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Thursday, May 30, 2013

Public Hearing on FATCA at the European Parliament in Brussels

Here is the video of the EU FATCA public hearing that was held in Brussels last Tuesday.  Part II is here.  Many thanks to Tim who put it up on YouTube.  The sound is not always perfect and sometimes it moves from those speaking to the interpreters, but the essentials talks are there.  Transcripts of some of the speeches are being posted over at Isaac Brock in this thread by Just Me.  Also see Lucy Laederich's (FAWCO U.S. Liaison and AARO President) comments on the meeting and read her letter to MEP Sophie in't Veld here.

There were reactions to yesterday's post about some of the events around our participation.   I think we are all genuinely confused by what organizations like the OECD and the EU mean by "public."  For us mere mortals that word says to us that we, the public and the eggs being broken in the making of policy, are welcome to attend and hear what is being said about things that concern us.   Well, that is clearly a misunderstanding on our part.  For the OECD it was, "Yes, you can attend if there is space once everyone else (the bankers and bureaucrats) has a seat."  For EP security it was, "The meeting is public but you have to be invited in order to access the building."

Yes, there was pre-registration process, but this was not mentioned in the draft agenda that was published nor was it clarified in the calls we made to confirm the meeting time, date and place.  We were very fortunate to have someone there who could help us.  Not everyone did and we have a confirmed report of an AARO person who came and was turned away.

About the member of our group who had a chilling close encounter with someone during the meeting, I would like to make it very clear that this gentleman, who held up his passports and had a sign next to his seat, was not being disruptive, nor was he asking to get up and make a speech.  Furthermore, he is an EU citizen, this issue is of direct concern to him, and these were his representatives in that meeting.  There was no reason (and I should know because I was sitting right next to him) for someone to come over and get in his face.

These kinds of things could make one very paranoid.  They certainly lend credence to charges of "policy laundering" - a term that means policy made in secret outside of the open, transparent  democratic process.  Are they afraid of what "the people" will say on this issue?   Perhaps they think we aren't capable of understanding the complexities around information exchange, FATCA and the fight against tax evasion.  Looks like some of them have decided to do our thinking for us.  And when the public is finally made aware of what has been done - and they will be once the search in the EU for the pesky U.S Persons who are not necessarily U.S citizens  begins - will FATCA and an automatic system of information system be presented as a fait accompli for the good of us all?

The EP meeting resembled the OECD meeting in another respect as well - lots of discussion about the importance of fighting tax evasion, the "nuts and bolts" of implementation, and speakers falling over themselves to prove that they are "cooperating" by revealing their own proposals for their own systems.  The most interesting speaker, I thought, was the gentleman from Action Aid who pointed out quite rightly that such systems and the information they contain must be made readily available to developing countries.  He's right.  If such systems exist, then the Latin American, African and Asian governments should be able to access the information they want about their citizens in Europe and North America.   I personally doubt that this is what the proponents of such systems in developed countries had in mind, but it would be hypocritical of them to deny access to the poorer sending countries of many international migrants (and their children) who have found themselves a home in more developed countries. I'm sure Eritrea which has a diaspora tax like the U.S., would be deeply grateful for help tracking down their citizens outside the country in order to get them to pay up.

That is a possible impact on global migrants which is a worthy topic but not the focus of this public meeting. It was very startling to see that the impact of information exchange systems on people who are EU citizens was dismissed as being unimportant.  MEP Sophie in't Veld tried to refocus the discussion with limited success.  She asked about the duals and the Accidentals (those who are not aware of their status as U.S. citizens).  The reply was that member states should be responsible for protecting their rights.  Did the person who responded really think this was a satisfactory answer?  Is he aware of the scope of the problem?  This was a moment where I really wanted to leap out of my seat to ask further questions.  This is what I would have said:
My neighbor who lives in an adjacent apartment building here in France told me that she was born in Texas, USA.  Her parents were in the U.S. for a short time and they (and she) returned to France when she was an infant.  She did not grow up in the U.S., she has never returned to the U.S.,  and she does not speak English.  
Is it up to her local French bank to explain to her that she is a U.S. citizen?    Can that bank legally deny her services (access to a checking or savings account, a retirement account or an "assurance vie" or even pull her mortgage) because she is a U.S. person?    Or will she be required to waive her EU privacy rights in her own country in order to retain access to banking services which she needs in order to lead a normal life? 
What would happen if she was either turned in by someone wishing to collect the IRS bounty on U.S. tax evaders, or her name came up on the list sent by the French government to the American government?   How would France and the EU respond if the American government decided that she indeed was a "tax evader" and went after her for American taxes?   
Is the EU aware that if she wishes to renounce her U.S. citizenship, once she knows she is one, that she may be asked to pay a penalty of 5%  even if she was completely unaware of the ramifications of having been born in the U.S. much less that she might be considered a citizen?
EU citizens in this case, be they duals or accidental U.S.persons, need answers to these questions as do EU citizen spouses of American citizens who have a right to know how this will impact them - will they be considered "guilty by association" and see their private data shooting off to the U.S. or their banks accounts closed, even though they are not U.S. citizens, Green Card holders or U.S. taxpayers?

