On May 20, 2019, an article published in International Adviser noted that a cross-party group of parliamentary politicians in France issued a report recommending the termination of the Foreign Account Tax Compliance Act (FATCA) agreement with the U.S. if the latter does not agree to negotiate to avoid the double taxation of French American citizens.
The report, written by a congressman of President Macron’s political party, recommends that the application of the FATCA agreement be limited to a group of people of an unspecified amount of income or net worth, and that the tax laws of both countries be aligned to avoid double taxation.
According to Bloomberg, the report also recommends that in case the negotiations fail, “We should envisage unilaterally pulling out of FATCA and restricting the transfer of information.”
Additionally, the report agreed to lobby in favor of the association called “Accidental Americans” that represents people who were born in the U.S., or their parents are American, and thus are covered by FATCA even though some of them have no idea they are considered American citizens. Political parties have called on French regulators to remind the banks that they cannot discriminate against their clients based on their nationality or by having ties to the U.S. This is because many banks have preferred not to service U.S. citizens or people with ties to the U.S. because of the many complications and high costs to comply with FATCA.
According to the European Banking Federation, there are about 300,000 “Accidental Americans” in Europe who have, or may have been affected, by FATCA. This case has already been brought up to France’s highest administrative court, the Conseil d’Etat, where it has been argued that FATCA clashes with the Constitution, just as we have mentioned before with respect to Mexico.
Problems With FATCA in Mexico
In the case of Mexico, the intergovernmental agreement for the implementation of FATCA suffers from two defects: First, the agreement was signed by the Undersecretary of the Treasury (Subsecretario de Hacienda) in place of the Secretary without having the authority to do so, although to this date the law and the internal regulations for the Secretary of the Treasury (Secretaría de Hacienda) have been modified to provide such authority to the Undersecretary and apply those changes retroactively. Secondly, the Mexican Constitution, which was based on the freedoms and ideals first conceived in the French Constitution of 1791, even though the direct source for all Mexican Constitutions was the Constitution of Cádiz of 1812, necessarily requires certain very specific formalities for the government to be able to act against a Mexican citizen, or to request, obtain, and utilize, information from third parties, in this case the United States, in a legal proceeding against any Mexican citizen.
However, the Conseil d’Etat has not made a decision yet. We will be looking out for any developments on this news which undoubtedly will bring very interesting consequences not just for France, but for the rest of the world as well.