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FATCA Discussion Thread (Ask your questions) Part Two

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Please ask your questions here about FATCA.

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3,498 thoughts on “FATCA Discussion Thread (Ask your questions) Part Two”

  1. @AnonAnon

    You raise an interesting point. Very little, or, maybe, way too much.

    The press release says that German institutions will make information on US customers available. The US obligation is to make interest income and dividend income information available. It doesn’t say anything about the information relating to German customers or customers resident in Germany. Maybe they’ll just send the entire data set and let the Germans deal with figuring out if anyone is a German resident.

  2. From Simon Black (sovereign man) today:

    ViaMat, a Swiss logistics company that has been safeguarding precious metals since 1945, is literally the gold standard in secure storage.

    They have vaults from Switzerland to Hong Kong to Dubai, and they count among their clients some of the largest mining companies in the world. They know what they’re doing.

    And now they’re dumping US citizens.
    ……
    This matter-of-fact letter from ViaMat management explains their decision:

    “We are currently experiencing rapid and substantial changes in the general regulations within this business. The changes mainly relate to the tax structures and taxation systems of various countries. As a consequence of these changes VIA MAT INTERNATIONAL has taken the decision to stop offering this service at its vault [sic] outside of the US to private customers with potential US-tax liability.”

  3. monalisa1776: which side is requiring Puritan values and where? Does the USA require cleanliness in your country of Residence so as to allow you to visit USA without citizenship?

    For myself, I am no longer accepting Money from women for sex.

  4. @Notamused…

    Regarding Germany… Just saw this, this morning…

    Germany in no hurry to sign its Fatca IGA, expert says</
    Author: Jessica Meek
    Source: Operational Risk & Regulation | 22 Feb 2013
    Categories: Operational Risk

    The link above is via Google News so you can read it…

    Germany in no hurry to sign its Fatca IGA, expert says
    Author: Jessica Meek
    Source: Operational Risk & Regulation | 22 Feb 2013
    Categories: Operational Risk

    Some excerpts…

    One of the original five Fatca partners likely to take its time over signing IGA, expert warns.

    Germany is in no hurry to sign its Foreign Account Tax Compliance Act (Fatca) intergovernmental agreement (IGA) with the US Internal Revenue Service (IRS), an industry expert has warned. The jurisdiction is one of the original so-called five Fatca partner countries of the US, but it is yet to sign an IGA with the US.

    “I would like to ask why it would be necessary to hurry,” he says. “The reporting starts in 2015 and it seems very unlikely that Germany won’t sign the IGA in 2013. Aside from a few exemptions and procedures coming from national peculiarities, the final regulations contain most of the relevant implementation measures, which means that the banks are already aware of what’s coming. Really, there is no reason for the German legislator to hurry.”

    But others in the industry think there is more to it than just a simple lack of incentive. In November 2012, a German-Swiss tax agreement failed to gain approval from the German parliament because of disagreement among the different parties in government…….

    “Governments tend to worry about the political aspects of their actions,” says Andrew Watters,

    “All the countries that have signed up already – including the UK – will now find that the disadvantage of that move is that the parts where the US relaxed the implementation burden in the final regulations are not part of these IGAs,” he explains.

    …….Article 7 of the UK-US IGA states that the UK shall be granted the benefit of any more favourable terms that may be afforded under a future bilateral agreement with another Fatca partner country.

    “That said, this effectively ‘most favoured nation’ clause does not apply to annex II of the IGA, which sets out country-specific exemptions

    Read more here…
    https://www.google.com/search?hl=en&gl=us&tbm=nws&q=germany-in-no-hurry-to-sign-its-fatca-iga-expert-says

  5. Oops with that BIG link above. No way to edit comments these days, so sorry. Petros, do you think things are stable enough to add that option back in? 🙂

  6. @notamused…

    This is the translation that came up for me….

    Agreements to promote tax compliance in cross-border cases of Germany and the U.S. initialed.

    Germany and the United States have initialed an agreement last night to promote tax compliance in cross-border situations. It improves the tax information exchange between tax authorities in the U.S. and Germany. The agreement also creates legal certainty for German financial institutions in relation to the U.S. Treasury.

    The agreement is based on the along with France, Italy, Spain and Britain negotiated with the U.S. model agreement on exchange of information or U.S. American withholding tax deduction in relation to the U.S. (see the press release dated 26/07/2012 ). It is related to the area known as FATCA law of the United States and has the following content:

    Germany undertakes to collect from the Germany-based financial institutions for information on guided U.S. customer accounts and the U.S. authority to provide.

