Bulgaria ratifies FATCA Agreement with the U.S.

On 11 June 2015 the Bulgarian National Assembly ratified the Intergovernmental Agreement with the U.S. to improve international tax compliance and to implement FATCA, which was signed on 5 December 2014 (Link). Two parliamentary groups (the BSP-Left Bulgaria Coalition and the Ataka party) expressed their opposition to this Agreement claiming that it is non-reciprocal (Model 1B). Despite these reactions the ratification bill was accepted with wide majority (114 votes to 28 and 3 abstentions (Link)).

The Holy See signs Model 1 FATCA Agreement with the U.S.

On 10 June 2015, the Holy See (acting also in the name and on behalf of the Vatican City State), signed a Model 1 Intergovernmental Agreement (IGA) with the United States of America to improve international tax compliance and facilitate the exchange of tax information with respect to the Foreign Account Tax Compliance Act (FATCA) (Link). The Agreement, which is the first intergovernmental agreement to be concluded between the Holy See and the U.S., was signed by Archbishop Paul Gallagher, secretary for Relations with States and the U.S. Ambassador to the Holy See, Kenneth F. Hackett.

Filers are reminded about their FBAR and FATCA requirements

On 10 June 2015, the IRS issued an announcement reminding taxpayers with a Report of Foreign Bank and Financial Accounts (FBAR) filing requirement that they should report their foreign assets by 30 June 2015 (Link). More precisely, FBAR concerns taxpayers who have an interest in, or signature or other authority over foreign financial accounts whose value exceeded $10,000 at any moment during 2014. These taxpayers have an obligation to file Form 114 directly to the Financial Crimes Enforcement Network (FinCEN). Form 114 is available online through the BSA E-Filing System website and can only be submitted electronically.

In the same announcement, taxpayers living abroad are also reminded that they may have an obligation to file FATCA Form 8938 (Statement of Special Foreign Financial Assets) with their tax return by 15 June 2015.

Update! FATCA XML Schema Prohibited Characters

On 9 June, the IRS issued an alert stating that there is an error in the FATCA XML Schema Best Practices web page related to the inclusion of entity references in FATCA XML documents.  To prevent file error notifications, the IRS requests that files do not include any of the characters mentioned in the FATCA XML Schema Best Practices web page (Link). The IRS further recommends that filers review the corrected FATCA IDES Technical FAQs C16 and C17 (Link). The FATCA XML schema reference documents will be updated to include these restrictions.

Swiss Federal Council Proposes Enhanced Due Diligence Procedures

The Swiss Federal Council issued a press release on 5 June 2015 (Link) calling for enhanced due diligence requirements in order to prevent the inflow of untaxed assets. These requirements should apply with regard to clients resident in countries where the future agreements on the Automatic Exchange of Financial Account Information do not apply. They will not apply in relation to clients resident in countries that have signed a Multilateral competent authority agreement (MCAA) with Switzerland. US clients are also included as FATCA is considered to effectively have an MCAA. These due diligence requirements are not applicable to clients who are resident in Switzerland for tax purposes.

For all other clients, a risk-based assessment should be conducted by financial intermediaries when accepting assets in order to effectively determine whether these assets have been duly taxed. The supervisory authorities and the recognized self-regulatory organization will determine in due time the details of the risk-based assessment. In brief, in cases where a risk-based assessment leads to the assumption that the offered assets are untaxed, the financial intermediaries should reject the business relationship if it is a new client. For preexisting clients, if the client offers untaxed assets, this creates the suspicion that the preexisting assets are also untaxed. The financial intermediary shall request proof of tax compliance or regularization of the situation. If none of this takes place in the allocated timeframe the business relations with this client shall be ended unless the proof of tax compliance is impossible to obtain or regularizing the situation is liable to create “unreasonable adverse effects”.

Seven more countries join CRS by signing the Multilateral Competent Authority Agreement

On 4 June 2015, seven more countries joined the multilateral agreement implementing the standard on automatic exchange of tax information (Link). Australia, Canada, Chile, Costa Rica, India, Indonesia and New Zealand are the latest countries to join the Multilateral competent authority agreement (Link), raising the total number of signatory countries to 61 (Link).

IRS grants extension of time to file FATCA reporting for 2014

Under FATCA certain US withholding agents, foreign financial institutions, and non-financial foreign entities, are required to file Form 8966 (Link), FATCA Report, using the International Data Exchange Service (IDES) provided by the IRS. The original due date for filing the 2014 Form 8966 was 31 March 2015. For calendar year 2014 reporting only: The IRS provided an automatic 90-day extension of time to file Form 8966 to all filers extending the deadline until 29 June 2015.  Filers can now request a second automatic 90-day extension by completing the Request for Additional Extension of Time to File Form 8966 for Tax Year 2014 (Link). If a filer is unable to electronically file Form 8966 as a result of an undue hardship, a request to file Form 8966 on paper can be made by submitting the template Request for Waiver from Filing Form 8966 Electronically for Tax Year 2014. Both requests can be mailed together (Link).

Link to PwC Tax Insights

Italy ratifies FATCA law

The Italian law ratifying the Intergovernmental Agreement between Italy and the United States of America aimed at improving international tax compliance and implementing FATCA has been approved on 3 June 2015 by the Italian Parliament (Link-Italian). It will enter into force after its publication in the Italian Official Journal (date not yet provided).

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