Thousands of Belgians could lose bank accounts under new US banking law

Thousands of Belgians could lose bank accounts under new US banking law

Thousands of Belgian nationals who were born in the United States could be faced with the prospect of having their Belgian bank accounts closed, under a new American law which comes into force on 1 January 2020.

The so-called FATCA law – Foreign Account Tax Compliance Act – means that any foreign bank with an account held by an American citizen must provide the US Internal Revenue Service – the federal tax authority – with details including the number of the account, the identification number of the bank, the balance, interests due and the social security number of the account holder.

Under American law, anyone born on US soil, even if the parents are only visiting, is granted American citizenship, and despite the fact that the person may have had no contact with the US since birth, they still fall under the FATCA rules. However many people may not realise this concerns them, while others may not know their social security number, allotted at birth, which can only be discovered via a lengthy and costly process.

Regardless, the bank where such a person – sometimes referred to as “accidental Americans” – has an account is obliged to show the information, or face a hefty penalty from the IRS on any and all transactions carried out with the US.

FATCA was introduced under the Obama administration, as a way to combat Americans using foreign bank accounts to hide money from the tax authorities. However, opponents like the Dutch-based organisation Americans Overseas say many of those affected may not even realise they had an obligation to the foreign country where they chanced to be born.

One solution would be to rescind one’s US citizenship, but that is another lengthy process which requires a social security number.

So you’re caught in a cleft stick,” Daan Durlacher of the organisation told Knack magazine. “You’re stuck, held hostage, because you don’t have that number.” Getting it is a very complicated administrative process that takes six to nine months. Above all, you have to employ a specialised accountant who knows the American tax system well enough to meet the various tax requirements that go along with the process. “Rescinding nationality costs a minimum of 5,000 euros and a lot of difficulties,” Durlacher said.

Alan Hope

The Brussels Times

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