Foreign Account Tax Compliance Act

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Foreign Account Tax Compliance Act
Great Seal of the United States (obverse).svg
Acronyms (colloquial)FATCA
Enacted bythe 111th United States Congress
EffectiveMarch 18, 2010 (26 USC § 6038D); December 31, 2017 (26 USC §§ 1471-1474)
Citations
Public law 111-147
Statutes at Large 124  Stat.   71, 97-117
Codification
Titles amended26
U.S.C. sections created 26 U.S.C.   §§ 14711474, § 6038D
U.S.C. sections amended 26 U.S.C.   § 163, § 643, § 679, § 871, § 1291, § 1298, § 4701, § 6011, § 6501, § 6662, § 6677
Legislative history
  • Introduced in the House and Senate as Foreign Account Tax Compliance Act of 2009 (S. 1934, H.R. 3933) by Max Baucus (DMT); Charles Rangel (DNY) on October 27, 2009
  • Committee consideration by Senate Finance, House Ways and Means
  • Passed the Senate on February 24, 2010 (70-28)
  • Passed the House as the Hiring Incentives to Restore Employment Act, Title V, Subtitle A on March 4, 2010 (217–201) with amendment
  • Senate agreed to House amendment on March 17, 2010 (68–29)
  • Signed into law by President Barack Obama on March 18, 2010

The Foreign Account Tax Compliance Act (FATCA) is a 2010 U.S. federal law requiring all non-U.S. foreign financial institutions (FFIs) to search their records for customers with indicia of a connection to the U.S., including indications in records of birth or prior residency in the U.S., or the like, and to report such assets and identities of such persons to the United States Department of the Treasury. [1] FATCA also requires such persons to report their non-U.S. financial assets annually to the Internal Revenue Service (IRS) on form 8938, which is in addition to the older and further redundant requirement to report them annually to the Financial Crimes Enforcement Network (FinCEN) on form 114 (also known as 'FBAR'). [2] Like U.S. income tax law, FATCA applies to U.S. residents and also to U.S. citizens and green card holders residing in other countries.

Contents

FATCA applies to all subjects identified as U.S. person. All U.S. citizens are U.S. person by default, but a non-U.S.-citizen can be eligible as U.S. person for tax purposes, for example, Green Card holders and corporations under certain criteria. Inhabitants of unincorporated U.S. territories (American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico or the U.S. Virgin Islands) are conciliated with a Resident Based Taxation. However, financial institutions are notified that U.S. taxpayer identification number (TIN) information is mandatory for all reportable accounts with FATCA reporting obligations, even residents of those territories do not pay taxes to the mainland U.S.A. Likewise, FATCA does not apply to Banks in Puerto Rico since they are classified as "Territory Financial Institutions". Nonetheless, customers in Puerto Rico must complete forms W-8BEN and W-8BEN-E as part of the account opening process and reportings are almost the same as other U.S. banks. However, Puerto Rico's Act 273 is that FATCA, Common Reporting Standards (CRS) and Intergovernmental Agreements (IGA) signed between the United States and a foreign country do not apply to International Financial Entities in Puerto Rico.

FATCA was the revenue-raising portion of the 2010 domestic jobs stimulus bill, the Hiring Incentives to Restore Employment (HIRE) Act, [3] [4] and was enacted as Subtitle A (sections 501 through 541) of Title V of that law. According to the IRS, "FFIs that enter into an agreement with the IRS to report on their account holders may be required to withhold 30% on certain payments to foreign payees if such payees do not comply with FATCA." [5] The U.S. has yet to comply with FATCA itself, because as of 2017, it has not yet provided the promised reciprocity to its partner countries and it has failed to sign up to the Common Reporting Standard (CRS). [6] [7] [8] [9] [10] FATCA has also been criticised for its impacts on Americans living overseas, and implicated in record-breaking numbers of U.S. citizenship renunciations throughout the 2010s and 2020s. [11] [12] [13] [14] Bills to repeal FATCA have been introduced in the U.S. Senate and House of Representatives. [15] [16] [17]

Background

FATCA was reportedly enacted for the purpose of detecting the non-U.S. financial accounts of U.S. resident taxpayers rather than to identify non-resident U.S. citizens and enforce collections. [18] However, although there might be thousands of resident U.S. citizens with non-U.S. assets, such as investors, dual citizens, or legal immigrants, [4] FATCA also applies to the estimated 5.7 to 9 million U.S. citizens residing outside of the United States [19] [20] and those persons believed to be U.S. persons for tax purposes. [21] [22] FATCA also affects non-U.S.-person family members and business partners who share accounts with U.S. persons or who have U.S.-person signatories of accounts. This feature allows the reporting of the assets of non-U.S. corporations, volunteer organisations, and any other non-U.S. entity where a U.S. person can be identified.

