French banks could be forced to close 40,000 accounts of 'accidental Americans'
French banks have warned that they could be forced to close up to 40,000 accounts belonging to US citizens because of ongoing difficulties with American tax regulations.
The president of the French banking association the Federation Bancaire Francais Laurent Mignon has written to finance minister Bruno Le Maire laying out his concerns about international banking accord FATCA - which obliges banks across the world to notify US tax authorities of all accounts owned by US citizens.
It was intended to combat tax avoidance, but has ended up snaring many US citizens of modest means who live in other countries, as well as 'accidental Americans' who have citizenship through family connections and may never have lived in the USA.
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An extract from the letter from France's bank federation president Laurent Mignon to finance minister Bruno Le Maire
The requirement has created an administrative headache for French banks, which can face fine up of to 30 percent of their US revenue if they do not comply.
Among the information they must supply is the account holder's US tax number - but many 'accidental Americans' have been previously unaware of their need to file a tax return in the US and therefore do not have a tax number.
A short-term concession negotiated between France and the US means that French banks can - until December 31st 2019 - supply just the individual's date of birth if they do not have a US tax number.
But after this waiver expires, Laurent Mignon warns that French banks may face no choice but to close the accounts of all 'accidental Americans' - thought to be about 40,000 people.
He writes: "As from 1 January 2020, including for accounts opened before that date, if they are unable to provide such information, banks may be unable to fulfil their reporting obligations to the tax authorities.
"French banks may therefore be required to close the accounts of the customers concerned (before December 31st 2019).
"To date, approximately 40,000 accounts have been impacted. Otherwise, banks would be likely to be subject to very significant financial and reputational sanctions."
Laurent Mignon. Photo: AFP
Accidental Americans are in the main French citizens who also have US citizenship, often without knowing it.
Some of them had left America in the days after being born in an American hospital. Some of them didn't even know they were technically American. Some of them don't even speak English.
The reason that the number of people affected is so high is that the USA automatically makes almost all children born within its borders or to an American parent US citizens from birth. It also, unlike most other countries, bases taxation requirements on both citizenship and residency.
It is therefore perfectly possible for people to be US citizens - and therefore required to file a tax return in the country - even if they have never lived or worked in the US.
Many people living in France were completely unaware of their tax requirements in the US until the introduction of FATCA, when their details were suddenly passed on to US authorities.
Since its introduction, many Americans have reported increasing difficulty in opening bank accounts in France, to the extent that the Accidental Americans Association has launched legal action against French banks, after a 'sting' operation showed that several were refusing to accept American customers.
However these proposed measures would go further and close down accounts that people already own, creating huge problems for people left with no account.
It is thought that across Europe there are around 300,000 'accidental Americans' and the European Banking Authority has lobbied Washington on the issue.
France's president Emmanuel Macron has also said he is aware of the issue, telling one of his MPs who has raised the problem with him that "the dialogue continues".
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The president of the French banking association the Federation Bancaire Francais Laurent Mignon has written to finance minister Bruno Le Maire laying out his concerns about international banking accord FATCA - which obliges banks across the world to notify US tax authorities of all accounts owned by US citizens.
It was intended to combat tax avoidance, but has ended up snaring many US citizens of modest means who live in other countries, as well as 'accidental Americans' who have citizenship through family connections and may never have lived in the USA.
READ ALSO
- Who are France's 'accidental Americans' and why are they suing big banks?
- Accidental Americans in France increase the pressure over US tax bills
An extract from the letter from France's bank federation president Laurent Mignon to finance minister Bruno Le Maire
The requirement has created an administrative headache for French banks, which can face fine up of to 30 percent of their US revenue if they do not comply.
Among the information they must supply is the account holder's US tax number - but many 'accidental Americans' have been previously unaware of their need to file a tax return in the US and therefore do not have a tax number.
A short-term concession negotiated between France and the US means that French banks can - until December 31st 2019 - supply just the individual's date of birth if they do not have a US tax number.
But after this waiver expires, Laurent Mignon warns that French banks may face no choice but to close the accounts of all 'accidental Americans' - thought to be about 40,000 people.
He writes: "As from 1 January 2020, including for accounts opened before that date, if they are unable to provide such information, banks may be unable to fulfil their reporting obligations to the tax authorities.
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