information only for such purposes."

This would seem to preclude using FATCA information for purposes other than the enforcement of each country's respective tax laws.  This contradicts proposals by a US politician to share this information with other agencies in the US government like Homeland Security.

Furthermore, it is a bit troubling to read that this IGA allows the banks to outsource the compliance burden - use third-party service providers to fulfill the terms of the IGA.  The banks remain ultimately responsible but surely there is a risk that some information will "want to be free."

Identifying US Reportable Accounts

This appears in the annexes and is the outline of the procedure for identifying the US accounts to be reported by French banks under FATCA.  This is where it all gets a bit sticky because here FATCA becomes visible to the customer.

Pre-existing accounts:  The banks can choose not to review or  report an already existing individual or depository account held by a US person if the account balance is under 50,000 USD (or 250,000 USD for Cash Value Insurance or Annuities).

If the account exceeds 50,000 USD but is still under 1 million USD then it is called a "Low Value Account"  and the French bank must search its records for the following U.S. indicia:

Identification of the person as either a US citizen or resident
A U.S. place of birth
A U.S. address or telephone number
Account transfers to the US
Power of attorney or signatory authority granted to a person with a US address

That is a pretty wide net.  Clearly many French citizens will appear.  For example, a French family with a child going to school in the U.S.  Or an "Accidental American" - someone who was born in the US but left as a child and never sought a US passport as an adult. And, of course, the duals - those with both French and American nationality.

So is that the end of the story and will these people be treated as "reportable" to the US?  Not quite and this is where the IGA gets very interesting indeed.

The French bank (not the French or US government mind you) can elect not to report those individuals born in the US (US citizens under US law) if the following applies:

1.  Self-certification that the person is not a US citizen or tax resident;
2. Proof of citizenship or nationality in a country other than the United States;
3.  A copy of an American Certificate of Loss of Nationality; or
4.  Lacking such a certificate a reasonable explanation for why that person does not consider him or herself to be an American.

Think about that for a moment.  The bank, a commercial financial institution, is responsible for determining an individual's citizenship status.  That is beyond bizarre.  That is sheer abdication on the part of both governments.  It's passing the buck and putting the burden (and the risk) onto institutions whose expertise and authority (I think we can all agree) is not in adjucating questions of citizenship status.

 Unbelievable. This is going to be interesting to watch.

New Accounts:  Different reporting thresholds here for any account opened on or after July 1, 2014.  The bank is not required to report depository account balances or Cash Value Insurance Contracts values under 50,000 USD.  All accounts over those thresholds are subject to  "self-certification" as part of the broader process of opening an account.  From what we've seen other banks doing, this will probably come in the form of a questionnaire that asks about any US connections the potential account holder may have. In short, they will be asking people to 'fess up to some sort of relationship to the US however innocuous.  There is no mention in the IGA of the privacy waivers we've heard about in other countries (these are documents US persons are required to sign that waive for example, their EU privacy rights).

Identifying French Reportable Accounts

Interesting enough, there is absolutely nothing I could find in this IGA that instructs American banks on how to track down their accounts holders to be reported to the French government.

Does this mean that Americans banks get to make their own rules and use their own procedures? Inquiring minds would really like to know....

Exempt French Financial Institutions and Products

At the very end of the IGA is the Annexe II (starts on page 47) which lists the FFI's and financial products that are exempt from FATCA reporting.  I will let you read the document for yourselves but I'll end this post on a high note and give you a few of the products that are exempt:

- Livret A and Livret Bleu

- Livret de Développement Durable

- Livret d’Epargne Populaire

- Livret Jeune

- Plan d’Epargne Logement and Compte d’Epargne Logement

- Plan d’épargne populaire / PEP

 Bonne lecture, my friends, and after you've cogitated over all this, please come back with your comments and questions.


37 comments:

bubblebustin said...
This comment has been removed by the author.
bubblebustin said...

Thank you for sorting through France's IGA for us, Victoria. I'm still hoping I don't ever have to read Canada's.

They're leaving it up to a bank employee to decide what a "reasonable" explanation is?

Either a bank is going to set the bar low - basically rendering FATCA ineffective in detecting US persons, or they'll set it high - turning the screening process into more of an inquisition.

This is more than just interesting, it's surreal.

bubblebustin said...
This comment has been removed by the author.
Christophe said...