FATCA is used to locate U.S. citizens (residing in the U.S. or not) and "U.S. persons for tax purposes" and to collect and store information including total asset value and Social Security number. The law is used to detect assets, rather than income. The law does not include a provision imposing any tax. In the law, financial institutions would report the information they gather to the U.S. Internal Revenue Service (IRS). As implemented by the intergovernmental agreements (IGAs) (discussed below) with many countries, each financial institution will send the U.S.-person's data to the local government first. For example, according to Ukraine's IGA, the U.S.-person data will be sent to U.S. via the Ukrainian government. Alternatively, in a non-IGA country, such as Russia, only the Russian bank will store the U.S.-person data and will send it directly to the IRS.

FATCA is used by government personnel to detect indicia of U.S. persons and their assets and to enable cross-checking where assets have been self-reported by individuals to the IRS or to the Financial Crimes Enforcement Network (FinCEN). U.S. persons, regardless of residence location and regardless of dual citizenship, are required to self-report their non-U.S. assets to FinCEN on an annual basis. [23] According to qualification criteria, individuals are also required to report this information on IRS information-reporting form 8938. FATCA will allow detection of persons who have not self-reported, enabling collection of large penalties. [23] FATCA allows government personnel to locate U.S. persons not living in the United States, so as to assess U.S. tax or penalties.

Under FATCA, non-U.S. ('foreign') financial institutions (FFIs) are required to report asset and identify information related to suspected U.S. persons using their financial institutions. [24]

Under U.S. tax law, U.S. persons (regardless of country of residence) are generally required to report and pay U.S. federal income tax on income from all sources. [25] The U.S. and Eritrea are the only two countries worldwide which tax non-resident citizens. The law requires U.S. citizens living abroad to pay U.S. taxes on foreign income if the foreign tax should be less than U.S. tax ("taxing up"), independently within each category of earned income and passive income. [26] [27] [28] For this reason, the increased reporting requirements of FATCA have had extensive implications for U.S. citizens living abroad. Taxpayer identification numbers and source withholding are also now used to enforce asset reporting requirements upon non-resident U.S. citizens. For example, mandatory withholding can be required via FATCA when a U.S. payor cannot confirm the non-U.S. status of a foreign payee. [29]

The IRS previously instituted a qualified intermediary (QI) program under 26 U.S.C.   § 1441 which required participating foreign financial institutions to maintain records of the U.S. or foreign status of their account holders and to report income and withhold taxes. [30] :10–11 One report included a statement of a finding that participation in the QI program was too low to have a substantive impact as an enforcement measure and was prone to abuse. [30] :10–11 An illustration of the weakness in the QI program was that UBS, a Swiss bank, had registered as a QI with the IRS in 2001 and was later forced to settle in the UBS tax evasion controversy with the U.S. Government for $780 million in 2009 over claims that it fraudulently concealed information on its U.S. person account holders. [30] :10–11 Non-resident U.S. citizens' required self-reporting of their local assets was also found to be relatively ineffective. [30] :5

The Hiring Incentives to Restore Employment Act (of which FATCA is a part) was passed on party lines: It narrowly passed the House, with no Republican members voting "yes" [31] and passed the Senate with only one Democrat member voting "no". [32] President Obama (D) signed the bill into law. [33]

Senator Carl Levin (D-MI) has stated that the U.S. Treasury loses as much as US$100 billion annually to "offshore tax non-compliance" without stating the source of the data. [4] [34] On March 4, 2009, the IRS Commissioner Douglas Shulman testified before the subcommittee that there is no credible estimate of lost tax revenue from offshore tax abuse. [35] In his book The Hidden Wealth of Nations , economist Gabriel Zucman estimates that U.S. persons hold US$1.2 trillion in financial wealth offshore. According to Zucman's analysis, this sheltering of assets results in US$36 billion in lost tax revenue annually in the United States. [36]

Supplementing the reporting regimes already in place was stated by Senator Max Baucus (D-MT) to be a means of acquiring more financial data and raising government revenue. [37] After committee deliberation, Sen. Max Baucus and Rep. Charles Rangel (D-NY) introduced the Foreign Account Tax Compliance Act of 2009 to Congress on October 27, 2009. It was later added to an appropriations bill as an amendment, sponsored by Sen. Harry Reid (D-NV), which also renamed the bill the HIRE Act. [38] The bill was signed into law by President Obama on March 18, 2010.

