The Paris-based Accidental Americans Association today filed another lawsuit – its second in a little more than a year – in a Paris court, alleging that the way France's banks are complying with the U.S. tax law known as FATCA is causing them to be discriminated against by making it difficult if not impossible for them to maintain a French bank account.
"This new complaint will force the courts to open an investigation into the discriminatory practices [being used] against accidental Americans," Fabien Lehagre, founder and president of the AAA, told the American Expat Financial News Journal, adding that 278 AAA members were party to the legal action.
He said the AAA had decided to file a second complaint because the courts had failed to investigate the claim the AAA filed last year.
Dupond-Moretti & Vey, a Parisian law fim, is handling the AAA's latest case, as it did last year's.
The suit is the latest development in a long-running battle that hundreds of dual American/European citizens, who typically no longer have ties to the U.S. even though they may have been born there, have been struggling with for years in trying to maintain bank accounts and access to other financial services in the countries in which they now live.
This is because the U.S. has been steadily moving to require more information from non-U.S. banks and financial institutions around the world about their U.S. citizen (and thus, under the U.S. system, U.S. taxpayer) clients, which it is able to do under FATCA (officially the Foreign Account Tax Compliance Act), an anti-tax evasion law signed into law by President Obama in 2010.
Because FATCA carries with it significant penalties for those "foreign financial institutions" that fail to comply, including a 30% withholding tax on the U.S. source income of any institutions found to have failed to report to the U.S. on any of their U.S. citizen account-holders, many banks simply refuse to have any American clients at all, saying it's not cost-effective for them to do so.
Others won't have American clients who are unable to provide them with so-called "Tax Information Numbers" (TINs, typically Social Security numbers), which, as of Jan. 1 of this year, the American authorities officially now require from all non-U.S. banks about their American account-holding clients.
The AAA, known in France as l'Association des Américains Accidentels, argues that French citizens who have lived in France almost their entire lives, and whose only connection to the U.S. is that they were born there or a parent is American, should not be considered "American" for the purposes of implementing FATCA.
violation of French law
As reported here last March, the AAA's complaint last year alleged that by not allowing them to open accounts at the online banks in question – including Societe Generale SA's online Boursorama, and an online operation of ING Group NV – the banks were actively discriminating against its members and other "accidentals", which they noted was a violation of French law.
The banks argue that the costs of complying with FATCA are too high, and that they would have to charge higher fees for all their account-holders if they were to accept Americans as clients. For online banks, which seek to keep fees low, this is seen as more of an issue than for some other banking products.
Around seven months after the AAA filed that lawsuit, the organization went public with its criticism of a then-new French television advertisement (pictured left), featuring the American film star Brad Pitt, which showed him appearing to make use of an account card issued by Boursorama, which, the AAA noted, technically wouldn't actually have accepted Pitt as an account-holder because of the fact that he was a U.S. citizen.
The issue of American citizens being refused bank accounts in Europe became increasingly heated last year because of the approaching end, on Dec. 31, of a moritorium that had been in force on the need for banks to provide U.S. officials with their U.S. clients' Social Security Numbers or TINs.
In May, the Dutch Banking Association posted an animated video on its website (below, right) in which it warned accidental American clients of the urgent need for them to get their U.S. Social Security numbers if they didn't wish to risk losing their Dutch bank accounts.
In the video, the Nederlandse Vereniging van Banken (NVB) explained clearly, in both English and Dutch, how Americans living in the Netherlands and who lack a Social Security number could go about applying for one.
U.S. officials remained silent on the matter, and by January, some banks began making good on their threats to freeze accounts, while the numbers of those refusing accounts to Americans seemed to grow. In January, Goldman Sachs, the New York-based financial services giant, cited FATCA as the reason its new Marcus product for British consumers would not be made available to Americans resident in the UK.
In January, accidental Americans in the Netherlands called for "urgent action" over the freezing of their bank accounts due to FATCA, during a hearing with Dutch lawmakers.
Thus far, there, as elsewhere across Europe, the situation remains unresolved, and those accidental Americans affected by the reluctance of European banks to have them as clients are continuing to struggle.
As this article was being written, a fiftysomething American named "Rochelle", who has lived in France for more than 35 years, and who has been struggling with FATCA-related banking issues since her husband recently died and she's been forced to attempt to get her own bank account, said she had just been refused a life insurance policy because of FATCA.
"They explained that it was too risky for them" to have me as a client, she told the AXFNJ.
"I told them I have now joined the militants who oppose this law."
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- Goldman Sachs still unable to accept U.S. expats as Marcus clients in UK, citing FATCA
- No hoped-for breakthroughs seen to emerge from Tuesday's landmark ECOFIN discussion of FATCA
- EU 'Accidentals' cheer, as FATCA on ECOFIN agenda next week