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
Continuous Delivery makes it possible to exploit findings of cognitive psychology and neuroscience to increase the productivity and happiness of our teams. In his session at 22nd Cloud Expo | DXWorld Expo, Daniel Jones, CTO of EngineerBetter, will answer: How can we improve willpower and decrease technical debt? Is the present bias real? How can we turn it to our advantage? Can you increase a team’s effective IQ? How do DevOps & Product Teams increase empathy, and what impact does empath...
As many know, the first generation of Cloud Management Platform (CMP) solutions were designed for managing virtual infrastructure (IaaS) and traditional applications. But that's no longer enough to satisfy evolving and complex business requirements. In his session at 21st Cloud Expo, Scott Davis, Embotics CTO, explored how next-generation CMPs ensure organizations can manage cloud-native and microservice-based application architectures, while also facilitating agile DevOps methodology. He expla...
Most technology leaders, contemporary and from the hardware era, are reshaping their businesses to do software. They hope to capture value from emerging technologies such as IoT, SDN, and AI. Ultimately, irrespective of the vertical, it is about deriving value from independent software applications participating in an ecosystem as one comprehensive solution. In his session at @ThingsExpo, Kausik Sridhar, founder and CTO of Pulzze Systems, discussed how given the magnitude of today's application ...
Modern software design has fundamentally changed how we manage applications, causing many to turn to containers as the new virtual machine for resource management. As container adoption grows beyond stateless applications to stateful workloads, the need for persistent storage is foundational - something customers routinely cite as a top pain point. In his session at @DevOpsSummit at 21st Cloud Expo, Bill Borsari, Head of Systems Engineering at Datera, explored how organizations can reap the bene...
With tough new regulations coming to Europe on data privacy in May 2018, Calligo will explain why in reality the effect is global and transforms how you consider critical data. EU GDPR fundamentally rewrites the rules for cloud, Big Data and IoT. In his session at 21st Cloud Expo, Adam Ryan, Vice President and General Manager EMEA at Calligo, examined the regulations and provided insight on how it affects technology, challenges the established rules and will usher in new levels of diligence arou...
You know you need the cloud, but you're hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You're looking at private cloud solutions based on hyperconverged infrastructure, but you're concerned with the limits inherent in those technologies. What do you do?
Sanjeev Sharma Joins June 5-7, 2018 @DevOpsSummit at @Cloud Expo New York Faculty. Sanjeev Sharma is an internationally known DevOps and Cloud Transformation thought leader, technology executive, and author. Sanjeev's industry experience includes tenures as CTO, Technical Sales leader, and Cloud Architect leader. As an IBM Distinguished Engineer, Sanjeev is recognized at the highest levels of IBM's core of technical leaders.
Recently, WebRTC has a lot of eyes from market. The use cases of WebRTC are expanding - video chat, online education, online health care etc. Not only for human-to-human communication, but also IoT use cases such as machine to human use cases can be seen recently. One of the typical use-case is remote camera monitoring. With WebRTC, people can have interoperability and flexibility for deploying monitoring service. However, the benefit of WebRTC for IoT is not only its convenience and interopera...
In his general session at 21st Cloud Expo, Greg Dumas, Calligo’s Vice President and G.M. of US operations, discussed the new Global Data Protection Regulation and how Calligo can help business stay compliant in digitally globalized world. Greg Dumas is Calligo's Vice President and G.M. of US operations. Calligo is an established service provider that provides an innovative platform for trusted cloud solutions. Calligo’s customers are typically most concerned about GDPR compliance, application p...
The 22nd International Cloud Expo | 1st DXWorld Expo has announced that its Call for Papers is open. Cloud Expo | DXWorld Expo, to be held June 5-7, 2018, at the Javits Center in New York, NY, brings together Cloud Computing, Digital Transformation, Big Data, Internet of Things, DevOps, Machine Learning and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding busin...
SYS-CON Events announced today that Synametrics Technologies will exhibit at SYS-CON's 22nd International Cloud Expo®, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. Synametrics Technologies is a privately held company based in Plainsboro, New Jersey that has been providing solutions for the developer community since 1997. Based on the success of its initial product offerings such as WinSQL, Xeams, SynaMan and Syncrify, Synametrics continues to create and hone inn...
Mobile device usage has increased exponentially during the past several years, as consumers rely on handhelds for everything from news and weather to banking and purchases. What can we expect in the next few years? The way in which we interact with our devices will fundamentally change, as businesses leverage Artificial Intelligence. We already see this taking shape as businesses leverage AI for cost savings and customer responsiveness. This trend will continue, as AI is used for more sophistica...
Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
No hype cycles or predictions of a gazillion things here. IoT is here. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, an Associate Partner of Analytics, IoT & Cybersecurity at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He also discussed the evaluation of communication standards and IoT messaging protocols, data...
Product connectivity goes hand and hand these days with increased use of personal data. New IoT devices are becoming more personalized than ever before. In his session at 22nd Cloud Expo | DXWorld Expo, Nicolas Fierro, CEO of MIMIR Blockchain Solutions, will discuss how in order to protect your data and privacy, IoT applications need to embrace Blockchain technology for a new level of product security never before seen - or needed.