Provisions

FATCA has the following important provisions:

Foreign financial institutions which are themselves the beneficial owners of such payments are not permitted a credit or refund for taxes withheld, absent a treaty override. [42]

US persons are identified by "FATCA indicia". A bank official who knows a U.S. person's status by other means is also required to identify that person for FATCA purposes. [43] After identification, the FFI is responsible under the law for further questioning the individual.

In other words, all account holders of FFIs are expected to confirm whether they are US persons or not. In practice, since the introduction of the Common Reporting Standard, FFIs are required to confirm the residence of all account holders as well as their US status.

The reporting requirements are in addition to the one that all U.S. persons report non-U.S. financial accounts to the U.S. Financial Crimes Enforcement Network (FinCEN). [54] This notably includes Form 114, "Report of Foreign Bank and Financial Accounts" (FBAR) for foreign financial accounts, where the balances of such accounts in the aggregate exceed US$10,000, required under Bank Secrecy Act regulations issued by the Financial Crimes Enforcement Network. [55]

FATCA indicia

Banks which are performing functions according to FATCA law will be searching according to FATCA indicia, which include: [56]

Revenue and cost

There are varying estimates of the revenues gained and likely cost of implementing the legislation.

Revenue

With implementation, FATCA was estimated by the United States Congress Joint Committee on Taxation to produce approximately $8.7 billion in additional tax revenue over 11 years (average $792 million a year). [57] A later analysis from Texas A&M includes an estimate that revenues would be less than US$250 million per year (US$2.5 billion total). [35] (Jane Gravelle, a specialist in economic policy at the Congressional Research Service, has asserted that this figure is small relative to her estimate of $40 billion per year as the cost of international tax evasion.) [34] :36 "The actual annual tax revenue generated since 2009 from offshore voluntary disclosure initiatives and from prosecutions of individual's tax evasion is running significantly lower than the JCT's estimated annual average, at less than $400 million, and will probably result in less than that over the decade 2010 to 2020." [35] "The IRS has claimed that over ten billion dollars in additional tax revenues will be recovered from offshore accounts over the next decade. Since the enactment of FATCA the IRS has received approximately $8.0 billion nearly entirely from FBAR penalties and not from tax collection." [58] Recently, a calculation showed that $771 million of tax revenue loss from U.S. banks could nearly nullify the reported revenue gain reported by the Joint Committee. [59]

Implementation cost

According to the Lebanese business magazine Executive , "FATCA requires major initial investment within an institution, estimated at $25,000 for smaller institutions, to $100,000 to $500,000 for most institutions and $1 million for larger firms. While a boon for the financial consultancy and IT industry, it is an extra cost that institutions would rather not have." [60]

Annual Costs of FATCA
Yr 2012: $8,177,055
Yr 2013: $27,554,441
Yr 2014: $33,625,624
Yr 2015: $110,955,823
Yr 2016: $101,846,152
Yr 2017: $97,614,710
Total: $379,773,805

Previously, there had been few reliable estimates for the additional cost burden to the U.S. Internal Revenue Service, although it seems certain that the majority of the cost seems likely to fall on the relevant financial institutions and (to a lesser degree) foreign tax authorities who have signed intergovernmental agreements. [78] [79] The FATCA bill approved 800 additional IRS employees (cost estimated to be $40 – $160 million per year). According to a TIGTA report, the cost to develop the FATCA XML data website is $16.6 million (which is $2.2 million over the budgeted amount). However, "IRS also submitted a budget request of $37.1 million for funding FATCA implementation for 2013, including the costs to staff examiners and agents dedicated to enforcing FATCA, along with IT development costs. This budget request does not identify the resources needed for implementation beyond fiscal year 2013." [80] The I.R.S. "has been unable to ascertain all potential costs beyond those for IT resources." [80]

Criticism

Certain aspects of FATCA have been a source of controversy in the financial and general press. [81] The Deputy Assistant Secretary for International Tax Affairs at the US Department of the Treasury stated in September 2013 that the controversies were incorrect (myths). [82] In April 2017 the Committee on Oversight and Government Reform, led by Congressman Mark Meadows, held a hearing on unintended consequences of FATCA. [83]

