The news of a deal between the 5 major EU governments and the US regarding FATCA came as a major shock to many, including myself, last week. I have now come across news that the EU, now bolstered by the US drive to implement FATCA, has on its agenda to really join US pressure and try to “break Switzerland” as I like to say. On the forums I have also come across posts which have implied that Russia and China are probably not going to resist FATCA either. See everything below.
European Deal could double the pressure on Switzerland with the EU joining the US in violating Swiss sovereignty:
European Fatca deal “threat to Swiss secrecy”
As a complete aside, part of me thinks that many EU countries also want to scare EU citizens into not putting their money into Swiss Francs or in Switzerland at all due to the Eurozone crisis. There are major tax dodgers holding accounts there, but you never know…!
Russia may also be giving in to FATCA as well. Eric writes on the forum that:
“The Association of Russian Banks just sent a letter to the Russian Ministry of Finance asking what they’re supposed to do about FATCA.
Previously they had basically recommended that Russia just roll over and comply with FATCA:
Roughly translated excerpt: “according to the results of the preliminary consultation with credit organisations’ specialists and international experts, we believe it appropriate to recommend that Russian credit organisations participate in FATCA. This step at a minimum would resolve the problem of withholding of funds, because in place of enforced penalties, they will only need to collect and transfer data. Aside from this, such a step prevents possible reputational harm to Russian credit organisations in the international financial market.”
Most importantly though, Geeez has found a report that the Chinese are in talks with the US on implementing FATCA along the lines of the EU deal:
By the way, in the link above, hover over the first link in the first line “US’s FATCA laws…ruining the lives of American expats”. Yes, that’s right, that is a link back to this website! Looks like the site is really starting to take off 🙂
If the EU, Russia and China give in to FATCA and put significant pressure on Switzerland’s banking sector, who is going to be able to resit FATCA? Who is left? Canada, Japan, Australia…? I am so embarassed that my country (Italy and thus the EU) was one of the first to “sell out” to the US. FATCA is a blatant violation of the rule of dominant nationality, as Petros has mentioned in a post beforehand, yet all of these countries seem to be lining up and falling over each other in order to please Uncle Sam as quickly as possible and trample over the rights of their own citizens (in blatent violation of European and National Data Protection Laws!).
I think tha the only way that FATCA will be repealed now is if the US Congress thinks that it is doing economic damage to the US. If the whole world implements it though, is there even any danger anymore in investing in the US since basically every bank will already be subject to FATCA? Is renouncing now the only way to protect your privacy and have banking services as a “US person” overseas if there will be no “FATCA-Free” safe havens in the future?
As a closing thought, look at this link that Geeez found from a blog on Uruguay:
Yes, that’s right – It is already very difficult to open an account as a US citizen even in tiny Uruguay, in addition to the majority of EU countries, Brazil and others. Add your banking stories here as well!
In an ideal world I would much prefer to live under a system where your tax is just deducted automatically from your earnings each month and where you never have to deal with forms, calculate how much you owe or worry about making a potentially expensive accounting error (not to mention dealing with multiple governments). So, a simple, automatic deduction of income tax combined with a hefty VAT (sales tax) would be the ideal tax system for me, the financially-uninterested type of person.
Any country have this system in place already that isn’t some sort of island in the middle of nowhere? Which major countries have the most simplistic and easy to understand taxation system? Russia seems straightforward since you pay 13% on your income no matter how much you make. Any other examples?
I see no reason why taxation cannot become more simplified or automatic in the coming years due to technological advances and assuming that governments can find people who are actually hiding money in tax havens, but FATCA is wrong way to go about implementing this as it is an entirely unilateral initiative.
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