“Accidental Americans” in Europe against FATCA and its reporting.

Dec 25, 2020 | FATCA, IRS - Internal Revenue Service | 0 comments

The Association of Accidental Americans (AAA) has filed two legal complaints simultaneously in Belgium and Luxemburg to demand the “immediate halt to the transfer of European citizens’ personal data to the United States”.

The claims relate to the countries’ adherence to the US’ Foreign Account Tax Compliance Act (FATCA), which requires US citizens overseas and their foreign financial institutions to report their information to the Internal Revenue Service (IRS) for tax purposes. The association claims the data reporting is “illegal” and breaches European privacy laws.

‘Accidental’ Americans are people who acquired US citizenship only because they were born in the US or their parents were US Citizens, even if they never lived in the US.

Automatic financial data transfer

They are very concerned because of the massive automatic financial data transferred to the IRS every year. The AAA said. “This means that the financial institutions and tax authorities of European Union member states are violating European and national legislation on the protection of personal data and privacy, the violation of these fundamental rights is particularly detrimental to Accidental Americans, who did not choose to be American citizens.”

At the same time, they also complaint of the complex and costly procedures people must go through when renouncing their US citizenship, as many have turned to this solution to get out of FATCA’s remit. As a result of these two legal complaints the EU Council has sent a letter to Internal Revenue Service (IRS) commissioner Charles Rettig to schedule a meeting with the IRS to discuss that situation that EU-US nationals are facing due to FATCA.

One of the big issues to be discuss is the fact that EU residents with a double nationality are faced with unnecessary closure of bank accounts due to the obligations under FATCA, since 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. This has resulted in many banks turning down clients who are also US citizens.

Martin Kreienbaum, Director General of International Taxation and the Head of Germany’s presidency of the Council of the EU, until the end of this month, 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.


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