Everyone can read into this how they want but I wanted to put it up. They seem to be indicating further negotiations will need to be undertaken. No mention of dual nationals but they do mention all of the countries involved have a “residency” based tax system.
http://www.hm-treasury.gov.uk/joint_intl_statement_fatca.htm
Well….at least it is a much softer approach.
Thanks very much for posting this. It seems to me that this is:
– a good deal for the banks; and
– helpful to U.S. citizens just trying to live their lives abroad.
I suspect that the U.S. domestic banks are going to be unhappy with this.
Will be interesting to learn more.
Wonder what the position of the Government of Canada will be.
Yes the UK talks about collecting foreign account information of residents of their own countries while the Treasury department issued this gem:
“When taxpayers overseas avoid paying what they owe, other Americans have to bear a disproportionate share of the tax burden,” Emily McMahon, the Treasury’s acting assistant secretary for tax policy, said in the press release. “FATCA is an important part of the U.S. government’s effort to address that issue and these regulations implement FATCA in a way that is targeted and efficient.”
http://www.businessweek.com/news/2012-02-08/treasury-proposes-easing-withholding-rule-for-offshore-banks.html
Wouldn’t the US and the other country be fighting over the same tax dollars if one uses residency to tax and other uses citizenship?
Considering that 50% of Americans living inside the US hardly pay any tax, they’re the ones who are a burden on the system and causing other Americans to pick up the tab for all the services they’re not paying for. How come the Treasury never has anything negative to say about them?
Just to point out a few things. The EU Commission won’t allow these five countries to do a deal just by themselves so eventually something will have to be done with all 27 EU Member States and EU Parliament approval in Brussels. EU Parliament approval shall I say be rather interesting on this issue.
That gem you mentioned is quite interesting and perhaps a slip of the tongue. The recipricioty issue will also be a big deal to much of the domestic US banking sector.
omghe’sstillanamerican: those comments are just amazing. Seems like a lame attempt to justify what they are doing. I think that all of the “lazy” people collecting welfare are more of a burden on their system. Why are productive people overseas supposed to subsidize people in America. This is atrocious!
I get zero benefits from the US. I’m not going to live my life always worrying about the US. I can’t wait to renounce.
I don’t think it is a slip of the tongue Tim. The United States’ idea of reciprocity is I’ll give you $5 if you give me $10. That’s the end result if they don’t switch to residency based taxation.
There is another statement that was put out by the EU commission indicating they are supporting the negotiations by these five EU members for now.
I am absolutely ashamed to be an Italian citizen today after reading this. I can only hope that the European Commission will do the right thing, but I doubt it..
Isn’t it amazing that Canada is holding out. That means there are still serious problems with FATCA.
I bet they signed the agreements with the 5 countries just so it could look like they’d accomplished something.
@DonPomodoro
The only thing I can say is for the the five governments seem to be very vague on what they are actually going to do. No talk of “US Persons” just specified US “accounts”. The US on the otherhand is only going to give back for information on UK, DE, FR, ES, IT “residents.” There are real legal problems with any of these countries implementing domestic legislation to do this at the moment. I am not sure for example whether German government can constitutionally make its banks ask whether you were born in the US for example. I have a feeling the German government knows this but was trying help the US save some face. I also find it hard to believe that the European Parliament won’t have some say in this plus I don’t see the Commission allowing these five countries to negotiate anything without the involvement of other 23 EU members beyond the most preliminary stage. For the five countries to impose a pass through witholding tax as suggested in the release on benificiaries in other non FATA participating EU states would be a MAJOR violation of EU rules.
They call FATCA the “neutron bomb” of the global financial system. Looks like its about to go off. I wonder how this will affect the stock markets.
@omghe’sstillanamerican
Exactly
Neutron bomb is right, as the law of unintended consequences continues to play out.
While I sincerely hope that Minister Flaherty will stand his ground, it’s going to be much harder to go against the grain when nearly the entire core of the Old World has already capitulated to this dangerous American hegemony.
The most frightening aspect of this is exactly what is supposed to make it all more palatable – having individual foreign governments themselves act as IRS deputies, rather than individual financial institutions. This is an even worse scenario beginning to unfold; one where the entire EU effectively mirrors Austria in 1938.
My gut feeling tells me that Canada will soon follow suit unless there is a an immediate and massive outcry from our country’s own citizens to ensure that our government stays the course. The importance of this development shouldn’t be underestimated. It will be the first true test of our country’s resolve against this tyranny and we’d better not fail. The game has begun in earnest.
