I showed a friend Monzo a while back and he loved it so download the app and has just got to the top of the queue. At first I get a load of excited messages telling me how wonderful it all is, then, when he gets to the last page and sees he’s required to declare his US Tax Residency sends me a load of messages about how terrible Monzo is, FACTA and the IRS.
I’m a Canadian citizen so I put my SIN in there and haven’t had any kinda trouble.
Anyone know what Monzo needs the tax residency for? Maybe @GalaxyMergirl can help as I think you’re a US citizen?
As an American I was a bit cautious about this when I switched over to the current account, but after some research I found that FACTA just means they will share data with the IRS about your account balances, but it is only required to be reported if you have a balance of over $50,000 USD. (and at that point it needs to be submitted on your US tax return, you need to show where the money came from, etc).
So, not an issue for me , but for someone who has a lot of money in accounts outside of the US and is trying to keep it out of sight of the IRS, it could be an issue?
Monzo needs this to comply with CRS and the British-American treaty requiring HMRC to play IRS agents. It is awful, and ridiculous. Taxation without representation. But it isn’t a bad thing with Monzo, they’re following the law and accepting US citizen customers. It isn’t Monzo’s fault that the US is crazy or that our government has betrayed us.
Your friend needs to report all his accounts to the US anyway, so it doesn’t change much.
Metro bank have started asking all their customers about their tax residency, presumably due to FACTA, but I heard there is also a treaty between UK and Switzerland that has some obligations on reporting to Swiss authorities - though I have not verified that claim yet
For those wondering what FATCA and CRS mean…CRS is Common Reporting Standards…FATCA is the Foreign Account Tax Compliance Act (which was passed as part of the HIRE Act)
FATCA generally requires that non-US financial Institutions and certain other non-financial entities report on the assets held by their U.S. account holders or be subject to a 30% withholding tax on withholdable payments. The HIRE Act also contained legislation requiring U.S. persons to report, depending on the value, their foreign financial accounts and foreign assets.
HIRE is the Hiring Incentives to Restore Employment (HIRE) Act.
The UK signed an intergovernmental agreement (IGA) with the U.S. on September 14, 2012. It was the first IGA signed with the U.S. and has become the basic model for most countries to follow. The UK IGA is a reciprocal agreement, where the UK and the U.S. will reciprocate information about their citizens’ investments in foreign countries.
Pursuant to the UK IGA, U.S. withholding tax will not be imposed on UK Financial Institutions (“FIs”), nor will UK FIs be required to remit the 30% withholding tax associated with FATCA, provided that the UK FIs comply with the reporting obligations associated with U.S. account holders. Those UK FIs in compliance will be considered a reporting UK financial institution (“RUKFI”).
On 17 June 2013, G8 leaders presented a report concluding that the FATCA Model 1 IGA was a logical basis from which to build a standardized model for the OECD automatic information exchange initiative. There are various models including 1, 1A, 2 etc, both reciprocal and non-reciprocal. The prefered model is reciprocal as implemented in the UK.
Over 50 European, Western and other countries have passed or are in the process of passing Intergovernmental Agreements with the U.S. ensuring tax avoidance by U.S. citizens is minimized in most regions of the world.
“Tax avoidance” LOL. I owe them nothing, but they spend a fortune processing my paperwork. Same for everyone in my shoes. A simple “I am a British Citizen living in the UK, thus I have treaty rights” declaration is all that would be needed to handle any tax concerns. Maybe a scan of my British passport or even an embassy visit at the beginning, and occasional self-certification and audits of residency.
The rest of it isn’t about tax - it’s about spying.
I got a couple of letters from two German banks I used to bank with until some time in 2016. (Deutsche Bank and a local Sparkasse) who wanted to know my tax residence status, including whether I was a US citizen. I am no longer their customer, and they didn’t even have my current address (Royal Mail’s forwarding was the only reason I still got those letters). I’m just mentioning this to point out that the FATCA and CRS nonsense is by no means limited to Monzo, challanger banks, the UK, or even currently active accounts (when I queried this with the banks they both stated that they must report these things to the German tax authorities until 2 years after account closure).
Incidentally: Does anyone know what we use as TINs in the UK? They wanted to know mine, and I just told them I didn’t know it…