Debates about tax for people who live across borders are usually about rates: 0% here, 15% there, a flat tax somewhere else. Rates are what governments announce and what newspapers compare.
But a large part of the system that internationally mobile people actually live with is not made of rates. It is made of thresholds: the amount above which an account must be reported, a gift declared, a form filed, a payment refused. Those lines decide who is inside the system and who is not. And many of them are written as fixed numbers that nobody updates.
The argument here is simple. A threshold that does not move with prices is not a neutral rule. It is a rule that gets wider every year without a vote. Over a generation, it turns a measure aimed at large sums into a duty that applies to ordinary savers. And the evidence that this is a choice, not an accident, is that governments index the lines when they want to, sometimes in the same statute.
Two numbers from the same law
The clearest example sits in American anti-money-laundering law.
The Bank Secrecy Act, which FinCEN describes as established in 1970, underpins the FBAR, the report of foreign bank and financial accounts. Under the IRS rules, an American with a financial interest in, or signature authority over, foreign accounts must file if their aggregate value exceeded $10,000 at any time in the calendar year. The regulation, 31 CFR 1010.306(c), still says "exceeding $10,000". The figure is not adjusted for inflation.
The penalty for getting it wrong is. The table of inflation-adjusted civil penalties in 31 CFR 1010.821 lists the statutory $10,000 maximum for a non-willful foreign account violation at $16,536 in its current version.
So the same body of law treats the two numbers differently. The amount that triggers the duty has stayed where it was written. The amount of the fine for missing it has been raised to keep its real value. Each year, the duty reaches further down the income scale, and the cost of failing it stays the same in real terms.
How far down? Measured by the US Bureau of Labor Statistics' consumer price index, prices in September 2026 were about 8.7 times their 1970 average. Ten thousand dollars today buys roughly what $1,150 bought in 1970. Whatever the original intention behind a $10,000 line, it now captures a salary account and a modest savings account held in the country where an American actually lives.
The Supreme Court limited the damage in one respect. In Bittner v. United States, decided on 28 February 2023, the government had calculated a penalty of $2.72 million for five late reports covering 272 accounts. The Court held that the maximum penalty for a non-willful violation accrues per report, not per account. That made the worst case less absurd. It did not change the line at which the duty begins.
Proof that lines can move
If frozen thresholds were simply a technical inability to update numbers, every threshold would be frozen. They are not.
When Congress added section 6039F to the tax code in 1996, requiring Americans to report large gifts from foreign sources, it wrote a $10,000 threshold and attached a cost-of-living adjustment for years beginning after 31 December 1996. That indexed figure is now set each year by the IRS. For 2027, Revenue Procedure 2026-35 puts it at $21,240.31, a figure precise to the cent because it is calculated, not chosen.
The result tracks prices. US consumer prices in September 2026 were about 2.15 times their 1996 average, and the indexed threshold has roughly doubled. The law works as designed.
Alongside it, the IRS applies a separate and much higher line for gifts or bequests from foreign individuals and estates: reporting on Form 3520 is required above $100,000, according to the IRS. That figure is not indexed. Two reporting lines for money received from abroad, one moving every year and one standing still.
FATCA: a line set in 2010
The Foreign Account Tax Compliance Act added section 6038D to the tax code on 18 March 2010. It requires individuals to report specified foreign financial assets above $50,000, "or such higher dollar amount as the Secretary may prescribe".
The Treasury has used that power to set higher lines: according to the IRS comparison of Form 8938 and FBAR, a single filer living in the United States reports above $50,000 at year end or $75,000 at any time, and a single filer living abroad above $200,000 or $300,000. The thresholds for people abroad are higher because their foreign assets are their ordinary assets.
Those figures have not been indexed either. On BLS data, $50,000 at 2010 prices corresponds to roughly $77,000 at September 2026 prices. A household that was below the line when the law was passed can be above it today with exactly the same real savings.
Canada moves its line
Canada offers the counterexample, in a budget tabled a week ago. Residents of Canada must file Form T1135 if the cost of their specified foreign property exceeds $100,000 at any time in the year, as the Canada Revenue Agency explains.
In Budget 2026, tabled on 5 November 2026, the government proposed to double that threshold to $200,000, and to raise the ceiling for the simplified version of the form from $250,000 to $500,000, for tax years ending after 2026. The proposal still needs legislation. But it shows what a government does when it decides that a reporting line has drifted too far below its purpose: it moves the line.
