Dutch Finance Secretary sidesteps hostile questions from lawmakers on FATCA

Mondaq.com is running the headline “The Netherlands to join Joint FATCA Statement”. This appears to be lifted from an English-language newsletter issued last week by Amsterdam-based law firm De Brauw Blackstone Westbroek. Don’t get the wrong impression, though — no agreement has yet been negotiated. The most recent news is that Finance Secretary Frans Weekers stated last week (link available in Dutch only) that the Netherlands is open in principle to joining FATCA. But the cross-border services providers have managed to miss (or to bury) the real news. Last week some Second Chamber members submitted written questions to Weekers (also in Dutch only; see here for Google Translate’s rendering). I’ve manually translated some of the interesting bits. I am disappointed by many of Weekers’ responses, both for their attitude towards the democratic process and their apparent lack of understanding about FATCA’s effects on bona fide residents of his country who have no financial connection to the U.S. besides their passports.

Gerard Schouw and Wouter Koolmees of social liberal party D66 submitted a set of ten fairly hostile questions, starting with:

2. Waarom heeft u de Kamer niet vooraf geïnformeerd over het feit dat Nederland bereid is zich aan te sluiten bij de Foreign Account Tax Compliance Act (FATCA)?
2. Why was this Chamber not informed in advance of the fact that the Netherlands will join the Foreign Account Tax Compliance Act

The answer, of course, is that FATCA was intended, from beginning to end, as an imperialistic end-run around the sovereignty of other countries and their parliaments. And once financial institutions decided that fighting it would be too expensive, they wanted to make sure as quickly as possible that they could dump all the costs and all the harms on the taxpayers of each nation, while avoiding or delaying any potential for democratic consultation that might derail it. So they quickly went to the executive branch and lobbied it to surrender as quickly as possible. In country after country, we see the same plan being set in motion: cabinets will present their national legislatures with faits accomplis which those legislatures will then be cajoled, harangued, or buffaloed into passing. Weekers rambles on for nearly five hundred words to try to hide this fact, but he has to state the real reason at some point — so he pulls the old presenter’s trick of putting the bad news in the middle in the hopes that listeners will have forgotten about it by the time he gets to the end:

Antwoord: … Daarbij heeft een rol gespeeld dat de financiële sector inmiddels had aangegeven zich te willen richten op het kunnen voldoen aan de verplichtingen die FATCA aan hen oplegt en dat de benadering van de VS en de G5 landen (hiernade G5 benadering) juist uitgaat van het zoeken naar oplossingen voor juridische knelpunten enkostenvermindering voor het bedrijfsleven …
Answer: … another [factor] that played a role was that the Masters Of The Universe the financial sector had already indicated its willingness to focus on satisfying the obligations that FATCA imposes on them, and that the approach of the US and the G5 countries (hereafter, “the G5 approach”) would serve to search for solutions to juridical bottlenecks and reduce costs for businesses …

Schouw and Koolmees went on to ask a number of questions about privacy laws — the same kinds of questions that lawmakers in every jurisdiction in the world have asked or are going to ask. Weekers has no answers yet besides “wait and see and trust us”. But when the two lawmakers suggest that responsibility should be taken out of his hands entirely and put in the hands of judges who will not act from political expediency, he responds quite negatively. Apparently he prefers weakening people’s rights by means of backroom dealings with the imperialistic bullies in the American IRS and Congress, rather than taking the risk that a court might put financial institutions in danger of increased operating costs:

10. Deelt u de mening van Eurocommissaris Reding dat deze jurisdictie kwestie, (wetten van der de landen met gevolgen buiten hun grondgebied die niet verenigbaar zijn met relevante EU-wetgeving op het gebied van gegevensbescherming en de hieraanverbonden rechten), het Internationaal Gerechtshof dient te worden voorgelegd?
10. Do you share the opinion of European Commissioner [Viviane] Reding that this jurisdictional question (laws of countries with consequences outside of their territories are not consistent with relevant EU legislation on data protection and associated rights) should be submitted to the International Court of Justice?

Antwoord: Het is mij niet bekend of Eurocommissaris Reding een dergelijke uitspraak heeft gedaan. Het heeftmijn voorkeur om jurisdictiegeschillen op te lossen langs de weg van gezamenlijk overleg, en waar mogelijk, met behulp van verdragen of coördinatie van wetgeving.
Answer: I am not aware that European Commissioner Reding has given such a statement. It is my preference to solve jurisdictional disputes by way of joint consultation, and where possible, by means of treaties or coordination of legislation.

Two D66 members indeed wrote Reding a letter about FATCA in January (in English) asking this question, but I have not been able to locate her response. Have any other commenters heard anything about this?

Aside from the above questions, Helma Neppérus of the centre-right VVD submitted her own set of six questions, among which the penultimate one asked about the territorial scope of data collection — seemingly suggesting that the Netherlands may be seeking information about Dutch expatriates. (Of course, drawing that implication requires you to presume that Weekers actually understood the question properly and understands what U.S. tax law is going to do to his country’s sovereignty.)

