Jersey extends reporting deadline for U.S. FATCA upon request

On 15 June 2015, the Government of Jersey announced that Reporting Financial Institutions having registered on the Jersey AEOI online portal can request an extension to the reporting deadline until 31 July 2015. According to the announcement, if “a reasoned request” is addressed to the Comptroller, the extension of the reporting deadline for 2014 “can be expected to be sympathetically considered”.

Singapore allows paper reports only for nil returns

In an updated version of the Singapore online FATCA Filing instructions it is mentioned that Reporting Financial Institutions with nil returns for 2014 can file their reports either electronically or by paper (Link). More precisely, reports can be filed by a) preparing a FATCA report and submitting in online through the International Data Exchange Service (IDES); or by b) completing a paper Nil Return and sending it to the Inland Revenue Authority of Singapore (IRAS). This possibility is only offered to FIs with nil returns while others must file their reports online. The reports shall be filed (or mailed) between 15 June and 31 July 2015.

Safe harbor granted to German Financial Institutions for 2014 reporting deadline

According to German local law § 8 III FATCA-USA-Umsetzungsverordnung, German Financial Institutions are obliged to report data from 2014 by 31 July 2015. If Financial Institutions do not meet this official reporting deadlines, fines are provided in § 11 FATCA-USA-Umsetzungsverordnung. The German Central Tax Office (Bundeszentralamt für Steuern or “BZSt”) announced “safe harbor” provisions for German Financial Institutions in its most recent “Infobrief” from June 2015 (Link). The awaited circular from the German Ministry of Finance should include a legal provision for a grace period for the first reporting year.

German Draft local laws to CRS/CAA

On 9 June 2015, the German Ministry of Finance (“BMF”) released two draft government bills which constitute milestones in the field of automatic exchange of information. The BMF requests written comments though a variety of lobby organizations (Attachment 1) until the 19th of June 2015.

 

  1. Draft ratification law to CAA / Memorandum of Understanding

The Multilateral Competent Authority Agreement (“CAA”) accompanying the OECD Common Reporting Standard (“CRS”) is a multilateral agreement between states to agree on automatic exchange of information in tax matters.  The bill “Entwurf für ein Gesetz zu der mehrseitigen Vereinbarung vom 29. Oktober 2014 (Attachment: Anlage I – in German) zwischen den zuständigen Behörden über den automatischen Austausch von Informationen über Finanzkonten” which was sent out by the BMF and drafted to implement the agreement into binding local law (according to Art. 59 para. 1 s. 2 German Constitution). Among other EU-Member States, Germany already has an obligation to enact transposing law based on the revised EU-Directive on Administrative Cooperation (Link). By sending out this draft laws, Germany will soon satisfy its obligation to transpose the directive into local law.

An accompanying Official Circular (“Denkschrift”) (Attachment: Anlage zur Anlage I – in German) to the CRS/CAA details the techniques and processes leveraged for this coordination including details on the role of the OECD coordination body as well as the structure of the multilateral agreement.

It should be specifically comforting for the financial industry that the draft law also includes a limitation on the use of the processed data. For data exchange on general criminal law matters, a formal mutual legal assistance procedure should still be required.

  1. Draft transposing law to CRS

The core component of the draft bills sent by the BMF is the “Entwurf eines Gesetzes zum automatischen Austausch über Finanzkonten in Steuersachen und zur Änderung des EU-Amtshilfegesetzes und anderer Gesetze” (Attachment: Anlage II – in German). The passage of this bill would not only transpose the revised EU-Directive on Administrative Cooperation into German law but would also include critical components of the multilateral agreement to exchange information on tax matters into local law.

The amending law is structured into several articles including a new law “Draft CRS transposing law” (Art. 1) (“Gesetz zum automatischen Austausch von Informationen über Finanzkonten in Steuersachen”). Furthermore, new provisions within the Law on Financial Managment (“Finanzverwaltungsgesetz”) (Art. 2) will be included, which determine the new responsibilities of the Bundeszentralamt für Steuern (Federal Central Tax Office).  The German Fiscal Code (“Abgabenordnung”) (Art. 3) will be amended by inserting a new provision addressing fines. The law on mutual administrative assistance (Art. 4) will also be revised. A repeal of the German transposing law of the EU-Savings Directive (“Zinsinformationsverordnung“) is not part of this new bill, even though a repeal of the EU-Savings Directive has already been agreed upon at the EU level.

The legislator decided to pass this bill by using the ordinary legislative procedure, including a vote from the parliament.  In contrary, by transposing FATCA into local law, the German legislator did not use this procedure. Rather, based on §117c German Fiscal Code, an ordinance (“Rechtsverordnung“) was enacted without involving the parliament.

In our view, the following should be particularly highlighted:

  • According to § 5 (6) of the Draft CRS transposing law, the Federal Central Tax Office is allowed to conduct tax examinations and audits on Financial Institutions based on §§ 193 – 203 German Fiscal Code.
  • According to § 6 (2) of the Draft CRS transposing law, the tax residency must be determined and assigned – independent from any classification as a reporting person – for all account holders. The so called “Wider Approach” is now mandatory for all German Financial Institutions.
  • According to § 6 (3) of the Draft CRS transposing law, the Financial Institutions must notify persons who are affected by the reporting in a “uniform manner” prior to the first reporting date. This is a clarification to the rather vague notification duty in the revised EU-Directive on Administrative Cooperation Art. 25 (b) 3. However, at this point, a reference to the German Federal Data Protection Act has not been made.
  • Other entities, which classify as “Low risk Non-Reporting Financial Institution according to § 15 (3) 1.c) including footnote 3 of the Draft CRS transposing law, shall be published in a future circular by the BMF. This is also applicable in relation to non-EU Member States. The same holds true for Low risk Excluded Accounts according to § 15 (4) 17. g) of the Drraft CRS transposing law.

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.

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