German Foreign Minister Calls for an Independent EU “SWIFT” System

Update 27 August 2018

For anyone interested in more details about this development please see: here
and here
Hat tip to Tim Smyth

interesting: One of the factors irritating to the EU is the “repatriations of billions of dollars in profit from Europe by U.S. based tech giants” (Bloomberg) an outcome of course, from recent U.S. tax reform (TTFC)


I have become fascinated by an ongoing development in Europe stemming from Trump’s actions against Iran. First, there is the United States pulling out of the Joint Comprehensive Plan of Action
JCPOA, (aka the Iran nuclear deal in which Iran promised to stop development of its nuclear program in return for a lessening of sanctions and increased trade relations). After the withdrawal, Trump issued harsh sanctions against Iran.

Over the last couple days, a number of expats have tweeted/posted a
condensed version
of this story. I was curious know more about it.

On August 21, German Foreign Minister Heiko Maas wrote an editorial for the German paper, the Handsblatt. He called for a “balanced partnership” as counterweight to the US actions regarding Iran.

At first, this might seem completely unrelated to our situation however, one aspect of this “Balanced Partnership” may include an option for trading outside of the U.S. SWIFT system.

Maas said Europe needs a to set up EU payment systems independent of the United States if it wants to save the nuclear deal.

“That’s why it is indispensable that we strengthen European autonomy by creating payment channels that are independent of the United States, a European Monetary Fund and an independent SWIFT system,” Maas wrote. “Every day the deal is alive is better than the highly explosive crisis that would otherwise threaten the Middle East.”

One might wonder if anyone in the U.S. has bothered to realize what the effects of pulling out of the Iran deal are. For those who are not fortunate enough to have the Atlantic Ocean as a shield, the ramifications of uncontrolled Iranian development of a nuclear arsenal are dangerous and potentially life-threatening. Perhaps those who remember WWII or those engaged in recent Middle East conflicts can appreciate this. Doubtful for those in America, given the impenetrable shell of mind-numbing exceptionalism.

Further, the EU Foreign Affairs Minister, Federica Mogherini, has taken the bold step of encouraging companies to disregard Trump’s threats should they continue to do business with Iran. She said:

“it’s up to Europeans to decide who they trade with.”

How refreshing! The development of a spine against what is nothing less than another massive example of U.S. economic imperialism.

The EU has created a new law to protect European companies from the punitive measures the U.S. will take against those who dare to defy its will.

With the new rules European companies are granted the right to challenge US sanctions in European courts and seek
compensation from the U.S. government or American companies. In practice, this path promises to be cumbersome and
costly and even the Commission acknowledged that there is no precedent in such cases.

The blocking statute has never been implemented, although one was issued for the first time in 1996 in connection to economic
sanctions against Cuba and Iran. Back then, the threat was enough to persuade the US to suspend secondary sanctions.

“The threat was enough to persuade….” reminds one of how the world responded to #FATCA, no?

This development could be incredibly helpful to us in at least two ways. First, the oft-discussed demise of the US dollar as the world’s reserve currency would clearly aid governments in divesting themselves from #FATCA. While not a direct hit at #CBT, such a move would take the “sting” out of what has come about since the H.I.R.E. Act ( 2011 for most of us). At the very least, it might stop the ongoing damage Europeans with “U.S. taint” are experiencing with the closure of bank accounts, mortgages etc. While Canadians are not currently experiencing this, a blow to #FATCA would enable them to:

  • decide to remain under the radar far more comfortably
  • put a huge dent into the screaming scare-tactic commentary of the tax compliance
    community and hopefully, their outrageous fees as well

Secondly, such a move might empower these governments, to support the requests of their own #Americansabroad citizens whether they be accidentals, dual citizens of other countries with residence in those countries as well as those who have yet to file I-407 for their greencards.

This would also encourage more effort from earlier efforts in various countries as well as the newer ones.

Here is a comparision for BRICs-US. Can you imagine the combined effect of the BRICs & the EU’s financial independence from the U.S.? Don’t you wish these countries could have thought of this BEFORE the U.S. stuffed #FATCA down the world’s throat?