    The U.S. undertakes, in return, the German tax authorities to provide information on interest and dividend income are available, which raises the IRS of U.S. financial institutions.

    The U.S. undertakes to exclude all financial institutions based in Germany from the obligation of having to conclude with the IRS agreements to avoid in the U.S. Quellensteuereinbehalte under FATCA.

    Both sides are to create the conditions for the early signing of the Agreement.

    That last statement interests me. “Both sides are to create the conditions for the early signing of the Agreement.”

    Is that a reference to the requirements that Germany demands on reciprocity which can only happen if there is legislation in America? Germany certainly seems to require these conditions, and the US has yet to create them!!

  7. @Mark Twain, effectively yes. It’s very difficult for foreigners to visit the states with any sort of record, especially for drugs. I feel the War on Drugs is stupid but am pragmatically acknowledging that I don’t want to risk getting into trouble because I need to know I can easily continue visiting my family in America. When applying for the visa waiver, the application form asks very specific questions which need to be answered; to lie would be a felony. I also believe that many governments exchange information about arrests and criminal records. So to my mind, just NOT worth the risk!

  8. @Just Me I think one possible, if not probable scenario is that Germany signs the IGA and takes a “wait and see” position on it, i.e. if the Americans deliver relevant data to Germany, then Germany will follow suit. If, however, it turns out that the Americans were bluffing, then Germany will simply not provide anything. I’ve heard comments to that effect elsewhere already.

  9. Source: http://www.repealfatca.com/index.asp?idmenu=4&title=News&idsubmenu=117

    FATCA: the “Fear And Total Confusion Act”

    Yet More Trouble for FATCA: China and Germany

    James George Jatras for RepealFATCA.com

    February 22, 2013
    Washington, DC

    As noted earlier, FATCA (the Foreign Account Tax Compliance Act) is unenforceable and unviable unless virtually all countries in the world – or at least all the major financial centers – sign on. That is looking less and less likely, spelling big trouble for a law that one of America’s top tax lawyers has correctly described as “sheer idiocy.”

    No China, no FATCA

    No scheme of global financial reporting can possibly succeed without China. As noted by Nigel Green, CEO of deVere Group regarding China and Hong Kong:

    FATCA could, ultimately, unravel if China rejects the IGA because FATCA’s primary strength would come from all governments around the world forcing their financial institutions to become compliant with it.

    Should the country which looks set to be the world’s dominant economic super power in a matter of decades rebuff FATCA, the project would be compromised and could, in the end, fail as such a stance would, many experts agree, prompt other countries to do the same.

    [ . . . ]

    It’s currently unclear but there are signs that Hong Kong could indeed act independently from Beijing’s stance as there has been no reference to Hong Kong, a special administrative region (SAR), in any of the published material we’ve seen on the matter.

    Additionally, James Jatras, of the Repeal FATCA campaign, informs us that, interestingly, like the People’s Republic of China, Hong Kong is not on the list of 50 countries the Treasury claims to be negotiating with. [“Could China Kill FATCA?,” Feb. 22, 2013]

    Germany “in no hurry”?

    While China’s compliance with FATCA always has been problematic, one country the U.S. has counted as a “given” from the outset is Germany. Among the first five countries to indicate a willingness to sign an IGA, Berlin was supposed to have been wrapped up by the end of 2012. While efforts to finalize a U.S.-Germany IGA will press forward hard in 2013, they could be tripped up by Berlin’s insistence that information exchange be a two-way street (“Germany in no hurry to sign its Fatca IGA, expert says,” Feb. 22, 2013).

    The problem of reciprocity has raised itself with the report that the U.S. Treasury Department plans to ask Congress – much earlier than expected – for new legislative authority to move closer to “full reciprocity” than currently exists in the Model 1 IGA. It’s speculated that this is because one or more countries has told Washington they will not sign until they get a more balanced exchange of information. Legislative approval ofadditional authority for information exchange is unlikely in light of Congressional and industry objections to even the limited bank interest reporting already provided for under the “Model 1” version of the IGA.

    In short, not just Germany but any government that insists on mutual respect and cooperation from the U.S. side is unlikely to get it.