5. Welke informatie ontvangt Nederland van de Verenigde Staten over onze belastingplichtigen die in de Verenigde Staten woonachtig zijn?
5. What information will the Netherlands receive from the United States about our taxpayers who are resident in the United States?

Antwoord: Momenteel ontvangt Nederland van de VS reeds gegevens op verzoek en spontaan op basis vanhet belastingverdrag. Daarnaast is Nederland met de VS in overleg om op wederkerige basisautomatisch informatie uit te wisselen. De Nederlandse inzet daarbij is gericht op degegevenscategorieën die gebruikelijk worden opgenomen in de Nederlandse overeenkomsten inzake automatische gegevensuitwisseling, zoals loon, pensioenen, dividenden en interest. Als Nederland en de VS een overeenkomst zullen sluiten in navolging van de G5 landen en conformde aanbeveling van de Europese Commissie, dan zal Nederland van de Amerikaanse belastingdienst dezelfde informatie ontvangen over Nederlanders die in de VS rekeningen aanhouden bij Amerikaanse financiële instellingen als de VS op grond van FATCA ontvangt vande Nederlandse belastingdienst over Amerikaanse klanten van Nederlandse financiële instellingen.
Answer: At present, the Netherlands already receives data from the United States upon request and “spontaneously”, on the basis of the tax treaty. In addition, the Netherlands and the U.S. in consulation with each other reciprocally exchange information on an automatic basis. The Netherlands’ efforts are thereby focused on the categories of data which are customarily included in Dutch agreements on the subject of automatic information exchange, such as loans, pensions, dividends, and interest. Likewise, any agreement between the Netherlands and the U.S. will closely imitate the G5 and will conform with the recommendation of the European Commission, and then the Netherlands shall receive from the American IRS the same information about Dutch people who in the United States hold accounts with American financial institutions as the US shall likewise under FATCA receive from the Dutch tax service on American customers of Dutch financial institutions.

This is a very confusing question with an equally confusing answer. I checked as carefully as I could that I am not misunderstanding the scope of the word woonachtig. A trip to the dictionary gives such synonyms as gedomicilieerd (“domiciled”) and zetelend (“settled”). Neppérus appears understands what’s at stake with FATCA — the U.S. wants to collect information on residents of the Netherlands, despite the fact that IRS always tries to confuse the issue by referring to “U.S. taxpayers” — and she wants to know the extent of the alleged American “reciprocity”. But she asks her question in a strange form: about Dutch “taxpayers” who reside in the United States. The Netherlands, like all normal civilised countries, does not tax its non-resident citizens; if a Dutch person or anyone else resides in the U.S., his only sources of income which might be subject to Dutch tax are those with a Dutch source — about which the Netherlands already has information and doesn’t need to ask for anything from Washington. However, Weekers’ response only refers to Nederlanders die in de VS rekeningen aanhouden (“Dutch who hold accounts in the United States”) without mentioning the crucial distinction of residency/domicile at all. It’s hard to say what this actually means …

Anyway, a final translation note: in the coming week you might see some Anglophone media reporting Weekers’ title as “State Secretary” or “Secretary of State”. This is a literal but misleading translation of Staatssecretaris — that position is not at all like the similarly-named U.S. Secretary of State (the equivalent of the Minister of Foreign Affairs in a parliamentary system). Weekers’ position, rather, is roughly analogous to the U.S. Deputy Secretary or Undersecretaries of the Treasury. (If you can name them off the top of your head, that’s a sign that you spend entirely too much time reading about politics). Finance Minister de Jager himself does not appear to be getting involved publicly at this time.


9 thoughts on “Dutch Finance Secretary sidesteps hostile questions from lawmakers on FATCA

  1. In theory you could be dual resident because you lets say reside in the US as your permanent residence but spend more than 153 days a year in the Netherlands. Rare but possible.

    Interesingly the American Bankers Association came out yesterday and said they were opposed to American banks being required to ask the nationality of the US customers and claimed they did not believe the IRS or US Treasury Department had the authority under current US law to demand that of US domestic banks

  2. “woonachtig” looks a bit like and prononced similar to the German word wohnen which basic means to live (in a city or place) – Ich wohne aus Berlin.

    This article sounds like what I have said before. Are the Europeans setting up the US for “residence-based taxation data?”

    In other words, the Dutch won’t give the US data on a bona fide Dutch resident, but will pass data to the IRS for a Dutch account with an US address for example.

    Vice versa the Dutch expect the IRS to pass data back for US accounts with Dutch addresses.

    However, does this mean if someone is a EU citizen with a US place of birth but a bona fide Dutch resident, the Dutch do not see this included in the scope of FATCA.

    The IRS only get some of what they want – not all.

    Why should Europe help the US enforce citizenship-based taxation when it’s not the law of the land here (in Europe)?

    Has the IRS lost something in the translation?

  3. @Tim: It is an interesting find. If the US banks refuse to ask the citizenship of the customers, how could they force banks in rest of the world to break national laws? Isn’t it a huge hypocrisy and elitist arrogance?