The controversies primarily relate to the following issues:

Whereas the Federal Register stated that 3,415 people renounced or relinquished their citizenship or long-term residence in 2014, the IRS stated that 1,100 people renounced citizenship at only one particular US consulate during the first ten months of 2014. [108] This contradicted prior claims that such statistics are not maintained at the consulates. [109] [110]

Opposition

Congressional bills to repeal FATCA

In 2017, bills to repeal FATCA were introduced in Congress: Senator Rand Paul (R-KY) introduced S. 869 [167] in the Senate [16] [168] [169] and Representative Mark Meadows (R-NC) introduced H.R. 2054 in the House of Representatives. [170] On 26 April 2017, the Oversight and Government Reform subcommittee on Government Operations held a hearing called 'Reviewing the Unintended Consequences of the Foreign Account Tax Compliance Act', chaired by Congressman Meadows. [171]

Republican National Committee

On January 24, 2014, the Republican National Committee passed a resolution calling for the repeal of FATCA. [172]

American expatriates

American Citizens Abroad, Inc., (ACA) a not-for-profit organization claiming to represent the interests of the millions of Americans residing outside the United States, asserts that one of FATCA's problems is citizenship-based taxation (CBT). Originally, ACA called for the US to institute residence-based taxation (RBT) to bring the United States in line with all other OECD countries. [173] Later in 2014, two ACA directors commented on the situation of Boris Johnson. [174] In 2015, ACA decided on a more refined stance. [175] ACA's current position on FATCA as of 2019 is published on its website. [176]

In March, 2015, the United States Senate Committee on Finance sought public submissions to a number of Tax Reform Working Groups. [177] Over 70 percent of all submissions to the International Taxation Working Group [178] and close to half of all submissions to the Individual Taxation Working Group [179] came from individual US expatriates, many citing specific consequences of FATCA in their countries of residence, and nearly all calling both for residence-based taxation and the repeal of FATCA.

In 2014, attorney James Bopp, Republicans Overseas, and Senator Rand Paul of Kentucky, Mark Crawford, among others, brought suit challenging the constitutionality of FATCA. Paul is among the individuals suing the U.S. Treasury and IRS. The plaintiffs, in the case Crawford v. U.S. Department of Treasury, argued that FATCA and related intergovernmental agreements violated the Senate's power with respect to treaties, the Excessive Fines Clause of the Eighth Amendment, or the Fourth Amendment right against unreasonable search and seizures. [180] [181] In 2016, the U.S. District Court for the Southern District of Ohio dismissed the suit, determining that the plaintiffs lacked standing. [182] In 2017, the U.S. Court of Appeals for the Sixth Circuit upheld the dismissal. [183]

Canadians, particularly those considered to be American persons for taxation purposes

Two American-Canadian dual citizens living in Canada, Virginia Hillis and Gwendolyn Louise Deegan, sued the Canadian government (specifically the Attorney General of Canada and the Minister of National Revenue) in 2014 in the Federal Court of Canada, claiming (among other things) that the intergovernmental US-Canadian agreement that implements FATCA violates the Canadian Charter of Rights and Freedoms, particularly the provisions related to discrimination on the basis of citizenship or national origin. [184] [185] [186] [187] The suit was prepared by a group called the Alliance for the Defence of Canadian Sovereignty (ADCS). [187] In 2015, the Federal Court of Canada dismissed the suit, upholding the intergovernmental agreement. [187] [188] The Federal Court also rejected the claims in 2019, [189] [190] although a further appeal to the Federal Court of Appeal may follow. [190]

Democrats Abroad

In April 2022, Democrats Abroad's Taxation Task Force voted to update its position, supporting the repeal of FATCA. [191]

Implementation

On September 11, 2018, the U.S. Government successfully prosecuted its first case against an individual for conspiracy to defraud the United States by failing to comply with FATCA. Former CEO of (liquidated) Loyal Bank Limited, [lower-alpha 1] Adrian Paul Baron (a British citizen) was arrested in Hungary, then transported to the U.S. for trial. Baron pleaded guilty, and was subsequently removed to England by authorities. [192]

Domestic

FATCA added 26 U.S.C.   § 6038D (section 6038D of the Internal Revenue Code) which requires the reporting of any interest in foreign financial assets over $50,000 after March 18, 2010. FATCA also added a requirement in 26 U.S.C.   §§ 1471 1474 that US payors withhold taxes on payments to foreign financial institutions (FFI) and nonfinancial foreign entities (NFFE) that have not agreed to provide the IRS with information on accounts held by US persons. FATCA also added 26 U.S.C.   § 1298(f) requiring shareholders of a passive foreign investment company (PFIC) to report certain information.

