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
SYS-CON Events announced today the Docker Meets Kubernetes – Intro into the Kubernetes World, being held June 9, 2016, in conjunction with 18th Cloud Expo | @ThingsExpo, at the Javits Center in New York, NY. Register for 'Docker Meets Kubernetes Workshop' Here! This workshop led by Sebastian Scheele, co-founder of Loodse, introduces participants to Kubernetes (container orchestration). Through a combination of instructor-led presentations, demonstrations, and hands-on labs, participants learn ...
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discuss how businesses can gain an edge over competitors by empowering consumers to take control through IoT. We'll cite examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He'll also highlight how IoT can revitalize and restore outdated business models, making them profitable...
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
Customer experience has become a competitive differentiator for companies, and it’s imperative that brands seamlessly connect the customer journey across all platforms. With the continued explosion of IoT, join us for a look at how to build a winning digital foundation in the connected era – today and in the future. In his session at @ThingsExpo, Chris Nguyen, Group Product Marketing Manager at Adobe, will discuss how to successfully leverage mobile, rapidly deploy content, capture real-time d...
In his session at 18th Cloud Expo, Andrew Cole, Director of Solutions Engineering at Peak 10, will discuss how the newest technology advances are reducing the cost and complexity of traditional business continuity and disaster recovery solutions. Attendees will: Learn why having a full disaster recovery strategy is more important now than ever before Explore the key drivers of a successful disaster recovery solution Achieve measurable operational and business value from a disaster recovery ...
The cloud era has reached the stage where it is no longer a question of whether a company should migrate, but when. Enterprises have embraced the outsourcing of where their various applications are stored and who manages them, saving significant investment along the way. Plus, the cloud has become a defining competitive edge. Companies that fail to successfully adapt risk failure. The media, of course, continues to extol the virtues of the cloud, including how easy it is to get there. Migrating...
As organizations shift towards IT-as-a-service models, the need for managing and protecting data residing across physical, virtual, and now cloud environments grows with it. Commvault can ensure protection, access and E-Discovery of your data – whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise. In his general session at 18th Cloud Expo, Randy De Meno, Chief Technologist - Windows Products and Microsoft Part...
SYS-CON Events announced today that Hanu Software will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Leveraging best-in-class people, processes, and technologies, Hanu provides high-quality, high-value software development and business process outsourcing services to independent software vendors (ISVs) and enterprises.
What a difference a year makes. Organizations aren’t just talking about IoT possibilities, it is now baked into their core business strategy. With IoT, billions of devices generating data from different companies on different networks around the globe need to interact. From efficiency to better customer insights to completely new business models, IoT will turn traditional business models upside down. In the new customer-centric age, the key to success is delivering critical services and apps wit...
SYS-CON Events announced today that ContentMX, the marketing technology and services company with a singular mission to increase engagement and drive more conversations for enterprise, channel and SMB technology marketers, has been named “Sponsor & Exhibitor Lounge Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York City, New York. “CloudExpo is a great opportunity to start a conversation with new prospects, but what happens after the...
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, will provide an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life ...
SYS-CON Events announced today that BMC Software has been named "Siver Sponsor" of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. BMC is a global leader in innovative software solutions that help businesses transform into digital enterprises for the ultimate competitive advantage. BMC Digital Enterprise Management is a set of innovative IT solutions designed to make digital business fast, seamless, and optimized from mainframe to mo...
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in Embedded and IoT solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and ...
SYS-CON Events announced today that MobiDev will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex software systems for startups and enterprises. Since 2009 it has grown from a small group of passionate engineers and business managers to a full-scale mobile software company with over 200 develope...