Court: Volksbank was wrong to close accounts of "accidental American"

The Volksbank was not allowed to close the bank accounts of an "accidental American," the Central Netherlands District Court concluded in legal proceedings. The bank closed the accounts of a man who did not want to give the bank specific pieces of information, and who did not want to file a tax return in the United States and was thus suspected by the bank of evading tax. In summary proceedings a year ago, a court ruled in favor of the bank.

The case concerns a Dutch man who was born in the United States while his father was stationed there, making him an American citizen by birth, even though he had no other connection with that country as he only lived there for the first year of his life. U.S. law requires all citizens, regardless of where they live, to file annual tax returns with the U.S. authorities. Moreover, the U.S. threatens to sanction banks who are not attentive to American requirements.

The court ruled that Dutch banks are not required to pass on the bank account details of American citizens with a balance below 50,000 dollars (44,000 euros) to the American authorities. During court proceedings, it was revealed that the man's accounts fall under that limit.

The Volksbank, which is the State-owned parent company of SNS and RegioBank, also closed his account because the man was suspected of evading tax, which could put the bank in a position to be considered guilty of money laundering. "Figures from the American authorities show that only a small percentage of 'Accidental Americans' actually have to pay taxes," the court said in a statement. "It is up to the Volksbank to demonstrate that this man falls into that small group. The bank has not done that."

Filing tax returns in the U.S. can be costly, even if no tax is owed. Relinquishing American nationality can also cost several thousand euros, and also requires that the person giving up their citizenship file a tax return covering the previous five years.