updated 2:57 PM CEST, Sep 21, 2023

U.S./European group claims EU discriminates by barring 'U.S. Persons' from Covid bonds

U.S./European group claims EU discriminates by barring 'U.S. Persons' from Covid bonds Florian Pircher

A recently-formed alliance of "accidental Americans" in the Netherlands and a group calling itself Bi-National European Investment Bankers (BiNEIB) is urging the European Parliament to end what they call the "discriminatory, fundamental rights-violating" practice of prohibiting U.S. citizens resident in the EU, as well as EU/U.S. dual citizens, from being able to purchase so-called EU SURE and Next Generation EU (NGEU) bonds.

They claim this discrimination is "due to FATCA" (the 2010 anti-tax evasion law, formally known as the Foreign Account Tax Compliance Act") and affects, they add, some 1.2 million EU/U.S. citizens as well as "hundreds of thousands of solely U.S. citizens." 

The accidental Americans are an already-existing group known as the Nederlandse Accidental Americans (NLAA), while little is known about the BiNEIB.

Accidental Americans typically refers to individuals who are considered to be American only as a result of having been born in the U.S. to non-American parents, but grew up elsewhere, most often in the countries where their parents were from, and where they live now.

Many have become aware of their U.S. citizenship status only recently, when informed by a bank, as growing numbers of such institutions say they are unable to continue to have Americans who are resident outside of the U.S. as clients.

The two groups say the EU's prohibiting of Americans resident in Europe from being able to buy these bonds is one of the key complaints at issue in their recently-filed European Parliament Petition Committee (PETI) petition, which they are hoping to explain in some depth, if time permits, during a scheduled "virtual" PETI hearing, being coordinated in Brussels, today.

The group's petition, as well as two other recently-filed and also FATCA-related petitions, are due to be presented today to an undisclosed number of members of the European Parliament, in a hearing that may be viewed live online, beginning at 1:45pm Central European Summer Time.

The hearing will be able to be accessed as it takes place on the European Parliament's live webstreaming portal, and afterwards at another European Parliament webstreaming site.

More information may be found by clicking here, and scrolling down to item No. 17. 

(Currently the four un-named individuals behind the petition, which is formally identified as "Petition No. 0323/2021 by G.L. (French), bearing four signatures, on alleged infringement of certain rights of bi-national European/American citizens resulting from FATCA", are requesting that their allotted five-minute slot on Sept. 2 be increased to 15 minutes.) 

EU bond programs unveiled in 2020

The two EU bond programs were announced by the EU last year, and have begun to be rolled out to investors across the EU by the European Commission and the European Council, respectively, to help Europe to recover from the Covid-19 pandemic.  Market observers have said that the SURE and NGEU bonds are in the process of making the EU into one of Europe's biggest bond issuers.

The problem for Americans resident in Europe, however, the petitioners said in a press release this week, is that in the bonds' EU-regulated prospectuses, "a 'U.S. Person' is defined by the U.S. Tax Code of 1986, in which a 'U.S. Person' is a U.S. citizen.

"This constitutes a gross breach of the Charter of Fundamental Rights (article 21.2) and the TFEU [Treaty on the Functioning of the European Union] (article 18), which prohibit discrimination on the grounds of nationality," they add.

"As a result of the Capital Markets Union, all financial documentation (namely KIDs [Key Information Documents], prospectuses, marketing material and websites) is strictly regulated by EU law.

"At least 21 of the world's major asset management companies working in the EU follow the European Commission and Euratom [European Atomic Energy Community] lead, and discriminate [against] us too, with total impunity."

In a posting on their website, https://eupetition-endfatca.eu, the NLAA and BiNEIB further explain that they are willing to make available to members of the European Parliament's Petitions Committee, members of the European Parliament, journalists and others some 1,300 documents that they say reveal discrimination "by major European, British and American asset management companies." 

Discrimination cited in French
finance journal opinion piece 

In making their case for their claims of formalized discrimination by the EU against would-be EU bond purchasers who are considered to be "U.S. Persons," the NLAA and BiNEIB point to an opinion piece published in a recent issue of the Revue Internationale Des Services Financiers, a quarterly French publication, by a professor of law at Sciences Po Law School, Paris.