These are THE questions that regular people, EU citizens and their families, are asking right now.  This forum did not address them adequately.  The reply that this was a matter for member states is a non-answer.  It's not only ducking the question, it's almost a slap in the face to those whose lives will be seriously impacted.

MEP Sophie in't Veld expressed it very well when she said that the question of whether or not to tackle tax evasion has already been decided.  The answer is a resounding "yes" and there is a broad consensus on this.  The MEP's might be very surprised to learn that many of us who have questions about FATCA and its implementation in the EU don't have a problem with the basic premise that states go after people who illegally remove their money from a country with the express purpose of avoiding that country's tax laws.

The issue on the table right now is how to do it.  What are the unintended and very destructive consequences of the proposed systems of automatic information exchange on EU citizens and their families?   I humbly suggest that if they were brought to light, perhaps they could be mitigated.

What we need is a real public forum where these questions can be asked, answered and possible solutions discussed.  We spoke to some people after the meeting and they were very surprised by what we had to say.  They had no idea of the scope of the problems FATCA implementation might pose for regular EU citizens.

The pro-FATCA MEPs seem to be seizing the day and using FATCA to do for Europe what Europe can't do it for itself.  Fair enough.  What is not acceptable is that the only concerns they seem willing to raise publicly is how much it will cost financial institutions and access problems for developing countries.

And the cost to their own citizens?  If they can't raise those questions and get direct answers from their representatives in a truly public forum, then everything I've heard about the EU "democracy deficit" is, alas, true.

Update 31/5/2013:   Tim just posted a link to MEP Sophie in't Veld's blog and this post which has links to the information she asked for and managed to get finally from the European Commission about their contact with the US government on the topic of FATCA.  Very interesting reading.  


Anonymous said...

Thank you so much Victoria and the others who so generously give of their time and money to make a showing in Brussels. It sounds like we need to find out who are the best people to contact in each country, UK, France, Italy, Germany, etc. for these questions to be raised and debated and thrown back to the EU.

Sophie Int'Veld is unique. Wish we could clone her, or at least her energy, here in France.

Tim said...

One comment I will make about Mr Giegold's blog post is it is clearly an attack on one of his fellow MEP's who I think we all know who it is.

A couple of interesting things about this are:

1. It is better in politics to be attacked than ignored.

2. While somewhat off topic it does not take long to find out that Ms In't Veld is extremely socially liberal. Well to the left of even the most left wing American Democrat politicans. I almost felt the blog post was attacking Ms. In't Veld for a being a "Tea Party" member. Now if you now anything about the Republican Party and the Tea Party and their social conservatism the idea In't Veld could be compared to lets say Michelle Bachmann is completely crazy.

3. I would actually like to see some additional attacks by Mr Giegold against Ms. In't Veld. As I said politics it is better to be attacked than ignored.

4. Politically many people especially in Continental Europe still like the idea of bank secrecy especially for themselves. They don't like their taxes being raised because others hid money in Switzerland but I think there to still a group of people who would like to support guilt free bank secrecy.

Tim said...

There are ways to get more public for a setup. You probably won't EU officialdom such as the EU Commission to participate but I think you should look to get a group of people such as yourself and others that know about these issues and a group of interested or sympathetic MEPs to meet informally in Brussels with all of the proceedings recorded for the public record.

If you get interested and sympathetic MEP's they can reserve conference facilities in Brussels and have the proceeding taped.

This is one example below of how these more informally groups work. This noticeably actually had an EU commission rep participating.

In the next few days I will send you and others a very long write-up of what's next so to speak.

The night before the hearing I couldn't sleep because I thought I sent all of you up to Brussels for a complete waste of time. From watching the video and hearing your report I thought it went MUCH better than what I was prepared for.

I really thought there was possibility the hearing would packed with MEP's all of which other than perhaps Ms In't Veld would simply get up and rail about the evils of tax evasion over and over again. Ms. In't would get perhaps one or two questions in at most over the whole hour and a half.

