The controversial Foreign Account Tax Compliance Act, FATCA, is shutting the door on investment and financial opportunities for US taxpayers.
From January 1, 2013, foreign financial institutions (FFI) have to phase in reporting information about US taxpayers with offshore accounts and assets to the Internal Residence Service (IRS).
The aim is to tackle tax management by US taxpayers through FFIs.
The result is many international trading platforms are pulling the plug on US taxpayers as clients, claiming they are too much hassle and too expensive to manage.
Just three of the largest trading platforms have indicated they will accept business from US taxpayers in the UK ”“ Skandia, Fidelity Funds Network and Standard Life. A fourth, Transact, remains undecided.
[h=2]FATCA pressure[/h] Industry experts warn that barring US taxpayers will not remove the FATCA shadow from a business.
Reporting financial and personal information about US taxpayers means more than just doing business with them.
FFIs now have to set up systems to identify all new clients as US taxpayers or non-US taxpayers. It's not clear from the US government documentation whether FFIs have to make a ”˜nil return' if they have no US taxpayer clients, but many tax authorities work on the basis that unless they are told no one qualifies for a specific relief or payment, they assume that someone might.
Under FATCA, this means an organisation could be liable to a 30% withholding tax and suspension of business within the US.
“Platforms have obviously had a lot of pressures on them recently, particularly given the changes required under the retail distribution review. Our experience is most firms and platforms have been focused on those kinds of issues. With the first deadlines coming in to comply with FATCA next year, now is the time to start understanding the detailed requirements of what firms need to do,” said Ernst & Young financial services advisory partner Dan Hall.
[h=2]War on tax fraud[/h] Investment opportunity is not the only door shut by FATCA.
US expats worldwide are complaining banks are closing their accounts, while banks back in the State are refusing to take them back. The complaints come from Switzerland, Argentina, Lebanon and other far flung outposts where many legitimate expats need banking to carry on their day to day lives.
For those that can open an account, transactions are becoming more expensive.
“Administrative requirements have increased in all countries that have declared war on tax fraud and are trying to recover money everywhere it has been stashed. Public opinion has changed, and the person who commits fraud is no longer a hero, but a criminal like any other,” said a Swiss Banking Association spokesman.
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From January 1, 2013, foreign financial institutions (FFI) have to phase in reporting information about US taxpayers with offshore accounts and assets to the Internal Residence Service (IRS).
The aim is to tackle tax management by US taxpayers through FFIs.
The result is many international trading platforms are pulling the plug on US taxpayers as clients, claiming they are too much hassle and too expensive to manage.
Just three of the largest trading platforms have indicated they will accept business from US taxpayers in the UK ”“ Skandia, Fidelity Funds Network and Standard Life. A fourth, Transact, remains undecided.
[h=2]FATCA pressure[/h] Industry experts warn that barring US taxpayers will not remove the FATCA shadow from a business.
Reporting financial and personal information about US taxpayers means more than just doing business with them.
FFIs now have to set up systems to identify all new clients as US taxpayers or non-US taxpayers. It's not clear from the US government documentation whether FFIs have to make a ”˜nil return' if they have no US taxpayer clients, but many tax authorities work on the basis that unless they are told no one qualifies for a specific relief or payment, they assume that someone might.
Under FATCA, this means an organisation could be liable to a 30% withholding tax and suspension of business within the US.
“Platforms have obviously had a lot of pressures on them recently, particularly given the changes required under the retail distribution review. Our experience is most firms and platforms have been focused on those kinds of issues. With the first deadlines coming in to comply with FATCA next year, now is the time to start understanding the detailed requirements of what firms need to do,” said Ernst & Young financial services advisory partner Dan Hall.
[h=2]War on tax fraud[/h] Investment opportunity is not the only door shut by FATCA.
US expats worldwide are complaining banks are closing their accounts, while banks back in the State are refusing to take them back. The complaints come from Switzerland, Argentina, Lebanon and other far flung outposts where many legitimate expats need banking to carry on their day to day lives.
For those that can open an account, transactions are becoming more expensive.
“Administrative requirements have increased in all countries that have declared war on tax fraud and are trying to recover money everywhere it has been stashed. Public opinion has changed, and the person who commits fraud is no longer a hero, but a criminal like any other,” said a Swiss Banking Association spokesman.
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Disclaimer: Nothing I say should be taken as tax, legal or financial advice. Anything I say is for general informational purposes only. Always seek independent professional advice.
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Disclaimer: Nothing I say should be taken as tax, legal or financial advice. Anything I say is for general informational purposes only. Always seek independent professional advice.
