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[The] new Loi de Finances Rectificative pour 2011¹ contains measures that oblige trusts and their trustees to report on the trust’s French assets, their French beneficiaries, and/or French settlors.What does that mean? A trust is basically a company which takes care of money for someone else, so France is apparently telling foreign trusts that they must report French assets back to France.²
Reporting is also required even if all the parties to the trust reside outside of France, if the trust holds any form of French asset, such as loans, real estate, stocks and shares.
So let's say you're the manager of a trust in New York City. Maybe you offer private trusts and don't have a legal right to divulge this information. Maybe you manage trusts for corporations and digging through their assets may very well meet with a wall of well-paid lawyers. And do you really want to follow the arbitrary laws of any country which is demanding legal compliance from entities over which that country has no jurisdiction? If this became a common practice, imagine financial institutions the world over suddenly find themselves having to simultaneously follow the laws of 200+ countries? Let's ignore for a moment the implementation costs of this (updating your IT systems to collect and manage information like this is not trivial). Instead, consider that the laws may be poorly defined, conflicting, and possibly illegal for the financial institution to comply with! It's idiocy and you would be right to mock the French government for passing such an idiotic law.
Is the US government really going to stand for France demanding that US financial institutions send private information to the French government?
Yes, the US will happily do this, no matter the cost to US companies.
With the US's FATCA law, the IRS has claimed jurisdiction over every foreign financial institution (FFI) on the planet. It's illegal for many FFIs to comply with FATCA (including all 27 states in the EEA) and it's a huge financial burden for them to try and implement the law, but there have been rumors that the US was trying to offer quid pro quo deals to foreign governments to convince them to not complain about the IRS demanding their bank's compliance and it looks like France may have accepted the deal. I am not a lawyer and my French is awful, so I could have misunderstood some of this, but it doesn't look good.
There's no way this is going to end well.
1. 2011 Budget Amendment Law
2. Text of the French law.
Great post. Yes, the U.S. treasury department is trying to force reporting on U.S. banks who are screaming bloody murder. There is a bill sponsored by Rubio, I think, which would prevent this. With FATCA I don't think they have a leg to stand on. If foreign banks have to report on US citizens than US banks should have to report on the foreigners in their banks. Imagine what this would do to a bank in California, for example.
ReplyDeleteTotally agree with you - this is going to end VERY badly for everyone....
I don't understand why the US wants to do this sort of thing. It is a real pain and is unnecessary. The costs are too high to comply: I don't see any real benefit.
ReplyDeleteThey seem to think that there is vast wealth out there just waiting to be uncovered.
ReplyDeleteThe US government doesn't really know what all of us are up to (all 6 million of us). We aren't part of the census, there are very few studies of the American Diaspora (I did find one if anyone is interested) and so we are viewed with suspicion and mistrust. Lacking any reliable data it's so much easier to just label us all "tax evaders" and be done with it.
Alas, I think they are quite mistaken. The vast majority of American expats seem to be concentrated in fields like Teaching English as a Second Language, the creative industries (writers, photographers and so on) and other fields that are not highly paid. I also know a fair number of retirees (military and civilian) who are on fixed incomes. And of course there are people like me married to a foreign national. There used to be a lot more business people but their numbers have greatly diminished - it's just too expensive to hire a stateside expat and pay him a fortune to do what a local can do just as well for half the price.
In other words they are on a fishing expedition. Personally I think they should cut bait before these folk start renouncing en masse (saw my first headline today "Mass Renunciations Under Obama") or they start (gasp) VOTING. If the race is close in certain states they might actually be able to influence the election. :-)
Victoria: I would love to see the study you refer to :)
DeleteYou bet. It's called American Abroad: a Comparative Study of Emigrants from the United Stated by A. Dashefsky et al published in 1992.
ReplyDeletehttp://www.amazon.com/Americans-Abroad-Comparative-Environment-Development/dp/0306439417/ref=sr_1_3?ie=UTF8&qid=1327646979&sr=8-3
Takes two countries (Australia and Israel) and studies why the Americans there emigrated and why they stayed. It was well done though I wished they had studied more countries and had included at least one from Europe. Haven't seen a follow-up to it.
There is however right now an American researcher in: Belgium who is conducting her own study of the diaspora. She has an on-line survey here https://www.surveymonkey.com/s/Americans_overseas
If you have about 15 minutes, reply. Her questions are fascinating and very timely. She'll be releasing the results as soon as she gets a sufficient number of responses.
And this just posted at Isaac Brock - an American in Switzerland sends an open letter to the Swiss President. Very well written.
ReplyDeletehttp://www.infrarouge.ch/ir/thread-364069-suisse-protege-assez-peuple-contre