The European Committee on Petitions (PETI) on 31 October sent a notice to members regarding petitions by four victims of US FATCA law and US tax law. Two of them are from the Netherlands.

After a summary of the four petitions and the several earlier Commission replies PETI received, on pages 9 and 10 of the notice the further reply from the Commission received on 30 October 2024 is shown:

8. Further reply from the Commission, received on 30 October 2024
Update to Petitions 1088/2016, 1470/2020, 0323/2021 and 0394/2021

The Commission’s observations

With regard to the overall impact of US’ Foreign Account Tax Compliance Act (FATCA) on financial services, contacts between the EU institutions and the US administration are ongoing. In particular, FATCA is discussed by the Commission services with high-level representatives of the US administration (US Treasury Department) in the context of the biannual EU-US Joint Regulatory Forum to further remedy and mitigate the multiple problems faced by EU citizens covered by these FATCA agreements.

In the Forum meeting on 4-5 December 2023, the Commission asked the US administration to consider more permanent and comprehensive relief for credit institutions on providing US Tax Identification Numbers (TINs) for customers presenting limited links with the US and with no meaningful tax liability there. This would ensure greater legal certainty and facilitate access to financial services for so-called accidental Americans. The US Treasury Department has responded that work is underway to develop a permanent relief to the issue of missing TINs.

The US Treasury Department is awaiting initial data from the current temporary relief (IRS Notice 2023-11) in order to develop a permanent solution which would also address possible abuses. At the Forum, the Commission also welcomed consideration given to reducing the fee for those seeking to renounce their US citizenship from the current US$ 2,350 to US$ 450. These issues were also considered in a letter from the Spanish Presidency (Chair of the Working Party on Tax Questions) to the US Treasury in September 2023 and discussed during a bilateral meeting between the US side and the Spanish Presidency in November 2023 [8].

With respect to data protection, the primary responsibility to monitor and ensure compliance with the EU’s data protection requirements lies with national data protection authorities (DPAs) and the courts. In May 2023, the Belgian DPA adopted a decision [9] in which it ruled that the processing and transfer to the US of the personal data of so-called accidental Americans in Belgium pursuant to the FATCA intergovernmental agreement was in breach of the General Data Protection Regulation (GDPR) [10] .

Following an appeal by the Belgian government against the DPA’s decision, the competent Belgian Cour des Marchés overturned the DPA’s decision, referring in particular to insufficient reasoning provided to support the DPA’s findings [11] . The case has therefore been referred back to the Belgian DPA, which is currently handling it. In addition, following an earlier decision in July 2019 [12] in which the French Council of State concluded that the French FATCA agreement with the US was not in violation of the GDPR, the French Council of State adopted a decision in January 2024 [13] that rejected an appeal against a decision of the

French DPA in which the DPA refused to suspend data transfers under the FATCA agreement.

The Commission is closely following further these developments and in other Member States where similar proceedings are taking place before DPAs and courts. To ensure coherence of the interpretation and application of the GDPR, it is important that the Commission is able to fully take their position into account. In this respect, the Commission is also closely following any follow-up discussions and/or actions at the level of the European Data Protection Board (EDPB, the body bringing together all national data protection authorities in the Member States).

With regard to the exemption of US citizens from the PRIIPS rules [14] under FATCA, US persons resident in the EU who are retail investors may have access to US domiciled investment funds, provided such funds meet certain conditions. As regards non-EU investment funds, Directive 2011/61/EU [15] (the Alternative Investment Fund Managers Directive (AIFMD)) qualifies such funds as alternative investment funds. Under Article 43 of the Directive, Member States may allow the marketing of all or certain types of alternative investment funds to retail investors in their territory. Since January 2023, undertakings for collective investment in transferable securities (UCITS) funds are subject to PRIIPS Regulation and have to provide a PRIIPs KID, same as for other investment products. Before, UCITS were subject to disclosure requirements in the form of a Key Investor Information Document (KIID), which has been replaced by the PRIIPs KIDs, applicable on a transversal basis, aiming to enable investors to compare products and make an informed decision.

Conclusion

The Commission continues to work with the US authorities and other EU institutions and bodies in various fora on issues affecting EU citizens covered by these FATCA agreements.

 

[8] see point 78 of Ecofin report to the European Council on tax issues: https://data.consilium.europa.eu/doc/document/ST-16411-2023-INIT/en/pdf
[9] https://www.autoriteprotectiondonnees.be/publications/decision-quant-au-fond-n-61-2023.pdf.
[10] OJ L 119, 4.5.2016, p. 1–88
[11] Judgment of 20 décembre 2023 (2023/AR/801).
[12] https://www.legifrance.gouv.fr/ceta/id/CETATEXT000038801233?isSuggest=true.
[13] https://www.legifrance.gouv.fr/ceta/id/CETATEXT000049066538.

It is disappointing that the European Commission is unwilling to follow through with the Americans and ensure that the fundamental rights of EU residents of US nationality are respected