I’ve been reading a book called “What We Say Goes – Conversations on U.S. Power in a Changing World,” by Noam Chomsky (2007). Chapter 6 – Invasions and Evasions – took place in Cambridge Massachusetts on February 2, 2007. In spite of the fact this Q & A predates FATCA and uses health reform and media reform as examples, I was struck by how well section this applies to what is happening to us now. So many are dissatisfied with R.O.’s TTFI proposal. People seem to expect a one-size-fits-all solution. At the beginning of our involvement with this, the phrase “It’s a marathon, not a sprint” was a sort of mantra. Part of that marathon is accepting that it will likely take a combination of a number of different solutions before it’s over.

Q. “I want to ask you about tinkerers versus overhaulers, reforms- cosmetic improvements and adjustments to the system – versus substantive structural change.”

A. “…..Tinkering, to borrow your word, is a preliminary to large-scale change. There can’t be large-scale structural change unless a very substantial part of the population is deeply committed to it. It’s going to have to come from the organized efforts of a dedicated population. That won’t happen and shouldn’t happen, unless people perceive that the reform efforts, the tinkering, are running into barriers that cannot be overcome without institutional change. Then you get pressure for institutional change. But short of that realization, there is no reason why people should take the risks, make the effort, or face the uncertainty and and the punishment that’s involved in serious change. That’s why every serious revolutionary is a reformist. If you’re a serious revolutionary, you don’t want a coup. You want changes to come from below, from the organized population.

What is needed is support from our entire population for each and every effort that will contribute to the end of this miserable situation. I cannot imagine any of us saying to the Accidentals – “I’m sorry, but since your proposal won’t solve my specific problem, I will not help.” Or an accidental being indifferent to specifics involving duals. There may need to be more lawsuits and stronger movements within individual countries. We all have to be on board as a solid, unified group adjusting and adapting as the process moves on.

The U.S.government is already a huge, disorganized, dysfunctional mess.

We cannot afford to be the same. We have to be better than that.



This piece is a report of an article by Helen S. Cheng and Dina Y. Name of Withers Bergman LLP by was originally published in the November 13, 2017 issue of Tax Notes.

Here is a summary (leaving out details of the Exit Tax with which we are all already familiar):

In theory, surrendering your U.S. citizenship for tax purposes can be expensive. However, the IRS sometimes has difficulty enforcing the exit tax against expatriates. Now the State Bar of California is recommending legislative changes that would make enforcement easier and expatriation more expensive.

Once an exit tax is assessed, the IRS has authority to place tax levies on the person’s domestic accounts, but has limited authority to collect the amount owed from any property held overseas.

To correct this, the State Bar of California’s proposal recommends that the U.S. legislature amend the Internal Revenue Code and related laws to close the information gaps and improve communication between the departments. The proposed laws, if adopted would essentially change the order of filing, requiring a U.S. taxpayer to complete Form 8854 and pay the exit tax before completing expatriation through the State Department or Department of Homeland Security. They would also allow the departments to exchange information about expatriating taxpayers, to the extent necessary to enforce the exit tax.

In addition, the Bar recommends requiring expatriates to consent to ongoing personal jurisdiction in the U.S. for five years.This would allow the IRS to seek enforcement in U.S. courts, rather than filing tax collection matters abroad.

I haven’t seen anything else about this idea and have no knowledge that it has gained ground. However, were this to happen, presuming those who can remain under the radar will continue, those who need to renounce may find it a lot harder……….

Why Is Bank of America Asking Clients About Their Citizenship?

info citizenship

from The Nation

Interesting that FATCA, which predates CRS is not mentioned here.If the U.S. were interested in reciprocity, wouldn’t this be the focus? In fact, this is not FATCA or CRS. It is plain and simple discrimination. If the U.S. continues making the unwelcome place for immigrants, we may no longer have to listen to the nonsense that our leaving is irrelevant due to the much larger numbers of people clamoring to get into the United States of America.