The US Department of the Treasury issued temporary and proposed regulations on December 14, 2011, ( 26 CFR 1.6038D-0T et seq.) for reporting foreign financial assets, requiring the filing of Form 8938 Archived April 21, 2016, at the Wayback Machine with income tax returns. [193] [194] The Department of the Treasury issued final regulations and guidance on reporting interest paid to nonresident aliens on April 16, 2012 ( 26 CFR 1.6049-4 et seq., 26 CFR 31.3406(g)-1 ). [195] Treasury issued proposed regulations regarding information reporting by, and withholding of payments to, foreign financial institutions on February 8, 2012, [196] [197] [198] and final regulations on January 17, 2013 ( 26 CFR 1.1471-0 et seq.). [199] [200] On December 31, 2013, the IRS published temporary and proposed regulations ( 26 CFR 1.1291-0T et seq.) on annual filing requirements for shareholders of PFICs. [201] On February 20, 2014, the IRS issued temporary and proposed regulations making additions and clarifications to previously issued regulations and providing guidance to coordinate FATCA rules with preexisting requirements. [202] [203]

On April 2, 2014, the U.S. Department of the Treasury extended from April 25, 2014, to May 5, 2014, the deadline by which an FFI must register with the IRS in order to appear on the initial public list of "Global Intermediary Identification Numbers" (GIINs) maintained by the IRS, also known as the "FFI List." [204] [205] In June 2014, the IRS began publishing a monthly online list of registered FFIs, intended to allow withholding agents to verify the GIINs of their payees in order to establish that withholding is not required on payments to those payees. [206]

International implementation

Implementation of FATCA may encounter legal hurdles. It may be illegal in foreign jurisdictions for financial institutions to disclose the required account information. [207] There is a controversy about the appropriateness of intergovernmental agreements (IGAs) to solve any of these problems, intellectually spearheaded by Allison Christians. [208] [209]

France, Germany, Italy, Spain, and the United Kingdom announced in 2012 they consented to cooperate with the U.S. on FATCA implementation, [210] [211] as did Switzerland, Japan [212] and South Africa.

The deputy director general of legal affairs of the People's Bank of China, the central bank of the People's Republic of China, Liu Xiangmin said "China's banking and tax laws and regulations do not allow Chinese financial institutions to comply with FATCA directly." [213] The U.S. Department of the Treasury suspended negotiations with Russia in March 2014. [214] Russia, while not ruling out an agreement, requires full reciprocity and abandonment of US extraterritoriality before signing an IGA. [215] [216] Russian President Vladimir Putin signed a law on June 30, 2014, that allowed Russian banks to transfer FATCA data directly to US tax authorities—after first reporting the information to the Russian government. [217] Russian banks are required to obtain client consent first but can deny service if that consent is not given. [218] Bangladeshi banks, which have accounts of US taxpayers, may report to the IRS, However they need prior approval of their clients. [219]

A 2014 Swiss referendum against the act did not come to fruition. [220]

In 2019, only Japan has signed a protocol to assist in collection of taxes to residents, including penalties for willful failure to file tax return. [221]

Intergovernmental agreements

As enacted by Congress, FATCA was intended to form the basis for a relationship between the U.S. Department of the Treasury and individual foreign banks. Some FFIs responded [222] however, that it was not possible for them to follow their own countries' laws on privacy, confidentiality, discrimination, and so on and simultaneously comply with FATCA as enacted. [223] [224] This resulted in the creation of intergovernmental agreements (IGAs) between the Executive Branch of the United States government and foreign governments. [225] This development resulted in foreign governments implementing the US FATCA requirements into their own legal systems, which in turn allowed those governments to change their privacy and discrimination laws [226] to allow the identification and reporting of US persons via those governments. [226]

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United States
Jurisdictions with agreements regarding FATCA implementation

Model 1 agreement in force
Model 2 agreement in force
Model 1 agreement not in force
Model 2 agreement not in force FATCA implementation agreements.svg
  United States
Jurisdictions with agreements regarding FATCA implementation
  Model 1 agreement in force
  Model 2 agreement in force
  Model 1 agreement not in force
  Model 2 agreement not in force

