Accidental Americans
Updated: Aug 29, 2018
Author: Dr. Olivier Vonk
On 5 July 2018 the European Parliament adopted a resolution to reopen negotiations with the US on an EU-FATCA (US Foreign Tax Compliance Act) agreement, after concerns expressed by the Alliance of Liberals and Democrats for Europe that under FATCA ‘“accidental Americans”, who, by accident of birth, inherited US citizenship, but who do not maintain any ties to the US and are EU citizens, face problems with banks or financial institutions. Banks, for example, are refusing US persons as customer, so these EU citizens no longer have access to financial services like a basic bank account, mortgage loans or credit for their business’.
Indeed, as noted by Peter Spiro in an analysis of US citizenship law, ‘FATCA has […] made it more expensive to retain [US] citizenship after permanent relocation abroad. Many with EU and other premium citizenships are renouncing their US citizenship in record numbers. Many more would like to but for various additional costs of renunciation. The filing fee for formal renunciation was increased in 2014 from $450 to $2350’. Spiro explores the problem in greater detail in ‘citizenship overreach’, concluding provisionally because of the thin practice that ‘in cases involving nominal [US] citizenship, [the] exit requirements lack proportionality’ and that ‘the allocation of citizenship in the absence of a genuine link without the possibility of frictionless exit, at least as coupled with nontrivial attendant obligations [including in the form of a hefty renunciation fee], may infringe individual rights under international law’.
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