    Time for an alternative to FATCA

    As Congress begins to wake up to the inadvertent mess this misguided and insufficiently thought-out law stands to cause, FATCA’s prospects are dimming every day. Incredibly, even as the unraveling of FATCA begins to accelerate, some countries remain convinced (in large part due to a poor understanding of the U.S. political system) that capitulation to FATCA by signing an IGA in one form or another is the only recourse – but “there must be no diminution of the countries’ sovereign rights.” This, of course, is a contradiction in terms, since FATCA inherently is a flat-out surrender of sovereignty to Washington’s diktat. Moreover, the IGAs don’t even provide any significant degree of protection for firms facing crushing compliance costs.

    Instead of cooperating with the Treasury Department’s efforts to rope them into the FATCA corral, financial firms and foreign governments need to move with the political winds in Washington – and get behind the campaign to repeal “the worst law most Americans have never heard of.”

    As efforts to repeal FATCA begin to pick up steam, it’s time to start thinking about alternatives to what is aptly called by some the “Fear And Total Confusion Act.”

    James George Jatras
    http://www.RepealFATCA.com
    RepealFATCA@gmail.com
    @RepealFATCA
    +1.202.375.1007

    Visit http://www.RepealFATCA.com for more information on “the worst law most Americans have never heard of”
    +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
    James George Jatras
    Principal, Squire Sanders Public Advocacy, LLC
    http://sspa.squiresanders.com/

    Email: james.jatras@squiresanders.com
    Office: +1 202 626 6248
    Mobile: +1 202 375 1007
    Reception: +1 202 626 6600

    Profile: http://sspa.squiresanders.com/professionals/professionals_detail.aspx?attorney=6014

    Squire Sanders Public Advocacy, LLC is a wholly owned affiliate of Squire Sanders (US) LLP.

    Squire Sanders (US) LLP
    1200 19th Street, NW
    Suite 300
    Washington, DC 20036
    http://www.squiresanders.com

  12. Mark Twain…

    That NYT times article is sad and amazing…. I thought I was reading about America’s future… It certainly isn’t that bad yet, but the Reed amendment is on the books just waiting to be used…

    “Compared to other forms of political persecution, the denial of the right to return home seems like a small evil,” said Hu Ping, the editor of a pro-democracy journal in New York who has not been allowed to see family members in China since 1987. “But it’s a blatant violation of human rights.”

  13. @Joseph Zernik

    You may not have noticed, but that entire piece by James Jatras was posted on the 22nd as a separate thread here…

    Thanks for drawing attention to it again.

    Helpful hint: To check for most recent postings, you can use the “Archive” button in the “About Isaac Brock Society” bar at the top of the page.

  14. From this evening’s Neue Zürcher Zeitung newspaper (excerpted):

    “The transparent American customer

    With regard to the US FATCA rules Swiss banks are requiring their US customers to leave all rights to their data at the border, which not only concerns the US Internal Revenue Service, but also third parties.

    American clients of Credit Suisse have received in recent weeks unpleasant post. With respect to “changes in the US tax code, particularly in the context of the FATCA-rules”, the letter states that the customer will be prompted to sign another form “Authorization to Disclose Data to the IRS and the bank’s US custodian bank». The signature is necessary for the continued existence of the banking relationship.

    Preparing for the worst case
    US customers must now agree that their bank details are supplied not only to the US IRS, and the US Depositary of their Swiss bank, but may be sent from there to other third parties. “Wherever they are located, and whoever they (the IRS and the Custodian) as suitable,” it says in the letter. In addition, the US customer is liable in case of any misuse in such disclosure. After you send the data to the US, the customer is also no longer under Swiss but foreign law. The letter went on to state that the authorization does not expire once signed. On request, UBS confirmed that it has sent a letter identical to their U.S. customers. Other banks stated that such a disclosure was being planned.”

    http://www.nzz.ch/aktuell/wirtschaft/wirtschaftsnachrichten/schweizer-banken-verlangen-glaeserne-us-kunden-1.18021854

    Canada and the rest of the world should expect the same if they sign a FATCA IGA.

  16. @MarkTwain…
    I see they closed the comments on that NYTs article quickly, so no opportunity to weigh in with some similarities of a future America.

    @Innocente

    That third party issue is one that Americans should fear. ID theft is a real concern. The IRS says they are now going to truncate SSN for domestic uses, so does that apply to FATCA data transmission too? Frankly I don’t know how that works, or if it is effective…

    http://www.accountingtoday.com/news/IRS-Allow-Truncated-Tax-IDs-Combat-Identity-Theft-65769-1.html

  17. Some tax havens closer to home than Cayman Islands

    America has taken aim at tax-dodging individuals and the banks that help them. Congress has passed the Foreign Account Tax Compliance Act, which forces foreign financial firms to disclose their American clients. Any whiff of offshore funds has become a political liability. During last year’s presidential campaign, Republican candidate Mitt Romney was excoriated by Democrats for his holdings in the Cayman Islands. Now Jack Lew, President Barack Obama’s nominee for treasury secretary, is under fire for once having had an interest in a Cayman fund.

