Author Archives: Northern Shrike

Germany will not meet its Foreign Account Tax Compliance Act (Fatca) obligations if the US reneges on an intergovernmental agreement with the country, an observer of the US legislation warns.

….Frankfurt-based Martin Schulte, head of capital markets at the Association of Foreign Banks in Germany, agrees reciprocity is key for Germany to engage in an intergovernmental Fatca agreement. “The reciprocity is one of the key issues for the German government,” he says. “Although I don’t think the German Treasury expects there are too many German citizens hiding in non-transparent vehicles in the US, reciprocity is a matter of principle – like a balance of power and ‘we’re not just following the US wherever they go: if they want something from us, we want something back’.”

The comments come on the back of growing concerns that the agreement is not legally binding on the US side. As such, European participants fear US banks may struggle to supply relevant data to a growing number of individual countries as part of the reciprocity agreements, and may decide not to honour them.

Schulte expects the German government won’t take kindly to any kind of rescindment from the US on the intergovernmental agreement. “If it turns out the agreement wasn’t properly enforced on the US side, then I don’t think the German government would undertake substantial effort to enforce the German Fatca implementation, even though it’s going to be a national law,” he says.

As well as the five intergovernmental agreements, the US has entered into so-called model II agreements with Switzerland and Japan. Nordic countries have also been pushing for reciprocity-style agreements.

Schulte warns this may have a negative impact on the reciprocity process. “Unfortunately, if other partner countries insist on reciprocity too, US banks might face even more effort and compliance costs than their foreign counterparts, since they will have to identify and report customers from not only one but from various countries. It’s hard to imagine this could really work.”

http://www.risk.net/operational-risk-and-regulation/news/2194462/germany-may-ditch-fatca-if-reciprocity-agreement-not-honoured-experts-warn

By Vanessa Houlder in London and Shahien Nasiripour in Washington

The US and Europe’s five biggest economies unveiled fresh details of their coordinated push to crack down on tax evasion on Thursday, in a move that promises to ease the burden on financial institutions that have been enlisted to gather information.

The announcement paves the way for the US to exchange information on account holders who are citizens of the UK, Italy, Spain, France and Germany with tax authorities in those countries. In turn, those authorities are to share information on US account holders with the Internal Revenue Service, the US tax authority.

More at: Financial Times: US and Europe in accord on tax evasion

The CEO of the Financial Services Council (FSC) has headed to Washington DC this week to argue that Australian super funds should be exempt from the reach of the Foreign Account Tax Compliance Act (FACTA) regime.

FSC in Washington to lobby for Aussie Super exemption from FACTA

I want to recommend a book that should be of interest to all IBS contributors/readers:

Nicholas Shaxson, Treasure Islands: Tax Havens and the Men Who Stole the World. London, 2011.

[editors note:  zuludogm has also provided a review of this book]

FATCA and other US initiatives are meant to curtail tax evasion through off-shore tax havens. Or, so we are led to believe. Shaxson shows, with ample documentation, that the US and the UK are the biggest tax havens in the world. Foreigners (“non-resident aliens” in tax lingo) can maintain tax-free savings and investment accounts in the US.  Anti-tax evasion measures taken by the US are chiefly aimed at preventing US citizens utilizing tax evasion strategies intended to attract non-US investment.

Continue reading →

Russian article, published in Russian:

http://www.klerk.ru/law/news/274541/

Anyone with Russian who might provide a good translation? Google translation, with the usual disclaimers, follows. It’s good enough to get the general drift:

According to the letter of the Ministry of Finance of the Russian Federation, Russia has no plans at the international level to harmonize the application in our country the law of the United States, which relates to the mandatory disclosure of payments to the persons subject to taxation in the United States. This May 4 at the conference “Compliance in Russia,” said Director of the Department advising on risk management and compliance at KPMG Dmitry Chistov. From the event: Klerk.ru correspondent Sergei Vasiliev.

Continue reading →

Nordic banking associations open Fatca reciprocity talks

The push for reciprocity under the US Foreign Account Tax Compliance Act (Fatca) is gaining pace, with banks in four Nordic countries now also urging their national governments to facilitate bilateral agreements with the US.

http://www.risk.net/operational-risk-and-regulation/news/2170830/nordic-banks-push-fatca-deal