FATCA in Europe: what your bank reports about you to Washington

Sooner or later the letter arrives. Your bank in Oslo, Stockholm or Zurich wants to know whether you are a US person under US tax law, and it encloses a form called W-9. Many people who were born in the US and have lived in Europe for decades hear about FATCA for the first time at this point. This article explains what is behind that letter: which agreement obliges your bank, what it reports about you and to whom, how it spots a US connection, what the W-9 is for, what applies if the bank wants to close your account, and what the bank's report means for your own obligations.

1What FATCA is and why your bank applies it

The Foreign Account Tax Compliance Act is a US law, passed on 18 March 2010. It requires financial institutions outside the US to check whether their customers are US citizens and to report those customers' accounts. A US law cannot directly bind a European bank. That is why the US has signed intergovernmental agreements with many countries that carry the procedure over into national law. So your bank is not applying American law, but an agreement its own country has signed.

Under US tax law, a US citizen is always a US person, even if they are also tax resident in another country. The intergovernmental agreements spell this out for new accounts: for the self-certification, a US citizen counts as tax resident in the US, even if they are resident in another country at the same time. Whether you feel American, hold a US passport or have ever lived in the US makes no difference.

What your side of the obligations looks like, meaning the tax return, FBAR and Form 8938, is summed up in our overview of US tax obligations for Americans abroad. Why the US gets so much from the information exchange and gives so little back is covered in our article on FATCA, CRS and the automatic exchange of information.

2Two models

The agreements come in two basic forms. Under Model 1, the bank reports to its own tax authority, which passes the data on to the IRS. Under Model 2, the bank reports directly to the IRS. Germany opted for Model 1, Austria and Switzerland for Model 2.

2.3Switzerland

Switzerland also uses Model 2, in force since 2 June 2014. According to the State Secretariat for International Finance, Swiss financial institutions report account data directly to the IRS with the consent of the US customers concerned; for customers who do not consent, the US has to request the data through administrative assistance. On 27 June 2024, Switzerland and the US signed a Model 1 agreement that provides for an automatic, reciprocal exchange between the authorities. It is set to enter into force on 1 January 2029 at the earliest.

3What the bank reports and when

The key point: the bank reports balances and income. It does not calculate any US tax and it does not file a return for you. The IRS can match what the bank reports against your tax return and your FBAR. If you don't file, your account still shows up in the IRS's data.

4How the bank spots a US connection

For existing accounts, the bank searches its records for clues, which the agreements call US indicia. There are seven:

• the account holder is recorded as a US citizen or US resident,
• an unambiguous US place of birth,
• a US mailing or residential address, including a US PO box,
• a US phone number,
• a standing order to an account in the US,
• a power of attorney or signing authority granted to a person with a US address,
• a c/o or hold-mail address as the customer's only address.

If the bank finds one of these indicators, it must treat the account as reportable unless you resolve the indicator with documents. For new accounts, the bank asks you directly: at opening it collects a self-certification that lets it determine whether you are tax resident in the US, and checks it for plausibility against the documents it already gathers for its anti-money-laundering checks.

The most common trigger in Europe is the place of birth. If you were born in the US, you are generally a US citizen, even if you moved back to Europe at the age of three. The IRS points out that a customer whom the bank classifies as a US citizen based on such indicators must either provide a Social Security Number or prove that they are no longer a US citizen.

5The self-certification and Form W-9

Form W-9 is the form a US person uses to give a reporting institution their US taxpayer identification number. Banks ask US customers for a self-certification with a US tax number, typically on a W-9 or a comparable form. For US citizens, the tax number is the Social Security Number. If you don't have one, you apply on Form SS-5 through the Social Security Administration's overseas services.

If you are not a US citizen but have a US indicator in your records, you instead provide a self-certification stating that you are neither a US citizen nor tax resident in the US. This can be a Form W-8 or a comparable bank form. How W-8 and W-9 differ and which form you need when is explained in our article on IRS Forms W-8.

5.1Born in the US, but no longer a US citizen

For this case, three documents are required: a self-certification that you are neither a US citizen nor tax resident in the US, a non-US passport or other official identity document, and a copy of your Certificate of Loss of Nationality. If you don't have the certificate, a reasonable explanation is enough: why you don't have it despite having renounced your citizenship, or why you did not acquire US citizenship at birth.

5.2What to sort out before you sign

With the W-9 you confirm under penalty of perjury that the information is correct. If you are filling out a W-9 for the first time and have never filed a US tax return, you should know beforehand how you will put the past in order. From now on your bank reports every year, and the IRS can match the report against its own data. The intended route for non-willful failures is the Streamlined Foreign Offshore Procedures, and how to get your first filing as an Accidental American off to the right start is covered in our article on filing for the first time as an Accidental American.

6If the bank closes your account or refuses to open one

6.3Switzerland

Switzerland is not a member of the European Union, and the EU directive does not apply there. There is therefore no right to a basic account under EU law. If your Swiss bank closes your account, read its terms and conditions and sort the matter out early, before your salary or rent has to run through another account.

A basic account is a payment account. A securities account is not included. Where US citizens in Europe can hold securities and which funds they are better off avoiding is covered in our article on brokerage accounts for US taxpayers.

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7What the bank's report means for your own obligations

Your bank's FATCA report is a report about you, not your report. It replaces nothing you have to file yourself. If your foreign accounts together exceed $10,000 at any point during the year, you file the FBAR on FinCEN Form 114. If your foreign assets exceed the Form 8938 thresholds (for single filers living abroad, more than $200,000 at year end or more than $300,000 at any time during the year), you attach Form 8938 to your tax return. And the tax return itself is due as soon as your gross income reaches the threshold for your filing status.

Because the bank reports the year-end balance and the FBAR asks for the highest balance during the year, the figures won't match. That is not a contradiction, as long as both are correct. Keep your statements: the IRS requires you to retain records for every reported account for five years from the FBAR due date.

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8Step by step after the bank's letter

1. Find out whether you are a US citizen. Birth in the US, a US parent at birth, a green card: any of these can decide the answer.
2. If you are a US citizen, get a Social Security Number if you don't have one.
3. Before you sign the W-9, get a clear picture of the past: which tax returns and which FBARs should you have filed?
4. Choose your route for the past, usually the Streamlined Foreign Offshore Procedures if there was no willful intent.
5. Give the bank the documents it asks for within the deadline it sets.
6. If you are no longer a US citizen, provide your self-certification, passport and Certificate of Loss of Nationality or your explanation.
7. Set up your annual deadlines: tax return, FBAR and, if applicable, Form 8938.

If you are thinking about giving up US citizenship altogether, you need the last five years in order first. What happens tax-wise when you leave is covered in our article on the exit tax.

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In short

• Under FATCA, banks in Europe must identify and report accounts held by US persons.
• Reported are name, address, US tax number, year-end balance and, for securities accounts, income and sale proceeds.
• Indicators such as a US place of birth or a US address trigger a query; US citizens usually provide their tax number on a W-9, and anyone who is no longer a US citizen proves it with a self-certification, passport and documentation.
• The bank's report replaces neither your FBAR nor your tax return.

How we help you

• US taxes for US citizens abroadForm 1040, FBAR and Streamlined for US citizens living in Europe.
• Streamlined FilingCatch up on missed US tax returns and FBARs through the Streamlined procedure.
• US Tax ConsultationYour US tax question, answered by people who know both sides.