The United States Department of the Treasury has published model IGAs which follow two approaches. Under Model 1, financial institutions in the partner country report information about U.S. accounts to the tax authority of the partner country. That tax authority then provides the information to the United States. Model 1 comes in a reciprocal version (Model 1A), under which the United States will also share information about the partner country's taxpayers with the partner country, and a nonreciprocal version (Model 1B). Under Model 2, partner country financial institutions report directly to the U.S. Internal Revenue Service, and the partner country agrees to lower any legal barriers to that reporting. [227] Model 2 is available in two versions: 2A with no Tax Information Exchange Agreement (TIEA) or Double Tax Convention (DTC) required, and 2B for countries with a pre-existing TIEA or DTC. The agreements generally require parliamentary approval in the countries they are concluded with, but the United States is not pursuing ratification of this as a treaty.

In April 2014, the U.S. Department of the Treasury and IRS announced that any jurisdictions that reach "agreements in substance" and consent to their compliance statuses being published by the July 1, 2014, deadline would be treated as having an IGA in effect through the end of 2014, ensuring no penalties would be incurred during that time while giving more jurisdictions an opportunity to finalize formal IGAs. [204] [227]

The Securities and Exchange Board of India (SEBI) said "FATCA in its current form lacks complete reciprocity from the US counterparts, and there is an asymmetry in due-diligence requirements." Furthermore, "Sources close to the development say the signing has been delayed because of Indian financial institutions' unpreparedness." [228]

With Canada's agreement in February 2014, all G7 countries have signed intergovernmental agreements. As of 2024, the following jurisdictions have concluded intergovernmental agreements with the United States regarding the implementation of FATCA, most of which have entered into force. [227]

