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Does a tax treaty or European tax residency exempt me from the FBAR?

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Short answer

No, a tax treaty, foreign tax residency or owing no U.S. tax does not remove the FBAR requirement.⁠Source 1⁠Source 2

The FBAR is a report under the Bank Secrecy Act, filed with FinCEN, not an income tax. If you are a U.S. person and your foreign accounts together exceeded $10,000, you file.⁠Source 1⁠Source 2

What changes the FBAR and what doesn't

Decides whether you file

Doesn't remove the FBAR

  • A tax treaty, including a treaty tie-breaker claim. Treaty provisions do not affect residency for FBAR purposes.⁠Source 4
  • Paying income tax only in your European country of residence.⁠Source 2
  • Using the foreign earned income exclusion or foreign tax credits, so that you owe no U.S. tax.⁠Source 2
  • Not filing a U.S. tax return. The FBAR is filed separately.⁠Source 2

Example

Example

Owen in Edinburgh

Owen is a U.S. citizen who has lived in Scotland for twelve years. He pays UK tax and uses the foreign earned income exclusion, so he owes no U.S. tax.⁠Source 2

His UK current and savings accounts peaked at £21,000 together. He files an FBAR every year, converted at the December 31 Treasury rate for pounds.⁠Source 5⁠Source 2

Common mistake

Treating the FBAR as part of the income tax return, so that a treaty or zero tax bill seems to cover it. It is a separate report to FinCEN.⁠Source 2⁠Source 1

More on this question

I owe no U.S. tax because of the FEIE. Do I still file?

Yes. The FBAR depends on your foreign account balances, not on whether you owe tax.⁠Source 2

I claim treaty nonresidency on my U.S. return. Am I still a U.S. person for the FBAR?

Yes, if you meet the green card or substantial presence test. The IRS manual says treaty provisions do not affect FBAR residency.⁠Source 4

Is the FBAR filed with my tax return?

No. It is filed electronically with FinCEN through BSA E-Filing, on its own schedule.⁠Source 2⁠Source 6

Related questions

Full rules and more examples: What is an FBAR?

Sources

Official sources used for this page.

  1. Source 1: eCFR, 31 CFR § 1010.350 — Reports of foreign financial accounts (opens in a new tab)

    Who has a reportable financial interest in accounts, the rule for owners of record and the definition of signature authority.

    ecfr.govChecked Back to text

  2. Source 2: IRS, Report of Foreign Bank and Financial Accounts (FBAR) (opens in a new tab)

    U.S.-person and $10,000 tests, spousal exception, irrelevance of income-tax filing status and extensions for certain employees and officers.

    irs.govChecked Back to text

  3. Source 3: FinCEN, Who is a United States person? (opens in a new tab)

    Citizens, residents and U.S. entities, including disregarded entities.

    fincen.govChecked Back to text

  4. Source 4: IRS, Internal Revenue Manual 4.26.16 — FBAR (opens in a new tab)

    Financial interests, signature authority, U.S. residency (including 6013(g)/(h) elections and treaties), family attribution, spousal filing, Form 114a parts and amended-FBAR identifiers.

    irs.govChecked Source updated Back to text

  5. Source 5: FinCEN, Reporting Maximum Account Value (opens in a new tab)

    Maximum account value for cash and nonmonetary assets, account-by-account values and currency conversion, including another verifiable rate with its source.

    fincen.govChecked Back to text

  6. Source 6: FinCEN, How Do I File the FBAR? (opens in a new tab)

    Official BSA E-Filing procedure for individual filers.

    fincen.govChecked Back to text