The article, by Régis Bismuth, refers (in French) to what Bismuth calls "discriminatory practices that occur on a wide scale in EU-regulated financial documentation by many [EU] financial institutions and is, needless to say, contrary to EU law." (The English-language version may be found by clicking here.) 

"The discriminatory mentions appearing in the EU's and Euratom's [European Atomic Energy Community] bond issues are only the tip of the iceberg," Bismuth adds in his article, the title of which translates as "European Bond Issues: Is The Commission Participating In An Enterprise of Discrimination Based On Nationality?"

Bismuth concludes his 1,025-word article by noting that "for a long time now, the [European] Commission has ignored the protestations of those dual citizens – more or less Accidental Americans, but above all, fully-fledged European citizens – when they have reported repeatedly in Brussels the discrimination of which they are victims in the financial sector (since the advent of FATCA IGAs).

"It is regrettable to observe that in this matter, the Commission now extends its role beyond that of just a neglectful guardian of the treaties."

More information about the NLAA and BiNEIB's petition and their arguments having to do with it may be found on their website, https://eupetition-endfatca.eu.

FATCA-related issues for
Americans resi in Europe

As this and other publications have been reporting for years, various other efforts aimed at addressing some of the FATCA-related issues impacting Americans resident in Europe have also been attempted, most of which are still active.

These include a 2019 legal challenge against the British tax authorities' sharing of her data with the U.S., by a UK-resident American known as "Jenny"; long-running efforts to bring about change in the way the EU permits member states to enforce FATCA, on behalf of "Jenny" and others, on the part of Mishcon de Reya partner Filippo Noseda;  and the often-innovative efforts of Fabien Lehagre's Paris-based Association des Américains Accidentels (AAA), which has launched a series of formal legal actions and complaints since it was founded in 2017.

The latest of these, in a case which is ongoing, is a legal complaint against the U.S. State Department over what the AAA and its 10 co-plaintiffs argue is the illegal and unconstitutional cost of renouncing one's U.S. citizenship. Prior to the introduction of FATCA, they argue, renunciation had been free. 

Meanwhile, as reported, a couple of European Court of Justice (CJEU) decisions last year were also seen as putting European Union officials on notice that FATCA was in need of revisiting, which, earlier this year, the EU Data Protection Board formally told EU member states to do, in the form of a "review" of their international agreements "that involve international transfers of personal data, such as those relating to taxation (e.g. to the automatic exchange of personal data for tax purposes)."

Previous PETI hearings on FATCA in 2019, 2020

As reported, PETI held a full two-and-a-half-hour hearing on the subject of FATCA, and its effects on accidental Americans specifically, in November, 2019, in response to a petition submitted in 2016 by a French "accidental". A second took place, mostly online, last November.

Among those testifying during both hearings were a number of members of the European Parliament, including Sophie in 't Veld of the Netherlands, a longtime advocate on behalf of Europe's accidental Americans, as well as officials from the European Commission and the European Data Protection Board. 

In March, a U.S. Treasury Department official was reported to have agreed to a meeting on behalf of the Treasury with the EU officials to discuss FATCA-related issues, including those that these dual nationals are struggling with. This was in response to an invitation sent by EU officials the previous December, as reported. No further mention of such a meeting is known to have been made.  

RELATED stories: 

PETI petitioner calls on EU to exempt EU-resident 'U.S. persons' from MiFID II/PRIIPs rules

Issue of alleged FATCA-related breaches of EU law poised to move to center stage, as latest PETI petition filed

AARO expat survey: '40% say they've had a U.S. bank refuse their business'

Charles Schwab telling clients in UK, Europe their accounts must move or be transferred by year’s end

UK-based wealth platform Nutmeg reported closing doors to American clients, in wake of JP Morgan buyout news

Goldman Sachs still unable to accept U.S. expats as Marcus clients in UK, citing FATCA 

French 'accidentals' protest over use of Brad Pitt in ad by bank named in discrim suit

German bank to close its doors to 'U.S. persons' from March, citing FATCA reporting burden