The argument in favour of the US’s citizenship based tax system has long been that citizens benefit from having an American passport, even if they don’t live in the United States. But for many expats, FATCA is tipping the balance and the US passport has become a liability.
Expats living in Europe are finding it increasingly difficult to open bank accounts – a necessity of daily life. But European banks are simply protecting themselves from the exorbitant costs of FATCA compliance and risk of harsh penalties.
“With FATCA, there is a cost on us in Europe but the benefits are in the US,” James Broderick, a senior manager with JP Morgan Asset Management, told Reuters in November.
But because of FATCA’s complex regulations, even refusing all American customers may not be enough to protect the banks.
And even banks that cease serving US customers may not be entirely safe. “Even if you have no US customers, you are not out of scope,” Mark Naretti, managing director of auditing firm KPMG, told Reuters this week. “This would also require that the firm not have any US investments and not be part of an expanded affiliated group that includes entities that are participating foreign financial institutions.”
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