The parliamentary report, released on Wednesday, states that France should renegotiate its FATCA tax treaty with the US and consider pulling out if it can’t find a way to protect those with dual French-American nationality.
The Foreign Account Tax Compliance Act (FATCA) act, signed in 2010, was created to stop tax evasion by Americans with financial assets abroad after a financial scandal revealed that US taxpayers were hiding millions of dollars overseas.
But since it was rolled out in France in 2013, dual French-American citizens living here are being slapped with huge tax bills from a country they are unfamiliar with that they can little afford to pay.
The term for people who fall into this category is 'Accidental Americans' and they are those who have US citizenship but do not live there, with many of them having little or no connection to the country at all.
One of the reasons behind the problem is that US tax eligibility is based on citizenship and not residency (as it is in most countries).
The report, written by an MP from French President Emmanuel Macron’s La Republique En Marche party in partnership with an MP from the centre-right, calls for restrictions on the way FATCA is implemented in France.
It asks the government to limit it to those who earn above a certain income as well as to better align the French and US taxation systems to avoid people being forced into a double taxation situation.
“In the case of failure of these negotiations, we should envisage unilaterally pulling out of FATCA and restricting the transfer of information,” the report said, adding that regulators in the banking sector should remind banks that they are not allowed to discriminate against clients for having links to the US.
The news is a positive step forward for those who, in some cases were not even aware they were American until being informed by their banks, and have spent years campaigning for action to be taken.
“This report asks the Government to enter into negotiations with the United States with a view to finding a solution to the problems faced by Americans,” President of the 'Association des Americains Accidentels' (Association of Accidental Americans), a campaign group devoted to defending the rights of those affected in France, Fabien Lehagre told The Local.
“And if there is no willingness on the part of the United States to find a solution, France could consider unilaterally denouncing the intergovernmental agreement.
“This should prompt other governments to act to defend their citizens against the perverse effects of US extraterritorial law.”
According to the European Banking Federation (EBF), more than 300,000 people in the European Union are 'Accidental Americans'.