Great summary. Would you mind telling us what you understood about the treatment of recalcitrant accounts?

How is a US bank going to ask for proof of residence in France in order to report the info?
Are they going to just ask for your green card/ work visa as proof you're resident in the US and therefore your account is not subject to reporting. Somehow, for the process to work, it needs to be linked to some official immigration document.

Christophe said...

Have you looked into the legal aspect of things in France - i.e. is this legal for France to transfer the data of French citizens who have nothing to do with the US, except being married to an American?

P. Moore said...

Seems to me the French motivation here is really about trying to scour around for more bits of revenue and not really caring about the collateral damage, being US persons or the heavy compliance burden on the FIs. It will be interesting to see if this can work once implementation in both the US and France is seriously attempted.

I note that you noted it is intended to be an extension of existing tax treaties. You don't have to be very bright to figure out this is an attempt to avoid having to get approval from any legislative body. I wonder how that will play out in both the US and France.

Thanks for breaking this down, Victoria.

A broken man on a Halifax pier said...

Do I read this correctly that the French IGA exempts anyone born on the US who has a with a non-US citizenship, eg. duals? In Canada, this would mean that FATCA would affect far, far fewer people.

bubblebustin said...

What am I missing here. I thought that US residents with foreign accounts were FATCA's intended target.

bubblebustin said...

Wouldn't their passport's stated US birthplace recapture them?

CarnetsSeattle said...

This is all very confusing. Reading this, I still have no idea if I am reportable or not. (Not your fault though, just the legislation is unclear).

Anyway, France just dropped the ball. Assholes.

Victoria FERAUGE said...

@bubblebustin, Not sure what would constitute a good explanation. Is it the ability of the potential client to spin a good story? :-)

I suspect that the bar will be very low. Who wants to get into a fight with a French citizen by inplying that he or she is really a closet American?

@Christophe Good question. I assume that if someone refuses to sign or cooperate then the account will be closed. What might happen after that? A lawsuit? Maybe.

The proof of residence is exactly what I don't see in that IGA. What would a French person in the US have to provide to a US bank to trigger the reporting to France? It's a mystery.

@P. Moore Allison Christians has some great analysis over at her blog Tax, Society and Culture. It's not clear what exactly these IGA''s are. If they are treaties they must be ratified by the US senate. If they are competent authority agreements then they dont' as far as I know. What is clear is that governments are doign their best to be sure that none of this becomes known to the average person until its all in place and a fait accompli. Sophie in't Veld calls this "policy laundering."

@Broken man, What the IGA seems to say is that anyone who can produce a non-US passport gets a pass. Yes, that would effectively eliminate the reporting on a quite a few US citizens.

Daniel Kuettel said...

Well, I'm gladthatI don't live in France! But, then again, I'm no longer an American so this doesn't matter for me. Nevertheless, I'm still confused as to why neither France or America wants equality, transparency and tax justice.

Anonymous said...

" What the IGA seems to say is that anyone who can produce a non-US passport gets a pass. Yes, that would effectively eliminate the reporting on a quite a few US citizens."

Unambiguous US Place of Birth:
You might want to check the IGA, does it contain the word "ALL", as in the financial institution must maintain records of "ALL of the following". (The 4th one is an alternative to the 3rd). In that case, individuals with a US place a birth who have a non-US passport are NOT exempt.

YesWeHaveNoBananas said...

Victoria, I can't even imagine how long this all took you to research ! One thing still perplexes me. From what I'd read on reportable accounts, I never understood that the Livret A, Dévelopment Durable or others were exempt from reporting since they provide interest. This may need to be cleared up. Also, if the $50,000 limit on accounts reportable by French banks is really the case, it would be quite simple for those who have more to split it among different banks. This would seem too good to be true as a way to get around being "snitched on".
As far as what accounts U.S. banks would have to report to France, it seems that non-interest-bearing accounts would not be reported. Yet France has a stiff law requiring all foreign bank accounts, even non-interest-bearing, to be reported on French tax returns. So how does this all square ?

Anonymous said...