@Deckard1138
I am not going to say Flaherty is a saint but do remember when he took on both Europeans and the US on that whole global bank tax thing a few years back.
@Tim
So another moment of truth is at hand.
It wouldn’t hurt for us to start a new wave of emails and other contacts with the government and our own MP’s. There are more stakeholders involved than just Flaherty himself.
@Deckard1138
I agree. Check out my new post. Refusing to say whether you’ll accept the same terms as the European is diplomatic for no. The US is going to have to show its cards on whether this whole thing is directed at US “residents” or US citizens abroad.
Tim said: The US is going to have to show its cards on whether this whole thing is directed at US “residents” or US citizens abroad.
I think they’ve already shown their cards in private and that’s why Flaherty couldn’t make a deal with them.
If they want to tax the residents of other countries just because they have some distant link to the US, they’ll have a big fight on their hands. No country will erode their own tax base to help the US get their hands on some more money.
If it was just about American residents having foreign bank accounts there wouldn’t be all this fuss by foreign banks and governments.
@omghe’sstillanamerican
I can’t say I have a crystal ball into what the current government will or won’t due. I’ll say a couple of things I don’t personally agree with many of Stephen Harper’s policies however, the guy is a fucking brilliant politician and he is extremely loyal to his base of which many of the people affected fall right into the center of i.e middle aged to senior citizens with a moderate amount of assets. If this was twenty somethings selling marijuana seeds to Americans Harper and Flaherty probably would not be as strenous in asserting Canadian sovereignty but they people effected on the issues are right smack dab in the Conservatives target demographic groups. Look at the whole China visiting going right now. Basically the Americans dissed the Alberta oil patch and Harper on a dime was quite willing to reverse his previous policies in China in order to stand up for “his people.”
There is a pretty long history of cooperation in tax matters between Canada and the US the fact there is no deal on the table right now indicates somethng is seriously wrong.
The sickest perspective of all is, the minions in the US government know they’re shooting themselves in the foot massively. About a year ago, our US ambassador came to speak to us, and reported that the massive US trade deficits started about the time that the US started taxing its citizens globally, in the early 1960s. He had a little chart and everything.
He effectively suggested in so many words that the US want to cure their structural balance of trade issues, no government program or foreign military intervention is going to do the job. The only way is to stop massively handicapping their citizens who are willing to endure the duress of going abroad and selling what the US produce. This will spread virally — a “keep the control central” approach has as much chance of succeeding as Soviet 5-year-plans.
Getting this understanding into laws that can be passed by the US congress is the real bottleneck. As long as one tolerates the shenanigans of operators like Carl Levin who find it too easy to look for some group of purported sinners who can’t fight back to scapegoat so as to improve his reelection chances, the chances of such legal reform are slim, and the US will further decline.
The defacto system of wanton self-prostitution required to gather enough campaign money to be elected to US public office really does limit the quality of the people who run, and ultimately of the ‘leadership’ they provide. Some solution must be found for this.
@chasb The solution will be the total economic collapse of the United States due to currency devaluation. The reason the standard of living has been high in the past is because of the ability of the US to export its currency, something they print or create electronically, for real resources and manufactured goods. But the dollar is being devalued quickly and countries are looking for alternate currencies. The US will have to adjust. If they don’t, it will turn into a 3rd world country, the rest of the world will go on without them.
Sen Carl Levin can stick it. He lives in a dream world thinking FATCA is going to make a real difference to the US Government’s debt problems.
Hey Carl……you’d be better off concentrating on taxing domestic Americans. The ex-pats (especially the dual nationals who have rights in their own countries) aren’t paying.
All you’re going to do is spend year demonizing, and chasing people the IRS has very very few powers of collection abroad. The exit clause is if the IRS gets nasty, I’ll put my assets in my foreign wife’s name or open up a small foreign company and stash the funds there beyond the reach of the IRS.
You’re on a loser mate…..just admit it.
The only way you can hassle people will be at an US airport flying in from abroad – if they choose to come. Of course you’ve always had that power but it may become politically explosive to start hassling people at airports and watch foreign visitor drop off out of fear of a system they don’t understand. Then you can stand up in Florida and tell the Disneyworld workers why they’ve been laid off.
It’s all crazy – and won’t succeed.
@James: Or Levin can stand up in his own state–Michigan–and tell them what happened to all the tourists from Ontario!
He probably thinks the blueberries will still lure them over LOL