It is not indexing. A one-off doubling resets the clock, and the line starts drifting again the next year. But it acknowledges the problem openly, which is more than most thresholds ever receive.
Europe's €10,000
The European Union has its own fixed number, and it is the same one.
Since Regulation (EC) No 1889/2005, anyone entering or leaving the EU with cash of €10,000 or more has had to declare it. The regulation that replaced it, Regulation (EU) 2018/1672, which has applied since 3 June 2021, kept exactly the same figure. On Eurostat's harmonised index, consumer prices in the euro area were about 52% higher in 2025 than in 2005. The line stayed put.
The next European line is also €10,000. The new Anti-Money Laundering Regulation, Regulation (EU) 2024/1624, limits cash payments for goods or services to €10,000 in Article 80, allows Member States to set lower limits, and applies from 10 July 2027. It is written as a fixed amount. Unless the law is amended, it will mean less in real terms every year it is in force.
For most travellers a cash declaration is a formality and not a burden. The point is not that these rules are wrong. It is that a fixed number in a law about money is a decision about the future, made once, and then made again silently every year by not revisiting it.
Why this matters more to people who live abroad
Someone who lives and banks in one country rarely meets these thresholds. Their accounts are domestic, their gifts are domestic, their cash stays at home.
An internationally mobile person meets all of them at once. An American in Lisbon has a Portuguese salary account, perhaps a pension account from a previous job in London, and a savings account in the United States. The FBAR line is crossed before the first month's rent is paid. A family that sends money between generations in different countries meets the gift reporting lines. A retiree who moves between residences with savings in two currencies meets every foreign-asset form there is.
None of these forms creates a tax. But each creates three things. A filing cost, often paid to a professional. A penalty exposure for innocent mistakes, at amounts that are adjusted for inflation even when the threshold is not. And a signal to banks: the more complicated a customer's reporting position, the more expensive they are to keep, which is one of the reasons why banks close accounts.
There is also a democratic point. People who live outside the country whose forms they file often have weak representation in the system that sets them. The Brief made a similar argument about fees in The Fee State: when the cost falls on people with little voice, nobody has a strong reason to adjust it. Frozen thresholds are the same phenomenon in a less visible form.
The case for leaving the numbers alone
The other side deserves a fair hearing.
Thresholds in anti-money-laundering law are not meant to measure wealth; they are meant to catch movements of money that deserve a second look. A round number is easy to remember, easy to enforce and hard to game. Indexing would create odd figures, like $21,240.31, that change every year and that ordinary people would never know. And tax authorities can fairly argue that, with automatic exchange of financial account information between countries, the forms are a small extra burden on top of information they will receive anyway. The Brief described how much information already flows in The Informant Economy.
Those are real arguments. But they are arguments for simple numbers, not for frozen ones. A government can round an indexed figure to the nearest thousand, or review fixed thresholds every five years, as Canada has just shown it can do on its own initiative. What it cannot honestly claim is that a line set in another decade still means what it meant then.
What follows for anyone with money in more than one country
The practical lesson is not to wait for the lines to move.
- Assume you are above every line. For an American abroad with a local salary account and savings, an FBAR is likely to be required. For a Canadian resident with savings elsewhere, check T1135 for 2026 at $100,000 even though 2027 may bring $200,000.
- Keep one register. A simple list of every account, its maximum balance in the year and its opening date answers most of the forms at once, and is the first thing an adviser or a bank compliance team will ask for.
- Read thresholds as cost, not value. T1135 works on cost; FBAR on maximum value; Form 8938 on year-end and peak value. The same savings can be above one line and below another.
- Treat a missed form as a problem to fix early. Penalties are set per report, and every further year adds another report.
The question of whether to bank abroad at all, and where, is covered in the guide to opening a bank account abroad. The American case, where every one of these lines follows the passport, is set out in how the US taxes its citizens abroad.
Rates will keep making the headlines. The lines nobody moves will keep doing the work.
Work with Sebastian
If you hold accounts, assets or family money in more than one country and want a clear picture of which reporting lines you cross and how to stay on the right side of them, that is the kind of cross-border planning Sebastian works on with internationally mobile clients. Book a consultation.
