A group representing French-American taxpayers has filed a complaint against France with the European Commission over its compliance with the US Foreign Account Tax Compliance Act (FATCA), in a bid to avoid being blacklisted by French banks starting in January.
France is a signatory to an agreement to give the US Internal Revenue Service personal and financial data about accounts and investments controlled by US taxpayers. The Paris-based Accidental Americans Association (AAA) argues this inter-governmental agreement is in breach of European Union law.
AAA argues that it is a violation of the EU's General Data Protection Regulation (GDPR) as it authorises the "massive storage and transmission to the United States of the personal data of numerous individuals" without their consent.
As a result, the advocacy group says French nationals with dual American citizenship face de facto discrimination, even though "most of these people have no links with the United States."
It added the European Commission had a year to decide if it will launch any proceedings against Paris on the issue.
The FATCA international tax code was designed to stop Americans stashing money abroad to evade tax. It forces banks worldwide to start revealing, via national tax agencies, information on clients with links to America. And it spawned the Common Reporting Standard, whereby over 100 countries swap data with each other to discourage cross-border tax dodging.
But many Americans living abroad have found it has also caused problems for them. Banks in France have warned that they could be forced to close up to 40,000 accounts belonging to US citizens because of ongoing difficulties with FATCA.
The 'Accidental Americans'' association has been battling for years to be exempt from a US demand that all its citizens overseas file bank details along with yearly tax returns.
The legal challenge follows a move by a US-born British citizen who started a crowdfunding campaign to stop HMRC sharing her personal information with the US Internal Revenue Service (IRS) under FATCA.