Blaze said...

“Paranoid? Probably. But just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face." (Jim Butcher, Storm Front)

We have every reason to be paranoid--along with very real feelings of scared, furious, confused, panicked, frustrated, betrayed, etc.

Public meetings that aren't public meetings to discuss matters that affect us so fundamentally don't exactly help.

I'm glad you and others were able to put human faces to this visible FATCA demon that is consuming our lives.

Christophe said...

@Tim, "guilt free bank secrecy". This is exactly what the Rubix accords tried to address.
If politicians like that for themselves, then why are they against it for other people?
Why is there a need to shame people. With Rubix, the states would still get their revenue. Since they have reasonable penalty structures in Europe, and paths to compliance, raising money through penalty is not the issue.
Why this need for "name and shame"?

Christophe said...

I think it's unfortunate that the consequences on people were not addressed, barely suggested, and that the only harm they mentioned was their privacy violated - when in fact, because of the draconian penalty structure that the US is having, much more is at stake.
I would have like Sophie to bring that much more openly to the debate.
Privacy concerns are nothing compared to the real monetary consequences that can be at stake for people like your neighbor, Victoria.
And that's not even talking about any possible discrimination they can face in their own country.

Just Me said...

Excellent Post Victoria... I have been spreading it around...

Christophe said...

"They certainly lend credence to charges of "policy laundering" - a term that means policy made in secret outside of the open, transparent democratic process."

That's exactly what Sophie reproached the commission, and corroborated by the fact that all the documents she received were blacked out. What do they not want the public to know??? I wonder what could be se secret and controversial about these negociations that they want to hide it from the public.
After all, all they discussion is data exchange.

Victoria FERAUGE said...

@anonymous, It was our pleasure. It was a great trip and I was so happy to get out of town and to meet so many interesting people. Our group was just amazing to watch. And getting to spend a few minutes with Ms. in't Veld was a real honor. We also met the MEP from Luxembourg and, wow, was she a kick. Funny, charming and beautiful.

@Tim, Yep, it's a good sign when people feel obliged to respond and justify their position. It means that awareness is growing.

It did go much better than I ever dreamed. And we learned so much. We even got some free advice about next steps. Yes, there is no reason we couldn't organize our own forum. We could also get a petition going. This meeting opened the door to possibilities.

@Blaze, Thanks so much for the space on the Maple Sandbox highlighting this event. There were moment when I thought "they really are out to get us." :-)

@Christophe, Ms. in't Veld sure tried and I don't think she's going to give up. What she said, however, did prompt those who spoke after to all least give a nod to the democratic process and citizen's rights.

@Just Me, Thanks so much. I crossposted this morning, as promised, at Isaac Brock.

Tim said...


FYI those documents posted are still only parts of the full request made by Ms. In't Veld. However if you read her blog post translating from Dutch to English she will post additional documents as she receives the. It is quite interesting that the documents clearly acknowledge the US's citizenship based tax policies but make no argument on public policy grounds about their legitimacy. That is our "opening" along with bank account closure issue. If every EU bank was required by law allow accounts to be opened by any US citizen resident in Europe even in the context of full FATCA reporting I think that was cause a lot of banks to choke on the subject of FATCA.

Tim said...

Additionally Ms. In't Veld has a written question currently outstanding with the EU Commission.

It will be fascinating to get the response hopefully in the next week or two.

Christophe said...

@Tim, do you know if they have to answer her by law, or if they can ignore her.
If I remember well, she had to threaten to go to court to get access to the FATCA documents she requested.

Anonymous said...

I wanted to leave MEP Giegold this response to your posting on his website. I'm still waiting for him to agree to publish it. Until then, for you:


Dear Mr. Giegold,

The issue is not merely an issue of taxation, but as much of an issue related to citizenship, and the treatment of persons (regardless of their citizenship) when residing/banking/living on EU soil.

I bring to your attention two examples that directly illustrate the “collateral damage” in Germany:

There is a clear discrimination worldwide based on citizenship, regardless of residency. We have anti-discrimination laws based on race, gender, etc … but all nations are free to discriminate against providing basic services (banking, investment accounts) based on the citizenship that a person may hold, even if they legally are allowed to reside in the given (EU) nation. Is this just? Can you consider looking into anti-discrimination legislation that ensures people are treated equally independent of their citizenship? If this is addressed, then FACTCA “collateral damage” may be less.

Seniorexpat said...

The URL submitted by Tim in the Update for Commission discloses documents on US tax agreements with EU Member States doesn't work any more. Here is the right one now.