  4. I had not thought about it before, but I don’t think I have ever had a US bank or brokerage firm ask me for proof of citizenship.

  5. @Roger

    In theory it would not just be proof of citizenship but also asking for your place of birth and any additional nationalities you hold. Given the position of Brazil on this issue I actually think recalcitrant withholding is going to be a big issue that was never really contemplated in the regulations.

  6. DISCLAIMER: This is going to be a rant that contains some PG-13 or worse curse-words and while I try not to go too overboard, please excuse me in advance because I am really pissed off. Read at your own risk. This post addresses multiple issues. There are also some Christian issues towards the end of this post, but for people of the book who are not Christian, I think you will understand as well. There is but one God, whatever we call Him. I think that non-monotheists will also understand what I am talking about.

    @Eric I would like to start off on a very positive note… this is a good bit of writing you did and I like the way you put it, to wit: “The answer, of course, is that FATCA was intended, from beginning to end, as an imperialistic end-run around the sovereignty of other countries and their parliaments. And once financial institutions decided that fighting it would be too expensive, they wanted to make sure as quickly as possible that they could dump all the costs and all the harms on the taxpayers of each nation, while avoiding or delaying any potential for democratic consultation that might derail it….” Well put, excellent and clear use of the English language, thanks for that!

    What really irks me is how dense our parliament deputies are in Europe. They should all grow a pair of whatever they should have, depending upon their gender. FATCA is a travesty, it forces costs on banks, on countries, and on individuals. This is a waste of time in a recession, the same way Obamacare is (though I like the idea of health-insurance for all). Tax when times are good; spend when the economy needs a boost (Keynes). But let people who live in foreign countries pay their taxes there and reinvest the money that they would otherwise spend on US double-taxes in their own local economies. They just might find a way to do business with the US sometimes if congresspeople and IRS let them be and don’t try to screw and rob them.

    I think current US policy is unchristian in some way. I can’t put my finger on it, because I am not a Bible expert. But I don’t think Jesus would accept what is going on.

    The banks need to resist: their managers need to grow a pair as well.

    Doesn’t anybody get it? Article 1, Section 2 USCOST requires proportional representation in the House. This has never been achieved as to “US Persons” abroad. Congress is treasonous against the Constitution. How dare they attempt to pass laws affecting people out of their jurisdiction? And their stupid FATCA law that they passed as part of “HIRE” has had the effect of causing officials abroad to commit treason against their own people and constitutions.

    Dear Congresspeople: Stop writing pages and pages of dreck that are difficult to interpret. Keep It Simple Stupid. (“KISS”)! Are you folks actually writing this crap or relying on some dork and dorkette page-people who are juniors or seniors in their bachelor’s studies? Grow up!

    I would propose a Constitutional amendment requiring Congress to pass bills on one subject at a time. Stop putting blasted riders into bills: this would save time for lawyers and courts as well. Do your freaking jobs, Congresspeople! Don’t put shitty measures into bills that claim to be about a different subject-matter. I am astounded that the American electorate allows you folks to pull the wool over their eyes to such an extent. Shame on you! You make me want to “gerber” (French). This is not what our founders intended. God save the United States and our sacred Constitution!

    I can’t translate the Dutch formally, but zetelend=setteled makes sense. For me this word would relate to somebody who is either Dutch or a foreigner who has a permanent residence status, such status being analogous to a green-card. See the German word “Niederlassung”. http://www.dict.cc is good for German, thanks to the (Austrian?) fellow who set it up. In the Swiss-French region, we would say “Permis d’établissement” . I am not sure what goes on in France. I know there is the notion of “carte de séjour” but I don’t know if there is a second tier for those that have lived a long time in France and do not have French nationality. @Victoria could perhaps shed some light on the subject?

    @Petros, although I hesitate to take the name of the Lord in vain, what would Jesus do if in our situation? He preached peace, but was a real hard and tough guy sometimes in the Gospels. Would Jesus turn over the tables of the Money-Changer FATCA cheats? I think so! And he would tell them to get out of the temple.

    Render unto Caesar what is Caesar’s? But our money earned in our countries abroad does not belong to the US. What would Jesus say today about all of this mess?

    @Petros, could you propose a prayer for us US persons abroad? God is watching, but he is waiting for us to figure out how to deal with this mess in a constructive way. We are made in his Image. How will we do it? What shall we ask Him? Give us Courage and Respect that we may find our way through this morass in the light you have given us through the Gospels? I would like your guidance as a fellow Christian.

  7. So, if the Dutch really want to sign up for the FATCA partnership, when will they finally wake up to the fact that they have signed up for a “faux reciprocity”. You could see that question 5 was trying to get an understanding of what they were getting from going along, but at some point I have to think they will finally figure it out, that like those 1000 page so called Free trade agreements, they were duped again!

  8. @Jefferson D. Tomas
    in Fiddler on the Roof, the rabbi was asked if there was a blessing for the czar, why of course there is
    `may the l-rd g-d keep the czar far away from us`

    so let us pray that FATCA and the IRS are kept far away and out of lives

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