In November 2015, the U.S. signed a Competent Authority Arrangement (“CAA”) with Denmark (Link) in accordance with the IGA previously signed with this jurisdiction (Link). In general, a Competent Authority Arrangement is a bilateral agreement between the U.S. and a treaty partner to clarify or interpret treaty provisions (Link). CAAs establish the procedures for the automatic exchange obligations and for the exchange of information between U.S. and the partner jurisdictions.
On 25 November 2015, the Swiss Federal Council adopted the dispatch on the agreement concerning the automatic exchange of information in tax matters with the EU and was submitted to the Parliament for vote (Link).
On 23 November 2015, Switzerland signed a tax information exchange agreement with Brazil which governs the exchange of information upon request (Link). The TIEA has to be approved by Parliament before it can come into force.
On 24 November 2015, the IRS notified taxpayers that applications for Qualified Intermediary (QI), Withholding Foreign Partnership (WP) and Withholding Foreign Trust (WT) status will be processed in 2015. Applicants who will need QI status for the remaining period of 2015 must ensure that their application is received by the Financial Intermediary Team by 18 December 2015.
On 30 October 2015, PwC released an update to inform the market of the public hearing of the Finance Committee in the German Federal Parliament (Deutscher Bundestag, Link – German) to discuss the CRS implementing law (Finanzkonten-Informationsaustauschgesetz – FKAustG) drafted by the Government (Link – German), which took place on 2 November 2015.
The German Federal Parliament has published the anticipated resolution and the report of the Finance Committee (Link – German). In particular, the Finance Committee recommended the following changes to the draft law:Inclusion of a data protection clause allowing financial institutions to collect, store and process relevant data
- Specification of the record retention period for documents relevant for financial institutions in connection with the fulfillment of reporting and due diligence requirements (10 years)
- Increasing the maximum administrative fine from 5.000 to 50.000 EUR
- Editorial changes in definitions etc.
The report also includes the exact and anticipated textual changes to the draft implementation law as of page 9. It is noteworthy to mention that paragraph 6, section 1 was expanded to oblige financial institutions not only to determine all customer’s tax residencies but to also mandatorily obtain their respective Tax Identification Numbers (TINs) now, irrespective of whether they are tax resident in a CRS Participating Jurisdiction or not, which is in-line with the so-called “wider approach”.
PwC Observation: Unfortunately, this important change has been made only in paragraph 6 and not in the subsequent and relevant paragraphs so that the requirements are at odds with each other. This issue should be assessed rather sensitively in particular from a data protection perspective and, thus, we recommend this to be legally validated before any translation into internal processes and systems with relevant data protection officers.
However, all recommended changes were fully adopted by all fractions and thus, should apply under the law once adopted.
As we also informed you in our last Newsalert, the public hearing also came with three additional requests from the parliamentary fractions “BÜNDIS 90/DIE GRÜNEN” and “DIE LINKE” (18/6064, 18/6065, 18/2014) , in which, inter alia, the extension of the CRS in Germany was stipulated with regard to the additional reporting of local tax residents, or the abolishment of the flat tax withholding regime on capital income. Those additional requests have all been refused with the votes of the fractions of the “CDU/CSU” and “SPD” against the votes of the “BÜNDIS 90/DIE GRÜNEN” and “DIE LINKE”.
On 9 November 2015, Turks and Caicos Islands published “Guidance Notes on the International tax compliance requirements of the legislation implementing the Intergovernmental Agreements (“IGAs”) between the Turks and Caicos Islands and the United States of America and the United Kingdom” (Link).
In November 2015, the U.S. signed a Competent Authority Arrangement (“CAAs”) with Latvia (Link) in accordance with the IGAs previously signed with this jurisdiction (Link). In general, a Competent Authority Arrangement is a bilateral agreement between the U.S. and a treaty partner to clarify or interpret treaty provisions (Link). These CAAs establish the procedures for the automatic exchange obligations and for the exchange of information between these jurisdictions.
On 24 March 2014, an amendment to the EU Savings Directive was accepted, which significantly widens the scope of the EU Savings Directive. The new provisions needed to be implemented in local law by 1 January 2016, having effect on Financial Institutions starting from 1 January 2017. On 15 April 2015, the EU issued a proposal to repeal the EU Savings Directive in light of the introduction of CRS. The repeal proposal contains transitional measures for Austria, to provide Austria with the option to join CRS one year later. The repeal proposal was accepted during the EcoFin meeting of 10 November 2015. The EU Savings Directive is repealed effectively as per the day that the CRS/ EU DAC obligations enter into effect, i.e. as per 1 January 2016 in most cases.
On 18 November 2015, the lower chamber of Dutch parliament (Tweede Kamer) accepted the law to implement the Common Reporting Standard in the Netherlands.
In November 2015, a the U.S. Internal Revenue Service (“IRS”) published a new version of the “FATCA Online Registration User Guide” (Link).