Implementation problems in connection with the FATCA Agreement
The BMF has application letter sent to the chief financial authorities of the countries associated with the between the Federal Republic of Germany and the United States of America concluded by 31.5.2013 FATCA Agreement.
Background
Background of extensive, comprehensive 71 pages, application letter from the Federal Ministry of Finance on 31.5.2013 concluded between Germany and the US, the agreement for the promotion of tax compliance in international cases and the law on tax compliance regarding the. Offshore accounts.
FATCA (Foreign Account Tax Compliance Act) relates primarily to the US information and reporting requirements. This Agreement from 31.5.2013 regulates the automatic exchange of tax-relevant data collected by financial institutions in order to increase tax compliance and in international affairs. On the basis of § 117c para. 1 sentence 1 AO has the BMF with the consent of the Federal Council Regulation on the implementation of obligations under the Agreement between Germany and the United States to promote tax compliance in international cases and with regard to the US with respect to foreign accounts known as Law on tax compliance -amerikanischen information and reporting provisions (FATCA USA Umsetzungsver-order, FATCA USA UmsVO, from 07.23.2014, BGBl. I 2014, 1222) was adopted.
Both countries have therefore agreed on a between-state procedure on the basis of Art. 26 “exchange of information and mutual assistance” of the German-American Double Taxation Convention. To this end, the two countries have signed on 31.5.2013 an international agreement to which at 10.16.2013 the Act Approving and on 11.12.2013 the FATCA Agreement has entered into force.
Based on the induced by the FATCA law development in Germany, France, Italy, Spain and the United Kingdom with other countries are working with each other to close more ajar to the FATCA agreement arrangements for the automatic exchange of information on financial accounts.
The final application letter from the Federal Ministry of Finance is the practical handling of the FATCA agreements and the FATCA-US UmsVO and § 117c AO, which provide that German financial institutions regulated information to the competent German tax authority, the Federal Central Tax Office (BZSt) to transfer. The Federal Central Tax Office forwards the information to the Internal Revenue Service (IRS) of the United States continues. The United States undertake in return, the German tax authorities to provide information on interest and dividend income available which raises the IRS of US financial institutions. The United States undertake to exclude all financial institutions based in Germany from the obligation of having to conclude agreements with the US tax authorities to avoid in the US Quellensteuereinbehalte under FATCA.
With the German version of § 117c AO and provisions of FATCA USA UmsVO the FATCA Agreement is implemented in its current version. The German financial institutions must comply with the then applicable German legal regulations, especially the provisions of FATCA Agreement, the regulation of § 117c AO and the FATCA-US UmsVO.
Special instructions
Below the scope, the customer due diligence procedures / documentation, the reporting system and the tax deduction by way of example with regard to some interesting and new regulations listed.:
The BMF confirmed in his letter that the term “dominant person(s)” must be interpreted in a manner consistent with the recommendations of the Financial Action Task Force (FATF) on 6.2.2012 (see. Www.fatf-gafi.org) is compatible. The term “controlling person” shall be construed so as to in the definition of the beneficial owner of the German Money Laundering Act (GWG) is based (see. Para. 169).
Paragraph. 175 of the BMF is a definition with respect to holding companies, according to which the activities of such a company “substantially” in the (total or partial) Possess the issued shares of one or more subsidiaries consist, as well as in the financing and provision of services for these subsidiaries if at least 80% of the assets of the Company in a given calendar year (or in an appropriate reporting period) cumulatively consist of assets which are (z. B. Investments in affiliated companies with a holding, financing or service activity against the subsidiary in the context, Receivables from affiliated companies). Under “Owning shares issued” is also understood as the holding of business or company shares.
The BMF is a list of financial products and transactions, which are by no concerns financial accounts by the FATCA Agreement or financial accounts, where in accordance with Annex II of the FATCA Agreement, there is a small risk that they misused for evasion of US tax and are the properties similar to those already reported in the FATCA Agreement excluded accounts and products exhibit (para. 141).
After paragraph. 96 of the letter to the identification of so-called. Passive NFFE (“Non Financial Foreign Entities”) are simplified in that certain types of income are specifically enumerated as “passive”, such. As dividends, interest, rents, royalties, gains from transactions derivatives, gains from currency transactions and profit distributions.
Has restricted the definition of financial accounts as purely internally managed accounts in which transactions are not posted to an account (interim accounts Auxilliaries etc.), no financial account are to represent according to the FATCA Agreement (para. 110).
Collective Investment Undertakings are only “deemed-compliant” and thus FATCA compliant if all the shares in the assets of financial institutions (or financial institutions) are kept and these financial institutions are no non-participating financial institutions. Thereafter, among other things, must always be ensured that the custodian depositary the necessary FATCA reporting obligations to (para. 70 f.). An investment company shall be deemed to FATCA compliant, if it does not issue uncertificated shares (paragraph. 72); to a corresponding regulation by the UCITS V Implementation Act in § 9a Custody Act is provided non-objection regulations apply (para. 73 f.).
It should not automatically to the application of more favorable terms from other FATCA agreements of other countries be trusted because it a communication of the US government to the German Government required, which are then familiar by BMF (para. 284 et seq.). A self-assessment to be obtained may be in the German language and part of the account opening documents be (para. 187 et seq.).
The original US tax forms, incl. The US Tax Forms W-8BEN and W-9, can be used by German banks (para. 199 et seq.). In addition, a self-disclosure is generally to determine the tax residency einholbar.
The letter from the Federal Ministry of Finance creates a so-called. “Good-faith-efforts clause” in paragraph. 287 Lower: Does a German financial institution as part of its due diligence under the FATCA Agreement and the FATCA-US UmsVO, all efforts in good faith taken that are deemed necessary to the due diligence up to the date of publication of this letter and the “Competent Authority Arrangements “comply under Art. 3, para. 6 of the FATCA Agreement, in particular with regard to the revision of its Neukontoeröffnungsverfahrens and implementation of procedures for the identification of its existing customers for FATCA purposes, so that financial institution shall be considered as if it had complied with its obligations legally.
The letter confirms the relevant reporting time points and to reporting data, further details regarding the XML data schema and other technical aspects should be addressed in a separate BMF (paragraph 288;.. See to BMF letter v 07.17.2015,.. 6 IVB – S 1316/11/10052: 124 BStBl I 2015 637).
The BMF clarifies if no reportable data available after the FATCA Agreement and the FATCA-US UmsVO there any message to the Federal Central Tax Office supplies (para. 111). The publications with the BMF letter dated 07.17.2015 provides for a so-called record. Zero message to that effect before not.
The BMF looks to date no regulations regarding. The FATCA withholding tax obligations in Germany.
It should be noted that time constraints have been modified in the FATCA Agreement by the FATCA-US UmsVO partially. The Regulation stipulates that the FATCA Agreement is to be interpreted as if it contained the amendments on 07.12.2013 promulgated by the United States concerning the timetable for the implementation of FATCA (Notice 2013-43). In addition, it shall not be contested if the scheme in Notice 2014-33 the Treasury of the United States is taken from German financial institutions to complete. This modifies the already displaced by Notice 2013-43 stitch data again.