Bank of America sent a customer a notice demanding details about their citizenship—and if they refused to answer, their accounts were promptly frozen.

Outside the United States, this is a normal practice. Dozens of countries have agreed to the Common Reporting Standard aimed at combating tax evasion, and began collecting citizenship information as part of that effort in 2017.

In the UK the banking industry has already been charged with collecting information on foreigners as part of a bigger plan to create a “hostile environment” for undocumented immigrants. Immigrants and advocates worry the United States could be next.

Under a separate law, foreign banks must collect citizenship information from Americans, ostensibly in order to track down potential tax-dodgers.

But domestically, they are not required to collect customer citizenship information.

Writing in The Hill, Gonzalez speculates that “some banks are more than willing to carry out Trump’s agenda of creating a system where immigrants have fewer economic rights than others.”

The American Bankers Association declined to comment on specific institutions’ policies, but said that “strict regulatory requirements” aimed at deterring illicit activities justify requests for personal information. “Banks of all sizes are required to collect a range of information about their customers to comply with the Bank Secrecy Act of 1970 and ‘Know Your Customer’ standards,” says spokesperson Blair Bernstein. “Since 9/11, these strict regulatory requirements have steadily expanded.”

A pending class-action lawsuit filed with the US District Court of Northern California against Wells Fargo claims that the bank refused to accept applications for student loans and credit cards from DACA recipients, which plaintiffs claim is a form of illegal discrimination under California consumer-protection law, as well as a federal civil-rights law originally drafted to protect emancipated slave “aliens.”

This policy is far more subtle than a stark red line on a map, but could result in the same outcome, with a segment of Americans’ being systemically relegated to an underclass. Whether intentionally or not, citizenship questions may well push more immigrants further into the margins.

Former Hamilton school superintendent pleads guilty to forging documents to get his children US citizenship

Just a little something likely to amuse many expats
Really, it boggles the mind……..would appear nothing further reached the Consulate.
Those kids don’t know how lucky they are!



Patrick Rocco’s case, which the judge called “puzzling,” leaves loose ends that Thursday’s court proceeding failed to answer.

Topping the list is why Rocco, who had a good career, no criminal record and a history of community service, broke the law to qualify his kids for dual citizenship.

While looking into the expenses, Figeuiredo inadvertently discovered emails between Rocco and Patrick Elliott, a vice-principal with the board, that hatched a plan to alter documents for the citizenship applications.

Rocco’s children are now aged 22, 21 and 19. He has been married 24 years.

On Jan. 5, 2015, Rocco, who was born in the United States, received correspondence from the U.S. Consulate in response to his inquiry about obtaining US citizenship for his children.

The consulate outlined the criteria, which included that one parent needed to be a U.S. citizen at the time of the child’s birth and living in the U.S. for periods totalling five years prior to the child’s birth, at least two of which were after the parent’s 14th birthday.

Rocco, who lived in Canada continuously since 1970 and has dual citizenship, did not meet the criteria.

On July 14, 2015 Rocco sent an email to Elliott that said: “I will call you, but need to change address on a PDF — I have the original as well that I scanned — any thoughts? Need to put in my US address and will explain.”

A series of email exchanges over the next month has Rocco sending two Niagara University documents to Elliott asking him to change the address he lived at while he was a student there from one in Niagara Falls, Ont. (where he actually lived from April 1977 to December 1986) to one in Lewiston, N.Y., where he fraudulently said he lived from 1984 to 1987.

On Aug. 4, 2017, Rocco was arrested by Hamilton police…..charged with two counts of making forged documents and two counts of using forged documents.

Court heard there was no evidence of plans to use the citizenships for financial gain or to jeopardize U.S. security.

“This was the misguided result of an effort to give broader options to his children,” Rocco’s lawyer told the court, without elaborating.