Intergovernmental agreements
JurisdictionModelSignatureEntry into forceNotes
1October 13, 2015January 18, 2017
Flag of Angola.svg  Angola
1November 9, 2015October 2, 2017
1January 15, 2017June 22, 2017
1August 31, 2016June 7, 2017
1November 18, 2022January 1, 2023
2February 12, 2018July 7, 2019
1April 28, 2014June 30, 2014 [229]
2April 29, 2014December 9, 2014 [230]
1September 9, 2015November 5, 2015 [231]
1November 3, 2014September 17, 2015 [231]
1January 18, 2017March 5, 2018
1November 17, 2014September 25, 2015 [231]
1March 18, 2015July 29, 2015 [231]
1April 23, 2014December 23, 2016
2December 19, 2013August 19, 2014 [230]
Flag of Brazil.svg  Brazil
1September 23, 2014June 26, 2015
1June 30, 2014July 13, 2015
1December 5, 2014June 30, 2015 [231]
1September 14, 2015December 23, 2016
Flag of Canada (Pantone).svg  Canada
1February 5, 2014June 27, 2014 [232]
Implementation act published. [233]
1March 30, 2021February 7, 2024
1B [234] November 29, 2013July 1, 2014 [230]
Flag of Chile.svg  Chile
2March 5, 2014
Flag of the People's Republic of China.svg  China
1"in substance"
1May 20, 2015August 27, 2015
1A [234] November 26, 2013July 8, 2019
1March 20, 2015December 27, 2016
1December 16, 2014August 3, 2016
Flag of Cyprus.svg  Cyprus
1December 2, 2014September 21, 2015
1August 4, 2014December 18, 2014
1November 19, 2012September 30, 2015 [231] Implementation law L67 passed December 20, 2013. [235] Draft implementation regulation published, hearing ended May 8, 2014. [236] Due diligence deadlines June 30, 2015, and June 30, 2016. [237]
1June 15, 2018August 12, 2019
1September 15, 2016July 17, 2019
1April 11, 2014July 9, 2014 [230]
1March 5, 2014February 20, 2015 [231]
Flag of France.svg  France
1November 14, 2013October 14, 2014 [230]
1July 10, 2015September 18, 2015
1May 31, 2013December 11, 2013 [238]
1May 8, 2014September 17, 2015 [231]
Flag of Greece.svg  Greece
1January 19, 2017December 13, 2017
1January 17, 2017November 30, 2018
1October 17, 2016April 6, 2018
1December 13, 2013August 26, 2015
Draft implementation regulation published. [239]
Flag of Guyana.svg  Guyana
1August 29, 2016September 29, 2017
Flag of Haiti.svg  Haiti
1"in substance"
1March 31, 2014February 19, 2015 [231]
2November 13, 2014July 6, 2016
1February 4, 2014July 16, 2014 [230]
1May 26, 2015September 22, 2015 [231]
Flag of India.svg  India
1July 9, 2015August 31, 2015 [231]
1"in substance"
Flag of Iraq.svg  Iraq
2"in substance"
1January 23, 2013April 2, 2014
1December 13, 2013August 26, 2015
Draft implementation regulation published. [239]
Flag of Israel.svg  Israel
1June 30, 2014August 29, 2016
Flag of Italy.svg  Italy
1January 10, 2014August 17, 2015 [231]
1May 2, 2014September 24, 2015
Flag of Japan.svg  Japan
2June 11, 2013June 11, 2013
Flag of Jersey.svg  Jersey
1December 13, 2013October 28, 2015 [231]
Draft implementation regulation published. [239]
1September 11, 2017April 5, 2022
Flag of Kosovo.svg  Kosovo
1February 26, 2015November 4, 2015
Flag of Kuwait.svg  Kuwait
1April 29, 2015January 28, 2016
Flag of Latvia.svg  Latvia
1June 27, 2014December 15, 2014 [230]
1May 19, 2014January 22, 2015 [231]
1August 26, 2014October 7, 2014
1March 28, 2014July 29, 2015 [231]
Flag of Macau.svg  Macau
2December 14, 2016July 30, 2021
1July 21, 2021October 3, 2022
Flag of Malta.svg  Malta
1A [240] December 16, 2013June 26, 2014 [230]
1December 27, 2013August 29, 2014 [230]
Flag of Mexico.svg  Mexico
1November 19, 2012January 1, 2013 [241]
Replaced by revised treaty on April 9, 2014, with no break in enforcement. [242]
2November 26, 2014January 21, 2016
1June 1, 2017March 28, 2018
1September 8, 2015October 28, 2016
1A [243] December 18, 2013April 9, 2015 [244]
2"in substance"
1June 12, 2014July 3, 2014 [245]
Flag of Norway.svg  Norway
1April 15, 2013January 27, 2014 [230]
Flag of Panama.svg  Panama
1April 27, 2016October 25, 2016
2"in substance"
Flag of Peru.svg  Peru
1"in substance"
1July 13, 2015
Flag of Poland.svg  Poland
1October 7, 2014July 1, 2015
1August 6, 2015August 10, 2016
Flag of Qatar.svg  Qatar
1January 7, 2015June 23, 2015 [231]
1May 28, 2015November 3, 2015
1August 31, 2015April 28, 2016
1November 19, 2015September 1, 2016
1August 18, 2015May 13, 2016
2October 28, 2015August 30, 2016
1November 15, 2016February 28, 2017
Flag of Serbia.svg  Serbia
1April 10, 2019January 8, 2020
1July 1, 2019
1December 9, 2014March 28, 2015
Replaced by revised agreement signed on November 18, 2018, entered into force on January 1, 2021. [246]
1July 31, 2015November 9, 2015
1June 2, 2014July 1, 2014 [230]
1June 9, 2014October 28, 2014 [230]
1June 10, 2015September 8, 2016
Flag of Spain.svg  Spain
1May 14, 2013December 9, 2013 [247]
Flag of Sweden.svg  Sweden
1August 8, 2014March 1, 2015
2 [248] February 14, 2013June 2, 2014 [220]
Parliamentary approval obtained; [249] insufficient supporters for a referendum. [250]
Flag of the Republic of China.svg  Taiwan
2December 22, 2016
1March 4, 2016
1August 19, 2016September 22, 2017
1May 13, 2019September 9, 2019
Flag of Turkey.svg  Turkey
1July 29, 2015June 14, 2021
1July 28, 2017November 6, 2017
1December 1, 2014July 25, 2016
1February 7, 2017November 18, 2019
1June 17, 2015February 19, 2016
1ASeptember 12, 2012August 11, 2014 [lower-alpha 2]
1April 3, 2015July 7, 2017
1June 10, 2015June 10, 2015 [231]
1April 1, 2016July 7, 2016

Delays in implementation of IGAs

Many jurisdictions are required to have their IGAs in effect and start exchange of information by 30 September 2015. The US IRS has issued Notice 2015–66, which relaxes the deadline for countries which have signed Model 1 IGAs "to hand over information regarding accounts held by U.S. taxpayers", [251] [252] if the jurisdiction requests more time and "provides assurance that the jurisdiction is making good faith efforts to exchange the information as soon as possible." [251]

