IRS reporting also requires banks to keep track of investment earnings or so-called capital gains. This is the profit (or loss) made with the sale of securities. For example, you buy 10 shares of Shell for EUR 400 and sell them for EUR 500. The EUR 100 profit is capital gains. The bank is required to report these details on the sale to the IRS. Specialized Dutch investment brokers and high net-wealth private banking divisions of the large Dutch banks already keep track of these details for their clients as a service, but for the average security account it would require banks incurring additional expenses for keeping track of this information.
It however gets worse when investing in mutual funds, for instance the Oil Fund. Within the Fund there would be daily transactions of for instance shares of Shell. The profits made from those underlying sales, need to be allocated to the Fund and to the accountholder as so-called capital gains distributions. This tracking of the underlying gains is something that Dutch institutions are not equipped to handle. Tracking this would require changing their entire administration system at considerable expenses.
Expenses considerable enough for the banks to decide that they rather not have any U.S. persons with security accounts than make the required investments. Consequently, the Dutch banks have been closing all security accounts held by U.S. Persons (regardless of shares or funds) and are refusing U.S. persons as security investors all together.