# FATCA - Bank search for canidates



## FFMralph (Dec 22, 2012)

I got my first inquiry from a small local bank today. They identified me as being American and as having an US tax obligation. (Not hard to figure out because I used my American passport to open the account).

The explained that they are, since July 2014 legally required under the "Foreign Tax Compliance Act" to report me to the German Tax Office who in turn, will report me to the IRS.

For 2014, my name, address, TIN, year end account balance will be reported.
In 2015 this will include interest, dividends and winnings.

Let the games begin!


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## Bevdeforges (Nov 16, 2007)

"Winnings" ??? Or "gains."

Keep us posted. 
Cheers,
Bev


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## FFMralph (Dec 22, 2012)

Gains.


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## maz57 (Apr 17, 2012)

Sounds like its time to switch banks.


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## BBCWatcher (Dec 28, 2012)

Why? It sounds like they're handling new German regulatory requirements well, keeping the account holder informed, with minimum or zero inconvenience to the account holder. In other words, a professional, well-run bank.


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## maz57 (Apr 17, 2012)

BBCWatcher said:


> Why? It sounds like they're handling new German regulatory requirements well......


I think you mean US regulatory requirements. Fatca is a US law. The Germans merely agreed to enforce it


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## BBCWatcher (Dec 28, 2012)

No, these are German regulations in Germany. _Inspired_ by the U.S., sure, but the regulatory code is German. (The German constitution was also inspired by the U.S., so that's not novel.) As it happens German banks are allowed to continue doing business in the U.S. without 30% withholding on their U.S. operations as long as they're compliant with German regulations (plus U.S. regulations in the U.S.)

See how that works? The U.S. doesn't actually regulate German banks in Germany. The German government does.

And before anyone tries to argue that a government cannot or should not throw its weight around a bit to cajole other governments into certain behaviors, nonsense. The German government is working hard, successfully, to prevent its pharmaceutical companies from distributing drugs to U.S. states with the death penalty. That's throwing sand in the gears of executions in the U.S. because states cannot acquire the necessary lethal injection drugs from a known, trusted supply chain that would pass U.S. judicial muster.


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## maz57 (Apr 17, 2012)

BBCWatcher said:


> No, these are German regulations in Germany. _Inspired_ by the U.S., sure, but the regulatory code is German. (The German constitution was also inspired by the U.S., so that's not novel.) As it happens German banks are allowed to continue doing business in the U.S. without 30% withholding on their U.S. operations as long as they're compliant with German regulations (plus U.S. regulations in the U.S.)
> 
> See how that works? The U.S. doesn't actually regulate German banks in Germany. The German government does.


The word "inspired" doesn't at all describe how those German regulations came into existence. Demanded by the US (under an extortionate threat of 30% withholding) is a more accurate description. 

And while it is technically true that the US doesn't regulate German banks in Germany, let's not be disingenuous. Practically speaking with FATCA that is exactly what the reality has now become. The US told the German banks they wanted those banks to search their customer records to find US persons and then report information about those accounts and any associated income to the IRS (or else face a business destroying 30% withholding). All this had to be accomplished on a timetable according to US specification. That sounds like regulation to me.

If the German pattern is similar to Canada, the German banks were put in a bind because actually transmitting that info to the IRS would violate German privacy rules and possibly even the German constitution. So the banks went crying to the German government which then obligingly changed German law so the banks could report the info to the German government instead of directly to the IRS and it would all be OK. The German government and the German banks (and ultimately the German people) pay for all this out their own pockets and receive no benefit from the US in return. (Except their banks aren't subject to that 30% withholding.)

So yes, I see exactly how it works. And for what purpose? So the US can tax income earned in Germany by people who live in Germany. Put another way, the US has engineered a transfer of a portion of Germany's wealth to the US treasury. I've got a word for that: "larceny". The US should be ashamed of itself.


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## Bevdeforges (Nov 16, 2007)

maz57 said:


> Sounds like its time to switch banks.


Unfortunately, the way the things go (at least in the IGA) there is considerably more "wiggle room" for the banks when they are dealing with accounts that were already in existence at the mid-2014 date than for new accounts. Probably best to just "let sleeping dogs lie" rather than to kick up alot of nosy questions by opening new accounts now.
Cheers,
Bev


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## FFMralph (Dec 22, 2012)

One advantage to the reporting being German law is that Americans are not being refused bank accounts or being dropped as customers.


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## maz57 (Apr 17, 2012)

FFMralph said:


> One advantage to the reporting being German law is that Americans are not being refused bank accounts or being dropped as customers.