Your article inspired me to look at the US-Japan IGA, which was signed last June. It is Model 2, meaning Japanese financial institutions report directly to the IRS. Interestingly, the number of institutions that are not required to report seems fairly large:
1) "Local banks," meaning those with more than 98% of deposits being held by residents of Japan (this has to be the majority of the banks, given that they will not open accounts for non-residents). Note that Japanese tax on interest in bank accounts is automatically withheld.
2) ISA accounts (sort of like an IRA, but more limited in term).
3) Specified Accounts -- ordinary brokerage accounts which automatically calculate and withhold all Japanese taxes due.

None of these are good vehicles for tax evasion, of course. Surprisingly, the US side seems to have actually grasped this fact.

Of course, Japan gets nothing in return from the US, beyond a promise to continue responding to specific requests, as already done under the tax treaty. This is irksome, but perhaps was the trade-off for exempting what looks to be a large fraction of the accounts that ordinary people hold, and for letting the Japanese government stay out of the mechanics of reporting.

Victoria FERAUGE said...

@Loic, It is confusing, isn't it? Now if you and I are confused, I have to wonder if there isn't going to be a lot of confusion at the banks. Between the must report and the optional reporting, the ambiguous English and so on you need a lawyer to really understand every nuance.

@anonymous, I looked again and the IGA does not say ALL but perhaps it's implied? So self-certification plus a non-US passport and an simple explanation for why one doesn't have a CLN. And frankly since the banks are not citizenship experts just tell them you lost US citizenship when you became French and the inefficient American bureaucracy isn't efficient enough to issue you a CLN on time (or something like that).

@YesWehave no bananas, Two readings and the better part of a day. I was surprised that the list of exempt products was so long. Yep, the livret A is exempt and the PEL and even the employee savings accounts that you get through your company.
Yes, France does have her own foreign bank accoutn reporting similar to the FBAR.

@anonymous, Cool! Would you like to do a guest post on the Japan one? It would be great to have reviews of both the model I and model II


Anonymous said...

Hi Victoria,

"@anonymous, Cool! Would you like to do a guest post on the Japan one? It would be great to have reviews of both the model I and model II"

Sure, though I would need some time to read it more carefully, and my schedule is a bit impacted at the moment. Maybe next week-ish?

Anonymous said...

Victoria
Thanks for your review.

I don't know if there are multiple versions circulating of the French IGA. I have copied Annex I, Paragraph B.4.a. 1 to 4 of the version I have below. Note the "and" at the end of subparagraph a.2. I would interpret this as meaning that for anyone with a US place of birth BOTH a non-US passport AND a CLN must be provided unless a reasonable explanation for not having a CLN is given. It will be interesting to see how this is written in the French version of the IGA and the accompanying French guidelines.

If I understand correctly, this IGA must now be submitted to the Senate and the Assemblée Nationale for ratification?

---------

Where the Account Holder information unambiguously
indicates a
U.S. place of birth
, the Reporting French Financial
Institution obtains, or has previously reviewed and maintains a
record of:
(1)
A self
-
certification that the Account Holder is neither
a U.S. citizen nor a U.S. resident for tax purposes (which
may be on an IRS Form W
-
8 or other similar agreed form);
(2)
A non
-
U.S. passport or other government
-
issued
identification evidencing the Acco
unt Holder’s citizenship
or nationality in a country other than the United States;
and
(3)
A copy of the Account Holder’s Certificate of Loss
of Nationality of the United States or a reasonable
explanation of:
(a)
The reason the Account Holder does not have
suc
h a certificate despite relinquishing U.S.
citizenship;
or
(b)
The reason the Account Holder did not obtain
U.S. citizenship at birth

Ellen said...

Thanks so much for this summary! I'm still looking for the French version to make sure they say the same thing. (Somehow, I have become wary.)
I think you've seen that I've shared the facebook link pretty widely.
I was sorry not to see you yesterday evening. I'll try to call you around lunch time.

Victoria FERAUGE said...

@anonymous, That would be wonderful! Thank you. Next weekish is perfect. It would be so useful to have another IGA to compare.

@anonymous, Yep, you're right and the "and" makes all the difference. Still it's that "reasonable explanation" that introduces a pretty serious loophole. I don\t see a definition anywhere of what constitutes an acceptable excuse for not having a CLN. So what is a bank supposed to do with that? Read up on all the twists and turns and intricacies of US citizenship law so they can make a detemination? No way. Hell, there are people here I meet who think I lost my US citizenship when I married my French husband and moved here. :-) The banks will do what is easiest and the least trouble and that will be to accept anything that sounds remotely plausible. That's my take on it. But perhaps there will be more guidance given to the banks and this will change.