    Getting rich people to pay their dues is an admirable ambition, but this attack is both hypocritical and misguided. It may be good populist politics, but leaders who want to make their countries work better should focus instead on cleaning up their own backyards and reforming their tax systems.

    The archetypal tax haven may be a palm-fringed island, but there is nothing small about offshore finance. If you define a tax haven as a place that tries to attract nonresident funds by offering light regulation, low — or zero — taxation and secrecy, then the world has 50 to 60 such havens. These serve as domiciles for more than two million companies and thousands of banks, funds and insurers. Nobody really knows how much money is stashed away, but estimates vary from way less than to way more than $20 trillion.

  18. The reciprocity thing is what will make FATCA shoot itself in the foot. Sure, signatory countries will want the same. BUT those of us who are international citizens will be doubly screwed (pardon the language) if reciprocity really goes through. US source money – including that of family origin, non-speculative in nature – will be reported to the foreign country of residence, thus subjecting it to confiscatory double taxation. And we already know what’s happening to our ordinary accounts where we live abroad. And what will be be able to leave our kids ? A big fat nothing. Foreign-source money should remain the business of the foreign country, and US- source the business of the US. All this reciprocity willl just kill us. Or may the FATCA, which would be preferable !

  19. FATCA is the beginning of the end of dual citizenship, ultimately forcing people to choose and renouncing the citizenship of the country they came from.
    I wonder how this will impact migration patterns in the future and what the consequences of limiting emigration would be.

  20. Good comment, Chris.

    Seems that Norway is in the same Place as others. The signature reports were premature and have faded away.

    blitt enig in Norwegian and är overens in Swedish is astronger than “agree to agree” but slightly weaker than “agree”

    http://www.regjeringen.no/nb/dep/fin/aktuelt/nyheter/2013/avtale-mellom-norge-og-usa-om-rapporteri.html?id=710830

    Agreement with the United States to automatically exchange information about account issues of financial institutions – FATCA

    The Ministry of Finance has agreed with U.S. authorities on an agreement between the IRS automatically reporting the account conditions in financial institutions. The agreement builds on the U.S. FATCA legislation (Foreign Account Tax Compliance Act). The agreement will facilitate the reporting obligation for Norwegian financial institutions.

    FATCA is a U.S. international law imposes foreign financial institutions to report financial information about individuals (physical persons, companies and other entities) that is taxable in the United States directly to the U.S. government. Financial institutions that choose not to report information under FATCA, after the U.S. rules will be fined 30 percent withholding tax on payments from the U.S..

    Once agreement on the implementation of FATCA is signed between Norway and the United States, the reporting obligation for financial institutions easier by allowing them to send the information to the Norwegian authorities who will communicate them to the appropriate U.S. authority. The agreement means that Norwegian institutions will not be subject to withholding tax.

    For the Norwegian tax authorities, the agreement that they will automatically receive information on all accounts Norwegian taxpayers in U.S. financial institutions.

    The aim of signature of the Agreement as early as possible in 2013, and the text will be published.

  21. @Chris…

    I do think you make an important point. Those are the ‘unknown unknowns’ of FATCA. I was just constructing this email to Roger about other country signers to the FATCA IGAs not requiring all the information on their citizens that the US wants, and said this…

    Roger. You and I understand that. However, I would note this…

    More and more countries adopt tax strategies by copying what the Hegemon does. 🙂
    IE, the Sons of FATCA…

    Also, more countries look at the US system of Citizenship taxation, and given their so called “revenue needs” say, why not us too?

    Each country has their own methods of keeping residents locked into Tax compliance even when living abroad.

    In New Zealand, I found, I had to go through a formal process to extract myself from Tax Residency, and while not as onerous as the U.S. model, it still took action on my part.

    Yesterday, I ran into an “US Citizen acquaintance” I hadn’t seen for years, who stopped by for a chat. The conversation drifted into taxes, as it seems to do a lot with U.S Persons abroad these days. She had been a New Zealand resident, and then married an American since I saw here last and moved back to the States.

