12/22/2012   English German
  Edition # 99  
San Francisco, 12-22-2012

U.S. Bureaucracy goes Europe: FATCA
Figure [1]: With FATCA, Obama has created an unprecedented bureaucracy nightmare that discourages U.S. residents from maintaining foreign bank accounts in Europe.

Michael Recently, our bank in Germany notified us that they no longer want our money. A new tax law called FATCA, the so-called "Foreign Account Tax Compliance Act", extends the reach of the U.S. tax bureaucracy deeply into Europe, where it, via treaties ratified by European governments, forces banks to report data on accounts owned by U.S. residents back to U.S. tax authorities. Banks in Germany, for example, are obligated to report to the U.S. Internal Revenue Service (IRS) on a regular basis, which U.S. residents have how much money stashed away in foreign accounts, to make sure those investors don't forget to pay their taxes in their country of residence.

Figure [2]: The Hafner bank located in the city of Augsburg, Germany, cancels the account of a U.S. resident because of unmanagable American tax bureaucracy.

If you know about the typical American obsession with bureaucratic process (which, ironically, most Europeans have no clue of), you can imagine that this new ordinance is peppered with idiotic clauses and requires filling out inane forms, which means European banks would have to purchase expensive software to cope with it. Instead, most smaller banks simply decided to cancel all accounts held by U.S. residents.

The acronym "FATCA" is most likely supposed to allude to "Fat Cat" tax evaders, which it was designed to discourage. It wants to track down U.S. investors who put their money into foreign accounts and don't declare the gains on their U.S. tax report. Unfortunately, the new requirements backfired also for U.S. citizens working in Europe and in need of a bank account: Only very few banks are accepting their applications.

The requirement has been ratified a while ago and went into full effect in 2013. France, Germany, Italy, Spain and the UK have agreed to comply and are sending account data to their American big brother. China has declined.

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