Implementation is noted as delayed in the following countries:

In 2014, the OECD introduced its Common Reporting Standard (CRS) proposed for the automatic exchange of information (AEOI) through its Global Forum on Transparency and Exchange of Information for Tax Purposes. The G-20 gave a mandate for this standard, and its relation to FATCA is mentioned on page 5 of the OECD's report. [257] Critics immediately dubbed it "GATCA" for Global FATCA. [258]

The Common Reporting Standard requires each signatory country to gather the full identifying information of each bank customer, including additional nationalities and place of birth. Prior to the implementation of CRS, there had been no other method of fully and globally identifying immigrants and emigrants and citizens by way of their identification numbers, birthplaces, and nationalities. Each participating government is tasked with collecting and storing the data of all its citizens and immigrants and of transferring the data automatically to participating countries. CRS is capable of transmitting person data according to the demands of either residence-based taxation, citizenship-based taxation (CBT) or personhood-based taxation.

Renunciation of citizenship

The number of Americans renouncing their citizenship has risen each year since the enactment of FATCA, from just 743 in 2009 to 3,415 in 2014, [259] 4,279 in 2015, [260] and 5,411 in 2016. [111] Among those who renounced was the then Mayor of London, Boris Johnson, who did so after the IRS taxed the sale of his house in London. [259] Due to the rise in applications and resulting backlog, the fee for renouncing citizenship was raised by roughly 400 percent in 2015 to $2,350. [260] The 5,411 renunciations in 2016 were a 26% increase from the previous record, set in 2015. [111] The number of renunciations for the first three quarters of 2017 was 4,448, which exceeds the entire year's total for 2015. [261]

See also

Notes

  1. Loyal Bank Limited was based in Saint Vincent and the Grenadines
  2. In the UK, formal approval of treaties by the legislature before ratification is not required, although the Constitutional Reform and Governance Act 2010 requires that they are presented to Parliament with an explanatory memorandum, which the government did in September 2012.

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  144. Jisander 2015 , p. 58(in Swedish): "Till undantagen räknas de fall då den registrerade gett sin tillåtelse, om informationsutlämningen krävs på grund av myndighetsutövning." ["The exceptions include cases where the data subject has given his permission, if the disclosure of information is required due to the exercise of authority."]
  145. Jisander 2015 , p. 58(in Swedish): "Vidare är behandlingen av personuppgifter tillåten om intresset av informationsutlämningen väger tyngre än skyddet för den personliga integriteten samt om personuppgiftsansvarige eller tredje man som tar emot personuppgifter ska kunna genomföra en arbetsuppgift på grund av myndighetsutövning." ["Furthermore, the processing of personal data is permitted if the interest in the disclosure of information outweighs the protection of personal privacy and if the person responsible for personal data or a third party who receives personal data must be able to carry out a task due to the exercise of authority."]
  146. Jisander 2015 , pp. 58–59(in Swedish): "Här stadgas att det är förbjudet att över personuppgifter till tredje land om landet inte har en adekvat skyddsnivå." ["It is stipulated here that it is forbidden to transfer personal data to third countries if the country does not have an adequate level of protection."]
  147. Jisander 2015 , p. 50(in Swedish): "Enligt artikel 8 punkt 1 har varje människa rätt till respekt för sitt privatoch familjeliv. Enligt artikel 8 punkt 2 får offentlig myndighet inte inskränka den rättigheten annat än med hänsyn till exempelvis statens säkerhet, den allmänna säkerheten, eller landets ekonomiska välstånd." ["According to Article 8, paragraph 1, every human being has the right to respect for his private and family life. According to Article 8 (2), a public authority may not restrict that right except with regard to, for example, the security of the State, public security, or the economic prosperity of the country. "]
  148. Jisander 2015 , p. 50(in Swedish): "...kan det konstateras att varken statens säkerhet, den allmänna säkerheten eller skydd för hälsa eller moraleller för andra personers fri- och rättigheter är relevanta undantagsgrunder i detta fall. De undantagsgrunder som däremot blir intressanta är landets ekonomiska välstånd på grund av den källskatt som påförs transaktioner. ["...it can be stated that neither state security, public security or protection of health or morals for the freedoms and rights of other persons are relevant exceptions in this case. The exceptional grounds that become interesting, on the other hand, are the country's economic prosperity due to the withholding tax imposed on transactions."]
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Bibliography

Further reading