Yesterday, the U.S. Treasury released it’s 2016 Model Tax Treaty.
I suspect that people will interpret this in terms of how it affects their individual situations. This gives a huge clue with respect to information exchange and how the U.S. views “double taxation”, citizenship-based taxation and related issues.
In the past, Brokers have been tremendously resourceful in analyzing complex documents.
I invite you to read the model agreement and comment on whether you see any improvement in how it affects your situation in different countries. Common sense dictates, that the text of the model treaty can be used as an interpretive aid for interpreting the existing treaties.
I am particularly interested in whether you see anything in this which would affect: pensions, PFIC, foreign corporations, etc.
Is this about continuing double taxation or is it about ending double taxation?
Is this Treaty better suited to justifying the exchange of information under FATCA?
When (if) you comment, please make clear which country you live in.
I notice right at the beginning, in Article I it reads:
4. Except to the extent provided in paragraph 5 of this Article, this Convention shall not affect the taxation by a Contracting State of its residents (as determined under Article 4 (Resident)) and its citizens. Notwithstanding the other provisions of this Convention, a former citizen or former long-term resident of a Contracting State may be taxed in accordance with the laws of that Contracting State.
5. The provisions of paragraph 4 of this Article shall not affect:
a) the benefits conferred by a Contracting State under paragraph 3 of Article 7 (Business Profits), paragraph 2 of Article 9 (Associated Enterprises), paragraph 7 of Article 13 (Gains), subparagraph (b) of paragraph 1, paragraphs 2, 3 and 6 of Article 17 (Pensions, Social Security, Annuities, Alimony and Child Support), paragraph 3 of Article 18 (Pension Funds), and Articles 23 (Relief From Double Taxation), 24 (Non-Discrimination) and 25 (Mutual Agreement Procedure); and
b) the benefits conferred by a Contracting State under paragraph 1 of Article 18 (Pension Funds), and Articles 19 (Government Service), 20 (Students and Trainees) and 27 (Members of Diplomatic Missions and Consular Posts), upon individuals who are neither citizens of, nor have been admitted for permanent residence in, that Contracting State.
That’s why I buy gold coins and hide them so the US can NEVER get at them.
I’ll just sell them when I need some money, simple and a good savings insurance.
Steven, (Feb 22 8:23 am) I think your idea is brilliant, and becoming our only hope. I am a member of your club. Even absent the USA’s arrogance, this is probably a great idea for anybody in the world.
@Steven, Sounds like a great idea in these uncertain times….
This treaty model is good ammunition for the CBT lawsuit. It demonstrates the US government’s intent to tax “former citizens,” who can not possibly receive any of the constitutional benefits of being a US citizens, to include General Welfare or Protection, which are the constitutional justifications for taxation, along with paying Government Debts.
This is basically another USG human rights abuse in the making (surreptitiously slipped into Tax Treaties like FATCA was into the Hire Act). It needs to be called out for what it is at the earliest stage possible.
Perhaps Rand Paul’s office would be a good place to start.
Robert Stack needs to go. He is truly an evil man.
Everybody needs to stop dreaming here. Calling out FATCA a bad and injust rule for americans living abroad and telling USA that IT IS NOT ALLOWED TO USE CBT because the United Nations does not allow it serves no purpuse what so ever. We are not dealing with a democratic gouvernement but with a private corporate organisation acting like a financial mafia.
Just look at the Franck act (called the directive BRRD in Europe) that allows failing banks to seize the deposits of their clients to stay afloat.
Don’t you people realise that whatever you try to do they have screwed us. Or rather they have screwed themselves. Because more and more people are realising that you just cannot trust gouvernments or the banks anymore.
Buy gold and silver coins and hide them well from the kings men is the ONLY WAY to save your savings or save for the futur.
Note that this is the OECD treaty model. The OECD treaty model is the precursor for setting CRS GATCA into motion. There is quite a bit of self-spreading propaganda amongst anti-FATCA people, that CRS is only for RBT countries. Some of the anti-FATCA people are actually cheering for it. CRS and the model treaty are for whatever the treaty partners want it to be. And America is the first to show it for what it is.
Why doesn’t CRS just verify residence address and be done? Address is all that is needed to implement RBT. But CRS requires self-declaration of country of birth, city of birth, and nationality. CRS is the perfect tool for ANY country to implement CBT.
“OECD does not specify what is reportable—it allows the participating countries to determine what accounts are reportable. “The term “Reportable Account” means a [Jurisdiction A] Reportable Account or a [Jurisdiction B] Reportable Account, as the context requires, provided it has been identified as such pursuant to due diligence procedures, consistent with the Annex, in place in [Jurisdiction A] or [Jurisdiction B].”
This means that either jurisdiction may negotiate and determine its own reportable accounts in its agreement. For example, the United States, with its citizenship-based taxation, has established in its FATCA Intergovernmental Agreements that accounts held by US citizens and US Persons for Tax purposes in the other country’s jurisdiction are required to be reported via FATCA.”
No one has yet told me exactly how the IRS can collect any taxes or penalties from a Canadian citizen if the money was earned here. What concrete steps could they actually and realistically take even if they know where the money is? The CRA won’t help and I doubt they’d have luck in the courts. Is trying to freeze your bank accounts realistic? Are there any precedents? If you have no US assets and have no plans to return what’s to lose by simply forgetting about it?
“No one has yet told me exactly how the IRS can collect any taxes or penalties from a Canadian citizen if the money was earned here.”
In 2002 TD Waterhouse, in Canada, withheld both 10% Canadian tax (correctly because I live in Japan) and 30% US withholding (sound familiar?) from Canadian sourced interest income.
TD Waterhouse refused to explain why and they closed my account rather than explain why. But in those days the IRS was answering e-mail so the IRS explained the reason was that TD Waterhouse had an affiliated company in the US. I asked the IRS if my employer should send 30% of my salary to the US in addition to deducting Japanese withholding, and the IRS said that if my employer had an affiliated company in the US then the answer would be yes.
Death and taxes :/