Tax, Society & Culture: Obama admin taking the high road on #FATCA reciproc..taxpol.blogspot.com/2013/02/obama-… – Turns out that he took the ditch
— U.S. Citizen Abroad (@USCitizenAbroad) May 27, 2013
France and Germany seeking greater #FATCA reciprocity before signing IGAs, expert says – Risk.net risk.net/operational-ri…
— U.S. Citizen Abroad (@USCitizenAbroad) May 27, 2013
Under the current IGAs the US is only reporting on US-sourced payments, he explains. This is something that US financial institutions already collect and send to the Internal Revenue Service (IRS). It is currently provided to home countries upon specific request, but under an IGA, it would be provided automatically.
While Jackel describes the automation of such processes as the key innovation of the IGAs, he says there are still gaps in the so-called reciprocity of the agreements, and this is where France and Germany have concerns.
“Another thing the US is not doing is looking through entities to determine whether there are substantial owners from the UK, Norway and so on, the way non-US institutions are expected to under Fatca. That’s not an obligation that the US has taken on in the reciprocal IGAs, so although the information flows both ways, the burdens are not equal. We’ve heard that France and Germany would prefer that the kind of information they receive looks a lot more like the kind of information the US will receive.”
The debate over FATCA IGAs continues. Few countries that have “signed on”. There has been lots of talk about “FATCA reciprocity”. Most feel that the US the US will not honor reciprocity in practice or in spirit. The reasons for this sentiment include:
– Treasury does NOT have the legal jurisdiction/authorization to enter into an IGA. There is nothing in the text of FATCA that even contemplates the IGA;
– The US is simply untrustworthy;
– Even if Treasury had the jurisdiction/authority to enter into an IGA, U.S. compliance depends on “follow through” by State banks. State banks won’t follow through (if the lawsuits from Texas and Florida are any indication);
– the U.S. is the world’s biggest tax haven. Part of the “FATCA benefit” to the U.S. is that it would preserve its advantage in Deleware and attack the “tax haven business” of other countries. The U.S. does not like competiton;
– from the perspective of other countries, a FATCA IGA would be equivalent to a Treaty. From the U.S. perspective a FATCA IGA is NOT a treaty but (at best) a “competent authority” agreement
– and perhaps more.
Here is the page on the Treasury site that provides FATCA information.
The US is requiring (at the risk of oversimplification) all countries to:
– actively identify those who according to the U.S. are “suspected of meeting the U.S. definition” of U.S. persons;
– turn their complete banking information over to the IRS.
Interesting that the U.S. has the right to define “U.S. persons”as it chooses.
Now, for other countries (let’s use Germany as an example) shouldn’t true reciprocity require the U.S.:
– actively identify those who the German government wants to define as German taxpayers;
– turn all of their banking information over to the Government of Germany?
In other words, meeting the terms of an IGA should mean:
Germany will turn over to the U.S. the banking details of ANYONE the U.S. wants.
The U.S will have to turn over to Germany ANYONE Germany wants.
Isn’t that true reciprocity? Doesn’t true reciprocity mean that Governments simply become the equivalent of “bounty hunters” seeking those with assets to confiscate?
Please explain what I am not understanding. I guess FATCA really means that the whole world simply “pretends” there is reciprocity where there is not.
What would true FATCA reciprocity look like to you? Remember the U.S. retains the right to define its taxpayers as it wants.
The only way to avoid turning all governments into “bounty hunters” is for all IGAs to say that the “Great WorldWide FATCA Hunt” excludes bank accounts in one’s country of residence. Example: The U.S. cannot request that the Canadian government turn over the banking details of any lawful resident of Canada.
The U.S. may have to abolish citizenship-based taxation as the price that must be paid to get a FATCA IGA. It’s becoming increasingly clear the the U.S. cannot have both citizenship-based taxation and FATCA!
It should be ok that the US be ‘primarily’ reciprocal :-/
Well, that would be consistent with the latest “IRSSpeak”.
But, of course, that’s what is meant by “US Exceptionalism”
“US Exceptionalism” + FATCA = Everybody else shuts down their tax havens = US banks rake up the profits
Ultimately, FATCA was written to do a big favor to the US banking and accounting industries. The little guys like us can go get screwed. Anyway, when was the last time YOU wrote a $1M check to your favorite American politician? I know I have not paid anybody in Washington to look after MY interests, hence they are fully ignored.
And their diabolical formula for success may have gone off without hitch if it wasn’t for the need to provide reciprocity for it to work.
These guys are so dumb. All they see is their own tax gap, not how they’re benefiting from the capital of others. A truly global, multilateral FATCA would just shuffle capital in favour of France and Greece (high tax & evasion) at the expense of the USA (efficient & accessible). Of course that will never happen because BRICs & co have already worked out that money will flow quickly to where there’s no capital controls (i.e. no FATCA). But we won’t even get there. FATCA will die when the reciprocal obligations are imposed on US financial institutions. They’ll balk at the price and make a call to Washington