Live Interview with Solomon Yue – Tweet Your Questions, Ideas in Advance! that channel graphic for interview

Reminder – Solomon Yue Visits Toronto

AMChamCanada logoDO_NOT_DELETE_AmCham_Canada_generic_event_image


Solomon Yue, CEO of Republicans Overseas will present publicly shareable information about the TTFI bill, and discuss its progress as it journeys through the legislative process. He will be encouraging AmCham Canada to lend its support in the global effort to encourage Congress to move forward with this legislation. Joined by John Richardson and Elena Hanson
When: Thursday, Aug 16, 2018 – 18:15 to 21:00
Where: St. Michael’s College, Alumni Hall, Room 400; 121 St. Joseph Street,Toronto Ontario M5C 3C2, paid parking near building; nearest subway station is Museum)
Cost: $20 +tax. Pre-registration is required. Registrations due August 13.
If you have any questions about the event, please contact
AmCham Toronto TTFI Event

Continue reading “Reminder – Solomon Yue Visits Toronto”

Identity Theft, and Social Security Numbers in a CRS and FATCA World

An excerpt from “Identity theft in a #FATCA and #CRS World: The Role Of the U.S. Social Security Number” cross-posted from

This morning I received a fascinating message from a third party who writes:


With the creation of Social Security in the US after World War II, Americans were issued individual social security numbers for retirement contribution tracking and disbursement purposes. Over time, by convenience and not by design, these social security numbers morphed into national tax ID numbers and the only identification number used in all aspects of Americans’ lives — from getting a driver’s license, buying a car, enrolling in university, opening a bank account, buying health insurance and soon. The list is endless.

The IRS and the Social Security Administration regularly entreat Americans to be careful about to whom, why, and how they reveal their precious SSI. Indeed, identity theft is the fastest growing industry in the US and rarely a day goes by without yet another data breach making headline news (need a list??) or a warning of fake IRS forms (such as the W8-Ben) enticing people to provide private data never asked on those forms.

Europe, on the other hand, provides its nationals with distinct tax ID numbers. No single identifying number can provide access to and take control of all aspects of an individual’s life.

In comes FATCA and CRS.

And what does the IRS and USG compel us to do? Fork over our SSN to FFIs and foreign governments — and their myriad service providers, data bases and servers.

Aside from this requirement’s dubious legality under GDPR, having to fork over one’s SSN is akin to leaving your front door open with a big “Welcome” sign while you go off on holiday.

Americans get to choose between the risk of privacy violations and identity theft and the ability to bank. If they can find a bank that accepts them that is — not one online European bank will accept a client with the slightest whiff of “American-ness”, even if said
client is a dual national. Discrimination anyone?

It’s not as if there were no other options and the USG had no CHOICE but to put its citizens at risk. The IRS could issue TIN numbers separate from SSN. Americans abroad could prove their identity with a passport number and show their compliance with redacted FBARs and
8938s. Most FFIs in Europe are not even aware that our SSN is the unique number that controls our lives and understand the Solomon’s dilemma once it is explained to them. Yet they cannot do anything about it, they too are victims of the IRS’ extra-territorial reach.

While we wait for various efforts to reform or repeal FATCA to bear fruit, solving this dangerous conundrum should be simple and SSI numbers must no longer be used.


The U.S. tax compliance industry regards FATCA as “The Gift That Keeps On Giving!

For Americans Abroad, FATCA is “The Nightmare That Just Keeps Happening!

John Richardson

So, you have received bank letter asking about your tax residence for CRS or FATCA – A @taxresidency primer – Part 4 -Conclusion

cross-posted from

Part F – A “U.S. citizen” cannot use a “tax treaty tie breaker” to break U.S. “tax residence”. How then does a “U.S. citizen” cease to be a “U.S. tax resident”?

Q. I am a U.S. citizen. I do not live in the United States. I live in Canada. I am a Canadian citizen. How do I stop being subject to the all of the FBAR and other reporting rules, tax rules (including PFIC), life restrictions and inability to effectively invest and plan for retirement imposed by the Internal Revenue Code?

