On Friday Germany became the latest country to approve legislation to help the U.S. in improving tax compliance abroad.
The bilateral agreement implements the Foreign Account Tax Compliance Agreement (FATCA) – a U.S. bill requiring foreign financial institutions to report directly to the Internal Revenue Service on American accounts (or those with substantial ownership by a U.S. citizen) worth $50,000 or more.
The bill’s German supporters say FATCA is part of the global momentum towards automatic information exchange and the pursuit of cross-country tax evaders. EU countries are considering their own versions of the bill to reign-in tax evasion by their own citizens.
Germany joins the UK, France, Italy, Spain, Switzerland, Mexico, Denmark, Ireland and Norway in signing a bilateral agreements with the U.S. to implement FATCA.
The U.S. and Japan released a joint statement last month indicating the two countries were on pace to knock out their own FATCA agreement. In total, the Treasury is engaging with more than 50 jurisdictions to curtail offshore tax evasion, many of which should be finalized by year-end.
FATCA is a portion of the 2010 Hiring Incentives to Restore Employment (HIRE) Act. The law is federally mandated as of Jan. 1, 2013, but its key provisions (including withholding) will not begin until Jan. 1, 2014.
- U.S. Senator compares FATCA to Big Brother (worldradio.ch)
- Compliance deadlines loom for U.S. global tax evasion law (uk.reuters.com)
- Final Regulations Under FATCA Address Phased-In Due Diligence, IGAs, Compliance Obligations and More (joyoftaxlaw.com)
- FATCA Makes Progress, but not Everyone is Pleased (joyoftaxlaw.com)
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.