As recently communicated in the Belgian media, Belgians with the American nationality risk losing their Belgian bank accounts because of the strict application of the U.S. FATCA-legislation.
FATCA
In application of the FATCA (Foreign Account Tax Compliance Act), which is also applicable in relation to U.S. citizens residing in Belgium, financial institutions outside the U.S. (such as Belgian banks), must provide specific data to the U.S. Tax Authorities (IRS) about the bank accounts of these American nationals. Also Belgians who were born in the U.S. but have no further connection whatsoever with the United States are in scope of this legislation.
TIN
An important element in the framework of FATCA information exchange is the American TIN or “Tax Identification Number”. However, the greatest part of these incidental “American” Belgians (who have obtained the U.S. nationality by birth), don’t have such a TIN number or are not aware of it. As a result, the Belgian financial institutions cannot provide this number to the tax authorities and they risk paying heavy fines as of 2020. To avoid paying these fines the Belgian banking sector decided that in 2020 the Belgian banks will have to close the bank accounts of clients for whom they cannot provide all data.
Future
The European banking sector is trying to negotiate further with the United States in an attempt to find a workable solution for the strict application of the FATCA-legislation, but it seems that the U.S. are not demonstrating any further flexibility. According to Febelfin, the Federation of the Belgian banking sector, 2020 could potentially serve as a transition year where clients still have the possibility to request a TIN, which is a burdensome procedure.
Author:
Philip Maertens, Partner
philip.maertens@pwc.com