@Ellen, So good to talk to you and thanks for circuclating the post.

And a question about the next step: does parliament have to ratify? Good question - let's check it out....

Anonymous said...

This might help with the Review re France, and also includes Japan;

'Cumulative List of Non-US Pension Funds Exempted by
FATCA Intergovernmental Agreements (IGAs)'

http://www.groom.com/media/publication/1224_Cumulative%20List%20of%20Non_US_Pension_Funds_Exempted_by_FATCA_Intergovernmental_Agreements_IGAs_November_2013.pdf

badger

Victoria FERAUGE said...

@badger, Ah, thank you. That is very useful indeed. Deserves its own post, I think.

Anonymous said...

I also found this quite interesting: The Happy Compliance video on how to ferret out and expose those with US 'indicia'.

http://fatca.thomsonreuters.com/resources/media-library/identity-for-fatca/

badger

Anonymous said...

And I hope this Responsible Officer liability issue torments the Happy Compliance collaborators in Financial institutions who have been working furtively behind the scenes to manoeuvre FATCA IGAs into place in Canada and elsewhere:

http://www.advisor.ca/tax/tax-news/whos-on-the-hook-for-fatca-136765

badger

Patrick said...

The French IGA looks very similar to the UK IGA. <50,000 USD then the bank does not have to report to HMRC.

I can't believe the HMRC is going to be charging full-steam ahead with this in January. We've had austerity, cuts, etc less people in public sector doing the same job. The staff at HMRC aren't paid by the USG. I would imagine that the FATCA-related work would be very much on the back burner.

Anonymous said...

FATCA FAQs instructional video:

http://www.youtube.com/watch?v=Y-EVF7CZt_w

'FATCA Explained in 4 Minutes...'

Somebody send this to the Treasury and State Department.

This is how we see the US.

Anonymous said...

Just come across this. Several points of clarity. There are only two model agreements for an IGA - model 1 where the financial institutions report to their own authorities(the majority including France), and Model 2 where they report directly to the IRS(e.g. Switzerland). In both cases there are workarounds for data privacy conflicts, with or without explicit consent from the account holder depending on local law. In both cases the local law is expected to be amended to bypass any current legal obstacles to this reporting. In model 1 - by enacting law changes to make this reporting compulsory to the local government - there is no possibility of it conflicting with local law as it becomes it, and the reporting is to the local tax agency. In Model 2 e.g. Switzerland, the Financial Institutions are required to obtain secrecy waivers from their clients - which is already true if the clients are US persons investing in US investments.

In both models there is a most favoured clause which means that any changes to a model IGA, signed subsequently, that make it less onerous will be assumed to have been in all other signed agreements. The main difference between IGAs for different countries is annex II which lists exempt organisations and products, which obviously varies country to country.
As far as the banks determining US citizenship is concerned they DO NOT have a choice. They must search for the indicia as listed by yourself, and where they are found, they must presume that the account is reportable unless the account holder proves othwerwise on request. No institution will choose to report accounts without first requesting proof one way or the other from the account holder.
If you were born in the US, the default position of the US law is that you ARE an US citizen unless you can prove otherwise. The main acceptable proof is the CLN, although the regulation and IGA also mentions a reasonable explanation of why you haven't got one, or didn't take up US citizenship. It is not clear what is reasonable here...
The important point though is that presence of 'indicia' is a prompt to obtain proof of US status, not absolute proof of such.
Finally, yes - each government has to make changes to their own law to make the promises made in the IGA legally binding on Financial Institutions in their own jurisdiction. The agreements are in fact agreements to change the law on each side. Local law cannot be changed by signing agreements with other governments or agencies.

Anonymous said...

About “Identifying US Reportable Accounts” and the 50,000 USD reporting threshold:

(FATCA Agreement, page 33): “Unless the Reporting French Financial Institution elects otherwise, either with respect to all New Individual Accounts or, separately, with respect to any clearly identified group of such accounts, where the implementing rules in France provide for such an election, the following New Individual Accounts are not required to be reviewed, identified, or reported as U.S. Reportable Accounts:
1. A Depository Account unless the account balance exceeds $50,000 “

Let's consider the wording of this sentence : “Unless the Reporting French Financial Institution elects otherwise…. where the implementing rules in France provide for such an election”.

