The French leader is going to tell his US counterpart about the case for easing the US worldwide system of tax, a report says.

France’s President Emmanuel Macron may reportedly press his US counterpart, Donald Trump, to ease the plight of expat “accidental Americans” who have lived entire adult lives abroad. Such US expats struggle to get financial services outside the US because of how they are seen as a compliance burden.

Macron is due to visit Washington DC at the end of April and early May for a summit and the problem US expats face because of America’s worldwide system of tax, and the rules used to enforce it, may come up in talks, Bloomberg said.

A problem is that a person born in the US, even if he or she has never spent any of his/her adult lives in the country, is caught in the crosshairs of the Internal Revenue Service for tax reporting purposes. While in practice expats may not actually send money to the IRS, rules mean that many non-US financial institutions aren’t willing to take them on board as clients. Since the Foreign Account Taxation Compliance Act, aka FATCA, was enacted in late 2010, the position has worsened. Some banks such as HSBC and Deutsche Bank stopped taking business from US clients. FATCA imposes a potential 30 per cent withholding tax on foreign financial institutions that haven’t disclosed US clients.

Organizations such as American Citizens Abroad, which lobby for expats, have called for lawmakers in Washington to change the worldwide tax regime. A recent trend has been of US expats renouncing their citizenship, but this can be a costly and difficult process. 

To some extent, the rise of legislation such as FATCA, and cross-border tax information exchange regimes such as the Common Reporting Standard, are designed to clamp down on expat tax evaders. However, critics say these rules deter people from working abroad and violate legitimate financial privacy. (The US has, meanwhile, not signed up to the CRS.)

As the news service story notes, legislators were urged to go after alleged expat tax cheats after it was found that thousands of wealthy Americans had stashed money in Swiss bank accounts. A number of Swiss firms, such as UBS, no longer offer such facilities. Switzerland and the US have drawn up a cross-border deal under which dozens of Swiss financial bodies paid settlements in exchange for non-prosecution agreements. 

Some banks, such as Royal Bank of Canada, continue to offer financial services to US expats, as do wealth managers in London such as London & Capital and MASECO and Schroders.

Late last year US tax legislation enabled US corporations parking earnings abroad to repatriate it and pay a one-off tax sum in a move seen as encouraging businesses to return money to the home country but this move was not replicated on the individual front, and the worldwide tax regime of the US remains. Most other nations tax persons on a territorial basis.