Brian Hayes MEP today (Sunday) said that a huge number of EU citizens are being unfairly hit with US tax bills simply because they inherited US citizenship but have no economic links to the country.
“Unlike most other countries, the US enforces a tax system on the basis of citizenship rather than residency. In 2010, the US adopted the Foreign Account Tax Compliance Act (FATCA) in order to crack down on tax evasion by Americans with financial assets held abroad.
“The FATCA legislation is subject to bilateral agreements between the US and other countries. Ireland was one of the first signatories to this agreement in 2015. While the aims and objectives of FATCA are admirable, the unintended consequences are having a deeply unsettling effect on many Irish and EU citizens. FATCA now effectively means that the US taxes its citizens on worldwide income even when they live abroad.
“A group of so-called ‘Accidental Americans’ in Europe have launched a campaign to ensure that they have a simple and free way of renouncing their US citizenship. MPs and MEPs have called for governments to push the US into action.
“There are potentially thousands of accidental Americans in Ireland who could be subject to huge US tax bills and they don’t know about it. Because of our long-standing cultural and family ties with the United States, Ireland could be worse affected than many other countries in the EU.
“In a recent letter to me, Niall Cody, head of Irish Revenue Commissioners said that the US is implementing FATCA as agreed and is complying with reporting obligations. However, because of US tax law some of the reporting may be withheld for confidentiality reasons. Therefore, we do not know the full extent of what taxes the IRS might be imposing on Irish citizens who also have US citizenship.
“The government should get ahead of the curve on this issue before many people find out they have huge US tax bills. People want certainty in their taxes. In Ireland, there is a clear and transparent way of paying taxes on income. Cohorts of people should not be hit with extra bills due to some anomaly in US tax law.
“I have written to the Chairman of the Oireachtas Finance Committee, John McGuinness, to enquire whether this Committee will consider this issue through public hearing.”