Could this mean that, if "French implementing rules" allow it, Banks could elect to report every account (with US indicia), even if below the 50000 $ treshold ?
After doing some research, the answer might be “YES”
It is a matter of what will be the “implementing rules” France decides on (if any).
Example: in New Zealand Inland revenue website (http://taxpolicy.ird.govt.nz/publications/2013-commentary-arearm/fatca), amendments to the IGA have been made to specifically address this issue:
“In the context of the IGA, the Government is of the view that only accounts that are actually required to be reported on should be submitted to Inland Revenue. In this regard, for example, paragraph II.A of Annex 1 of the model IGA contemplates that a person can elect to report on accounts even if they are below the reporting threshold set out in the IGA. This election can only be made when the implementing rules provide for this election. The effect of section 185F(6) and (7) is that the implementing rules will not provide for such an election – this also applies to other similar “low value threshold” elections contained in the model IGA. Therefore making the choice to report on all accounts below the threshold is not a “permitted choice” for the purposes of the proposed legislation.
Example
A financial institution has nine pre-existing depository accounts held by “US persons” that are individuals. Three of those accounts would be reportable except they have a balance of less than US$50,000, with the others having balances above that threshold. The financial institution does not have the option of reporting on all nine accounts, it must only report on the six that exceed the minimum threshold set out in the model IGA.

FYI: Some countries published their implementing rules for FATCA already and most can be found online (cf. New Zealand).

Victoria FERAUGE said...

@Anonymous, A very good analysis. Yes, the language seems to say they can report all accounts if they choose. I suspect some will.

It's just a whole lot easier to sort and report based on one criteria as opposed to many. A lot simpler to just add a checkbox "US Person" as opposed to "US Person" if accounts =/> 50,000 USD (and that must be converted from Euros according to a fluctuating exchange rate).

What a mess. I wouldn't do it and I suspect that the banks aren't going to go through that hassle either....

Anonymous said...

IRS Commissioner recognizes excessive burden on the “non-willful non-compliant’

http://www.aaro.org/fatca/448-lucy

paul-harvey du bois said...

The World Governement has arrived!

paul-harvey du bois said...

The World Government has come to power.

Georges Kaufman said...

My bank in France has decided not to sign on, and has notified me that they will be closing my account, even though it is way below the $50K reporting limit. Now I have to find another bank that will let me open an account in France without travelling there.

Anonymous said...

Georges, if you are a French citizen, you might want to use the French penal code that specifically forbids refusal to provide a service on the basis of nationality
Code Pénal 225-1 and 225-2 seem to fit. I am not a lawyer but you might want to play around witht this (for fun)

adrien said...

@Victoria
From what I can tell most people seem to assume the IRS reciprocates by getting lists of non-resident accounts from US banks, and as you noted, the IGA is vague as to how they would go about this. Do you have any news on this?
I wonder if the IRS might be circumventing this issue in part, and instead might be
supplying the French with US bank account data taken from the tax forms filed by US citizens abroad (ie schedule B of your 1040).

Anonymous said...

"The French bank (not the French or US government mind you) can elect not to report those individuals born in the US (US citizens under US law) if the following applies: ...
2. Proof of citizenship or nationality in a country other than the United States;
..."

Does this mean that as a dual French American citizen the bank can choose not to report me? If so I need to print out the legal information and bring it to the bank with me so I can open a bank account again! Thank you for the information!

I was kicked out from the BNP last year after they realized I was an American citizen. Unfortunately, I was abroad for a project and was not able to fly back to France to open a bank account right away so I spent several months bankless. I finally flew back, tried to open a bank account at a bank I was confident would accept me (I already know Americans with bank accounts there), only to receive a refusal letter a month later. Fast forward to today, 6 months later, and I am still bankless because I am still abroad with no time to return to France and open an account. Frustrating.

Beth Dillard said...

Oh no this is bad news for me. I am a US citizen and starting a renovation on a property in Provence. I plan on opening a bank account , compte non-resident in October . I will need this to pay utilities as well as insurance and wire money over for construction costs . Is there a bank more friendly to US citizens that are non- resident? I will not want to keep more that 50K in the account. My brother purchased an apartment in Paris last year and told me of this problem . He said for me to ask the notaire I am using to help me. This is how he was able to open his checking account in Paris.