    She had not formally changed her tax residency status, and now was receiving the notice from the IRD that she had to report her foreign (in the case the US) accounts and pay taxes on them. Her friend, who was a US Person, but Tax attorney by profession interest really perked up and started asking questions about their status as NZ residents too.

    She was in a panic, as you can imagine. New Zealand, would love to have her now living in Vermont, continue to pay taxes ‘down under’ by maintaining her NZ tax residency status. I think she can undo it without too much trouble, but might get stuck for this past tax year of paying taxes to NZ on her retirement accounts in the US which are not a recognized exempt savings vehicle.

    In the future, an IGA might want to find out about her, so they could collect should she not voluntarily come into compliance. She has an TIN issued by the IRD, and they might want the IGA to give that up to them for her accounts in the US. I can already see the Banking question they would be required to ask. “Do you have a TIN from any other country on the globe? If so, tell us what it is.” Failure to provide information will subject the customer to recalcitrant status, and of course we all know the penalties for perjury.

    I also have heard from yachting friends, horror stories of them trying to extract themselves from HMRC tax residency rules, as the HMRC considered them UK tax resident, even though they had left the UK on their yacht many years before and were now residing in New Zealand. It was not without a lot of effort and pain that they finally got the HMRC to let go of them.

    It is a slippery slope the world is going down with this FATCA reporting, and as you know, Andy Sunberg, our friend, once asked the question “What would the world look like, if they all adopted the U.S. Citizenship Taxation practice?”

    With this age of copy cat tax practices, we could be heading there by other means. That alone is a reason to oppose FATCA, as it gives the world some pretty terrible ideas! As you know there have been some open rumors in CPA circles that Australia technocrats were considering the US Citizenship taxation model, and as goes Australia, so goes New Zealand.

    So, we don’t really know that the IGA signers don’t want similar information that the IRS requests. Their tax offices may be pouring over those FATCA and IGA regs and using them as the model for the new taxation regime they want to create. If it is good enough for the US Goose, than good enough for the IGA country gander. 🙂

    Just trying to see the possible bigger trend picture…

    Cheers

  22. The treaties overlap. If one has a Residence in each Place which is not unavailable (not rented out, not sold), then both countries claim them as a resident, and the paper nightmare begins.

    I spoke with the local tax authorities here last week, and they wanted to Review each person exiting to see if tax could be stopped or not (Dubai etc might be a problem)

  23. What the German press notice says:

    1- Germany is promising to get and provide information about bank accounts.
    2- The US is only promising to provide information about interest and dividends that it already happens to have.

    This is by no means reciprocal, although the press notice is trying hard to make it appear so.

    However there is talk of “each side fulfilling the requirement for a signature” soon. It doesn’t say what that “requirement” could possibly be.

  24. http://www.sydsvenskan.se/ekonomi/uppgifter-ska-utbytas-med-usa/

    Data is exchanged with the U.S., , Jan 28, 2013

    Stockholm.
    Neither bank secrecy or the Personal Data Act provides no protection when the United States with the support of a new agreement begins retrieve account details from Sweden, probably next year.
    In exchange, Tax more information about accounts in the United States. .

    – It can be about as much information both ways, says Marcus Sjogren, ministry secretary at the Finance Ministry.

    One difference is that Sweden does not want thresholds for information about Swedish capital accounts in the United States.

    A Swedish draft agreement is taking shape.

    – When it is finished it will be sent over to the U.S., says Sjogren.

    The agreement is intended to replace the controversial U.S. FATCA rules, which come into force in January 2014 and is considered contrary to Swedish bank secrecy and data protection.

    The aim is to get agreement from new Swedish legislation in place that allows banks, asset managers and insurance companies in Sweden are obliged to disclose the basis for the Tax Agency, which in turn forwards the relevant information to the United States.

    – It is in line with recent developments in information exchange, the bank secrecy and data rules should not be relied upon as barriers against countries exchange information. The development has been important in Sweden, says Sjogren.

    Accounts in Sweden with less than $ 50 000 (about 325,000 dollars) are not covered. In practice, it is a small percentage of the nearly 10,000 Americans who live in the country concerned.

    Norway is expected in the days to sign a similar agreement. Denmark, Mexico and the UK are already clear.

    Under FATCA rules is dual citizenship does not prevent the disclosure of information to the United States. That someone has lived, worked and underestimated in Sweden all his life does not matter.

    Swedes of residence in the United States (so-called green card) is also covered.

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