A. You relinquish U.S. citizenship. Please note that a “renunciation” is one form of “relinquishment”. In general, the date of relinquishment of U.S. citizenship is more important than the form of relinquishment of U.S. citizenship. A Certificate of Loss of Nationality (“CLN”) may or may not (depending on the date of relinquishment) be necessary to cease to be subject to U.S. taxation.

Q. In simple terms, where do I get information about the process of renouncing U.S. citizenship?

A. You can start here.

Q. What are the tax consequences of relinquishing or renouncing U.S. citizenship?

A. The Internal Revenue Code describes the tax consequences of relinquishing/renouncing U.S. citizenship. See Internal Revenue Code S. 877A (the “Exit Tax” rules).

Part G – How a “permanent resident” of the U.S. – AKA “Green Card Holder” – ceases to be a U.S. tax resident

Q. I understand that IF I am a U.S. “tax resident” then I may be able to use a “tax treaty tie breaker” to NOT be treated as a U.S. “tax resident”. But, how do I cease being a U.S. tax resident period?

A. The definition of “residence” for tax purposes is NOT the same as the definition of “residence” for immigration purposes. In fact it is possible to have lost the right to live permanently in the United States, but still be treated as a “resident for tax purposes.” “Residence for tax purposes” is defined in Sec. 7701(b) of the Internal Revenue Code and is discussed in the Topsnik case. Most “lawful permanent residents of the United States” cease to be “tax residents” of the United States by either (1) Filing Form I-407 or (2) Filing a “tax treaty election”. You are advised to seek professional advice on the best way to proceed.

ATTENTION!! A permanent resident of the United Sates AKA “Green Card Holder” does NOT cease to be a U.S. “tax resident” by simply moving from the United States to another country. One must take specific steps to sever “tax residency” with the United States.

Part H – Are you, or have you ever been a U.S. citizen or Green card holder? Sometimes it’s not what it seems.

Q. Are you a “U.S. Person” for FATCA purposes?

A. See the articles referenced in the following two tweets.

Conclusion …

The receipt of a FATCA or “CRS” letter is a frightening thing. Take a deep breath. Deal with it rationally and logically. If you are NOT a U.S. citizen you are probably NOT a “tax resident” of more than one country. On the other hand, if you are a “U.S. citizen” …

How would you go about “Solving this problem of U.S. citizenship”?

or maybe this

(For an interesting article on the “Possible Meghan Markle U.S. Tax Chronicles” by Helen Burggraf read here).

I am available on a “consultation basis” to help you sort out your “Tax Residency” in a FATCA and CRS world.

John Richardson

So, you have received bank letter asking about your tax residence for CRS or FATCA – A @taxresidency primer – Part 3

cross-posted from

Part D – Different definitions of “tax residence” – Not all countries define “tax residence” in the same way

Q. What is the criteria that different countries use to define who is a “tax resident” of the country?

A. The circumstances that constitute “tax residence” will differ from country to country. Generally speaking “tax residence” is based on definitions of (1) “residency” (deemed and actual), (2) “domicile” and (3) (in the case of the United States and Eritrea) “citizenship”. Note that different countries may define “tax residency” differently.

Q. How can I learn the definition of “tax resident” for the OECD countries?

A. In an earlier post about “OECD tax residency” I referenced the following chart which summarizes the definitions of “tax residency” in OECD countries. (I suggest that you use these definitions as a “start” to your research and not as the “last word”.)

Q. What is the significance of the “OECD” and why does “OECD tax residency” matter?

A. About the “CRS”: “OECD” tax residency matters because the “OECD” has implemented what is called the “Common Reporting Standard” (“CRS”). The purpose of the “CRS” is to require members to exchange information about the existence of financial accounts, owned by individuals in countries where they do NOT have “tax residence”. For example, if a “tax resident” of Germany had a bank account in Canada, then the German Government would want to know about it! Ultimately this is to ensure that all “individuals” pay their “fair share” of taxes. (By the way, the salaries of OECD employees are generally tax exempt. See an interesting post by Dan Mitchell on the OECD. Seems pretty clear that if OECD employees do not pay tax, that they are not paying their “fair share”.)

