Welcome!

News Feed Item

Dutch State Secretary of Finance Submits Legislative Proposal for the Approval of the Intergovernmental FATCA Agreement Between the Netherlands and the United States with the Dutch Parliament

 

DALLAS, Aug. 8, 2014 /PRNewswire/ -- In an effort to combat tax evasion by US taxpayers through undisclosed offshore investments, the United States Congress ("Congress") adopted the Foreign Account Tax Compliance Act (FATCA) March 18, 2010 as a part of the Hiring Incentives to Restore Employment Act. Under the FATCA, financial institutions across the world are required to register with the US tax authorities (Internal Revenue Service) and report, on an annual basis, specific details of their US clients and interest holders. Should a foreign financial institution fail to do so, the FATCA imposes a 30% withholding tax on most US payments to such noncompliant institutions. The requirements to submit such information and for US payors to start withholding the aforementioned tax entered into force on July 1, 2014.

Effectively, the FATCA requires all non-US financial institutions to contribute to Congress's effort to increase US tax revenue on offshore investments. Because such investments may vary in shape and size, the FATCA's impact extends beyond "traditional" investment managers such as banks and funds. Under the FATCA, all non-US recipients of US source payments will need to assess their FATCA status, which they are required to disclose to the payor when receiving a US source payment.

Unsurprisingly, we have seen a wide variety of objections to the FATCA. One argument against the FATCA relates to the fact a non-US financial institution may be violating its local laws when it is effectively forced to submit its clients' information directly to a foreign government (i.e., the United States). Another argument is that the FATCA in itself is a unilateral effort by the US, offering no room for the receipt of information by a foreign government. Moreover, the FATCA was initially only written in US domestic laws and Treasury regulations, containing broad definitions to ensure that no US tax would be avoided through alternative investment avenues. As a result, no foreign government had any formal opportunity to consult with the United States regarding specific types of business in its country that would have a minimal risk to be used for tax avoidance purposes by the United States. In recognition of a number of legal and practical arguments against the FATCA, the US in 2012 first announced that it had started engaging with more than 50 countries to enter into so-called Intergovernmental Agreements (IGAs) with respect to the FATCA. On December 18, 2013, the Netherlands signed the Intergovernmental FATCA Agreement between the Netherlands and the United States.

As described, the US domestic laws relating to the FATCA require that financial institutions report information regarding US investors directly to the Internal Revenue Service (IRS). Under the IGA, however, financial institutions will report the information to the Dutch tax authorities, which will subsequently exchange the information with the IRS under Article 30 of the US-Netherlands tax treaty. Arguably, this two-step approach invalidates legal objections against Dutch financial institutions directly providing the US government with information regarding their clients and interest holders.

On another note, the Dutch government has been able to limit the scope of the FATCA to a certain extent during negotiations of the IGA with the United States, as Dutch pension funds are deemed compliant financial institutions under the IGA (and as a result, not subject to FATCA reporting requirements).

Finally, the Dutch-US IGA contains a reciprocity provision in Article 6, Paragraph 1, in which the United States acknowledges the need for the reciprocal exchange of information by implementing legislation that would enable the exchange of information on equal footing. However, while the Netherlands specifically commits to implement national laws that enable FATCA reporting, the United States makes no such commitment vis-à-vis the Netherlands under the IGA.

Under the IGA, both states intend to commence the automatic exchange of information in 2015, with respect to the 2014 fiscal year. The legislative proposal and the explanatory memorandum that would convert the obligations to the Netherlands under the IGA into Dutch domestic law have been submitted with the Dutch Parliament. The goal is to complete the ratification and implementation process before September 30, 2015, when the first exchange of information is scheduled to take place.

Interestingly, all Dutch financial institutions are considered FATCA-compliant during the time in which the Netherlands is in the process of enacting legislation that allows it to comply with its obligations under the IGA (principally, laws that allow it to submit information from Dutch financial institutions to the IRS). Notwithstanding this deemed FATCA compliance, however, Dutch financial institutions should still collect the relevant FATCA information of their clients and interest holders that relates to 2014, as they are required to submit it to the Dutch authorities once the Dutch legislation relating to the FATCA comes into effect in 2015.

If you would like to receive more information on how your business may be impacted by this IGA or the FATCA in general, please contact a Ryan International Tax professional.

Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the sixth largest corporate tax practice in the United States.

TECHNICAL INFORMATION CONTACTS:

Mark H. van der Linden
Principal
Ryan
212.871.3901
[email protected]

Scott Dayan
Director
Ryan
571.481.9393
[email protected]

Logo - http://photos.prnewswire.com/prnh/20140716/127737

SOURCE Ryan

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Without a clear strategy for cost control and an architecture designed with cloud services in mind, costs and operational performance can quickly get out of control. To avoid multiple architectural redesigns requires extensive thought and planning. Boundary (now part of BMC) launched a new public-facing multi-tenant high resolution monitoring service on Amazon AWS two years ago, facing challenges and learning best practices in the early days of the new service. In his session at 19th Cloud Exp...
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, provided an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data professionals...
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
@GonzalezCarmen has been ranked the Number One Influencer and @ThingsExpo has been named the Number One Brand in the “M2M 2016: Top 100 Influencers and Brands” by Onalytica. Onalytica analyzed tweets over the last 6 months mentioning the keywords M2M OR “Machine to Machine.” They then identified the top 100 most influential brands and individuals leading the discussion on Twitter.
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
"We are an all-flash array storage provider but our focus has been on VM-aware storage specifically for virtualized applications," stated Dhiraj Sehgal of Tintri in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
In an era of historic innovation fueled by unprecedented access to data and technology, the low cost and risk of entering new markets has leveled the playing field for business. Today, any ambitious innovator can easily introduce a new application or product that can reinvent business models and transform the client experience. In their Day 2 Keynote at 19th Cloud Expo, Mercer Rowe, IBM Vice President of Strategic Alliances, and Raejeanne Skillern, Intel Vice President of Data Center Group and G...
"We are a modern development application platform and we have a suite of products that allow you to application release automation, we do version control, and we do application life cycle management," explained Flint Brenton, CEO of CollabNet, in this SYS-CON.tv interview at DevOps at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Information technology is an industry that has always experienced change, and the dramatic change sweeping across the industry today could not be truthfully described as the first time we've seen such widespread change impacting customer investments. However, the rate of the change, and the potential outcomes from today's digital transformation has the distinct potential to separate the industry into two camps: Organizations that see the change coming, embrace it, and successful leverage it; and...
In IT, we sometimes coin terms for things before we know exactly what they are and how they’ll be used. The resulting terms may capture a common set of aspirations and goals – as “cloud” did broadly for on-demand, self-service, and flexible computing. But such a term can also lump together diverse and even competing practices, technologies, and priorities to the point where important distinctions are glossed over and lost.
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of Soli...
Predictive analytics tools monitor, report, and troubleshoot in order to make proactive decisions about the health, performance, and utilization of storage. Most enterprises combine cloud and on-premise storage, resulting in blended environments of physical, virtual, cloud, and other platforms, which justifies more sophisticated storage analytics. In his session at 18th Cloud Expo, Peter McCallum, Vice President of Datacenter Solutions at FalconStor, discussed using predictive analytics to mon...
Keeping pace with advancements in software delivery processes and tooling is taxing even for the most proficient organizations. Point tools, platforms, open source and the increasing adoption of private and public cloud services requires strong engineering rigor – all in the face of developer demands to use the tools of choice. As Agile has settled in as a mainstream practice, now DevOps has emerged as the next wave to improve software delivery speed and output. To make DevOps work, organization...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...