# US - Europe reciprocity under FATCA



## Free n' Easy (May 14, 2013)

Well, since the FATCA has made such a mess of every expat's life, I was just wondering. If the folks back in D.C. think it's such a hot idea to make US persons report foreign-earned income and even the most ordinary basic-for-living foreign bank accounts, then wouldn't it be logical for us to also claim US unemployment benefits on our foreign unemployment in case of job loss, full or partial ??? Inother words, double taxation, double benefits !


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## Bevdeforges (Nov 16, 2007)

You're mixing apples and oranges here. You don't pay unemployment taxes to the US when you're working overseas. But FATCA and FBAR are nothing but declarations - there are no taxes that result from declaring your foreign accounts. 

Matter of fact, many foreign governments now require taxpayers to declare all their foreign bank and investment accounts - so here in France, I wind up reporting my US bank accounts and investment accounts as part of my French income tax returns. Don't know what Italy's requirements are, but they're part of the OECD so if you don't have to report it now, just wait.

OTOH, if you are an Italian citizen, living in Italy and getting US Social Security, you don't even have to declare that on your US tax return, thanks to the US-Italy social security treaty. THAT's the goodie I'd like to see made universal for us US expats (at least until and unless they decide to just drop the tax filing requirement for foreign residents altogether).
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

Bevdeforges said:


> Don't know what Italy's requirements are, but they're part of the OECD so if you don't have to report it now, just wait.


Italy requires all tax residents to report foreign accounts via Form RW. Those reporting requirements are more extensive than FATCA and FBAR. There are new wealth taxes levied on those foreign assets, although they are comparatively modest and foreign taxes are generally counted. Penalties for noncompliance are severe, and tax authorities have a lot of ways to find those who are not properly reporting.


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## Free n' Easy (May 14, 2013)

*FATCA and FBAR*

Right, I was mixing apples and oranges - but that's the point concerning US citizen-based taxation. I still don't see why each country needs to know what you have in the other country, especially if the origin of the money is the country in which it is banked - or earned AND TAXED in the first place. 

The other idiocy is that people are penalized for saving, wheareas if they blew cash on cars, jewelry or whatever, it wouldn't have to be reported. Obviously cars etc. don't earn interest, but neither do many bank accounts like checking, etc.

Plus reporting the highest amount in each account artifically inflates the person's wealth. It takes no account of expenses or transfer to savings, etc.

The US tax code is very unclear about exactly what foreign accounts or interest derived from the accounts are actually taxed... and how much if they are. So you file stuff and hope for the best.. but hang waiting and wondering "what sauce you'll be eaten with", as they say in French.

Have a nice file !


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## Bevdeforges (Nov 16, 2007)

No one here is arguing that the US system is logical or even fair. But the US is far from the only country that requires that you report your worldwide income. In France, for example, if you blow your money on cars, jewelry or whatever, then they get you with the VAT. VAT actually accounts for a larger portion of the government's revenue than the income tax.

The US tax code is actually pretty clear - you are taxed on everything considered "income." There are specific relief credits, exemptions and exclusions for certain foreign items, but all income is subject to income tax.
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

It's perfectly understandable why tax authorities want to know what you're holding in foreign accounts: you may be using them to hide income and evade taxes. Some countries also have wealth taxes.


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## Free n' Easy (May 14, 2013)

That's the point. There are more and more international citizens, yet they're being hit with heavy reporting burdens and considered guilty until proven innocent. The "avoidance of double taxation treaties" signed by the US with other countries poorly bear their names. The "Repeal FATCA" website and the Isaac Brock Society site are full of clear, lucid arguments against US citizenship taxation. It's becoming difficult to even give money to our children without being taxed in 2 countries. And when they're unemployed through no fault of their own... well.. sorry, but I don't agree with that.


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## Bevdeforges (Nov 16, 2007)

You're preaching to the choir here, as they say. I used to be involved in some of the US expat groups that were lobbying Congress for various changes to the law supposedly for the benefit of Americans living overseas. One of their BIG mistakes was extending US citizenship to children born overseas more or less indiscriminately. Used to be the kids got dual citizenship (either from each parent - or from the parents and where they were born, in some countries) until the age of 18, when they had to choose one or the other. In lots of ways, that system actually worked out better all around.

But within the US expat groups you find lots of tax accountants and lawyers who make their livings doing tax returns for US expats. When it comes time to do some serious lobbying in Washington, guess who is adamant that "there's no point" raising the taxation by citizenship issue? Though in the current Congressional morass, I'm not sure it's worth expecting anything to get passed in the next few years.

There's always Civil Disobedience - but I learned the hard way not to bring that idea up in the US expat groups. ound:
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

There is no reasonable prospect that the U.S. will change its core tax principles. There is a reasonable prospect that other countries will continue to expand their tax coverage to more individuals physically outside their borders.

Bottom line: governments need revenue, and some of that revenue collection will increasingly be coordinated with other countries because practically all governments have the same need. As one example, Europe looks likely to adopt a financial transactions tax. The U.K. and The City are howling about that idea, but that tax is going to happen.


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