What Koolaid have you been drinking BBC? That is precisely what is now happening in Canada even though Canada has similar "Canadian made" legislation. The decision to refuse a new US customer or drop an existing one is purely a business decision the individual bank makes based on the risk such "tainted" persons pose. It certainly violates laws which prohibit discrimination based on national origin but the banks do it anyway. Most people would rather go elsewhere than begin a protracted lawsuit. There is nothing to prevent a German bank from doing the same and I have heard reports that is already happening.

At least in Canada there is a non-FATCA option, the "local client base" credit unions. In fact a large credit union near where I live has turned their non-FATCA status into a selling point in their advertising. That particular institution has been a vocal critic of the imposition (their words) of FATCA right from the beginning. I don't know if Germans have a similar option, but if they do, I'll repeat "its time to find another bank". With respect to opening new accounts, smart Canadians have now learned to be careful which i.d. they use to open the account.


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## maz57 (Apr 17, 2012)

My apologies, FFMralph. I got mixed up. Your comment sounded so BBC-like I somehow in my mind attributed it to him. I am not so confident that US customers won't be weeded out by some of the banks. It will take several years for this to play out.

For US customers who are US tax compliant FATCA reporting is no big deal. For those who are not (or don't even know they are supposed to be) it will be a very rude awakening. National-origin discrimination is now alive and well in any country that has signed a FATCA IGA. Does Germany have non-FATCA financial institutions similar to Canada?


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## Bevdeforges (Nov 16, 2007)

One "cultural phenomenon" FFMralph has to deal with the is German "thing" for following orders. (And before anyone jumps on me, I lived and worked in Germany for a couple of years and speak rather decent German, or so I'm told.) It depends how the German law/regulations are written to see if there are small banks (or at least "non-international" ones) like in most of the IGAs I've skimmed. Actually, if there are, a customer in Germany could easily push back, possibly quite effectively. (All my colleagues where I worked there could quote chapter and verse of any law they were relying on.)

OTOH, there is the "French approach" - I know of lots of folks who have been asked for W9s due to their birthplaces. But only from a couple of specific banks here that have run afoul of US banking law somehow. Plus, I notice, the IGA with France specifically excludes the need for the French banks to report several common types of tax free interest and retirement fund accounts (which they never have reported to the Bank of France). So something tells me "same old same old" here.
Cheers,
Bev


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## cuerna1 (Mar 7, 2015)

We have two premium accounts with different banks in Mexico. One account is with a global bank that is always getting in trouble for money laundering. We have an excellent relationship with the account manager. We have completed so many W-9s it is ridiculous. In fact at the moment I have signed blank forms so she can complete them in whatever manner they want in the future. We are her only Americans and she has hinted she will be told to get rid of us in the future.

The other account is with a bank that is owned by a large US bank. We met with the US representative recently who was visiting Mexico. The US bank offers a global account (not US domestic) for expats with non- US resident addresses. The vetting process is incredible. I'm retired but had a 30 year career with many different employers over the years. They asked for my resume and a salary history for my entire career. I went to the social security site and printed off my salary history and gave that to them. I also had to provide info on every substantial financial event in our 30 year marriage. Inheritances, house sales, sizable investments etc. You would think I was running for president or something.


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## maz57 (Apr 17, 2012)

Bevdeforges said:


> One "cultural phenomenon" FFMralph has to deal with the is German "thing" for following orders. (And before anyone jumps on me, I lived and worked in Germany for a couple of years and speak rather decent German, or so I'm told.) It depends how the German law/regulations are written to see if there are small banks (or at least "non-international" ones) like in most of the IGAs I've skimmed. Actually, if there are, a customer in Germany could easily push back, possibly quite effectively. (All my colleagues where I worked there could quote chapter and verse of any law they were relying on.)
> 
> OTOH, there is the "French approach" - I know of lots of folks who have been asked for W9s due to their birthplaces. But only from a couple of specific banks here that have run afoul of US banking law somehow. Plus, I notice, the IGA with France specifically excludes the need for the French banks to report several common types of tax free interest and retirement fund accounts (which they never have reported to the Bank of France). So something tells me "same old same old" here.
> Cheers,
> Bev


The Teutonic tendency to follow rules and prefer order and efficiency does seem to be a national trait. Here in Canada we have a polar opposite tradition, the "crazy Canucks", i.e. people who have an aversion to following the rules. The craziest Canucks of all are the French Canadians and they are a ton of fun!


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## Bevdeforges (Nov 16, 2007)

maz57 said:


> The Teutonic tendency to follow rules and prefer order and efficiency does seem to be a national trait. Here in Canada we have a polar opposite tradition, the "crazy Canucks", i.e. people who have an aversion to following the rules. The craziest Canucks of all are the French Canadians and they are a ton of fun!


By descent, I AM one of those crazy Canucks - and you're right, they ARE a ton of fun!
Cheers,
Bev


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