Q. About FATCA: Tell me more about the requirements to be a “tax resident of the United States”.

A. The United States has a system of “deemed tax residency”. In other words, the rules are very clear. At a minimum both U.S. citizens and “permanent residents” of the United States (“Green Card Holders”) are U.S. “tax residents” (Note that unless you are a U.S. citizen or “permanent resident” – a physical presence in the United States is necessary make one a U.S. “tax resident”. Here is a post I wrote describing what it means to be a “tax resident of the United States“.

Q. Tell me more about the requirements to be a “tax resident” of Canada.

A. The definition of “tax resident” in Canada includes both “deemed tax residency” and “tax residency based on facts and circumstances”. Here is a post I wrote describing what it means to be a “tax resident of Canada“.

Q. What about South Africa? The way that South Africa imposes taxation on its expats has been in the news lately. Can you tell me about the definitions of “tax residency” for South Africa? Is it true that South Africa is considering “citizenship-based taxation” just like the United States has?

A. No, South Africa has NOT considered “citizenship-based taxation”. But, it doesn’t require much to meet the test of “residence” for tax purposes in South Africa. To understand the “South Africa issue”, see:

Part 1: South Africa is NOT attempting to compete with the USA by enacting “citizenship-based taxation”; and

Part 2: The problem is NOT “worldwide taxation”. The problem is imposing “worldwide taxation” on people who don’t live in the South Africa or the USA and are “tax residents’ of other countries

Part E – Oh My God! I think I might be a “tax resident” of two countries – What is a “tax treaty tie breaker”? How does a “tax treaty” tie breaker work?

Q. I am a U.S. citizen and a “tax resident” of Canada who actually lives in Canada and not the United States. Can I use the “tax treaty” to become a “tax resident” of only Canada?

A. Absolutely, positively NOT. U.S. citizens CANNOT use a tax treaty to break “tax residence” with the United States. The reason is that almost all U.S. tax treaties includes what is called a “savings clause“. The purpose of the “savings clause” is two-fold:

First, to ensure that U.S. citizens can never (without relinquishment or renunciation) cease to be U.S. tax residents; and

Second, to force other countries to agree that the U.S. can impose U.S. taxation (according to U.S. tax rules) on people who are actual residents of those other countries (because those residents are deemed to be U.S. citizens). To understand how this impacts the lives of U.S. citizens living outside the United States see: “How to live outside the United Staes in an FBAR and FATCA world“.

Q. I am a U.S. “permanent resident” (Green Card Holder) and a “tax resident” of Canada who actually lives in Canada and not the United States. Can I use the “tax treaty” to become a “tax resident” of only Canada?

A. Yes, the “savings clause” does NOT apply to Green Card holders. A “Green Card holder” is a “tax resident” of the United States. Therefore, a “Green Card” holder who actually lives in Canada and is a “tax resident” of Canada, may use a “tax treaty tie breaker” to cease to be a U.S. tax resident. But, this decision must be made VERY CAREFULLY because the use of the “tax treaty tie breaker” by a Green Card Holder “may” have the following NEGATIVE implications:

On the other hand, there are many reasons why a Green Card Holder might want to use a “tax treaty tie breaker” to cease to be a “tax resident” of the United States. These reasons include (but are not limited to):

Note: If you are a Green Card holder, the decision to use a “tax treaty tie breaker” should be made only after consultation with an appropriate advisor! I am not kidding! The fallout from making this election can be enormous!

Q. I am a “tax resident” of Canada. I am not a U.S. citizen. I am a pure Canadian! Can I use a “tax treaty tie breaker” to break “tax residence” with another country!

A. Thankfully (as long as you are a “Tax resident” of both Canada and that other country), the answer is YES! Canada (apparently) has more than 90 tax treaties that include a “tax treaty” tie breaker provision. Here is a post that describes how the “tax treaty tax tie breaker” can be used to break “tax residence” with another country.

John Richardson