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Foreign account tax compliance act (FATCA) impact to Netherlands Financial Institutions

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Foreign account tax compliance act (FATCA) impact to Netherlands Financial Institutions. Key topics, major milestones and a call to act now to safeguard compliance.

Foreign account tax compliance act (FATCA) impact to Netherlands Financial Institutions. Key topics, major milestones and a call to act now to safeguard compliance.


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  • 1. Foreign Account Tax Compliance Act (FATCA) impact to Financial Institutions in the Netherlands Henk-Jan van der Klis Financial Services Domain Solutions
  • 2. The agenda for the next 6 months…and beyond  FATCA in a nutshell  US Person for US income taxes  Key topics for Netherlands Financial Institutions  Major milestones in The Netherlands  Key players Foreign Account Tax Compliance Act Copyright © Capgemini 2014 – All Rights Reserved 2
  • 3. FATCA in a nutshell  US enacted Foreign Account Tax Compliance Act (FATCA) in 2010 as part of Hiring Incentives to Restore Employment (HIRE) Act  Combat tax evasion by US Persons holding investments in offshore locations  Additions to US Internal Revenue Code  Requirements imposed on Foreign Financial Institutions to identify, review and report US Persons and their US Reportable Accounts, plus withholding.  Non-compliance by a Foreign (non-US) Financial Institution would invoke a 30% withholding tax on gross proceeds from US activities.  Bilateral intergovernmental agreements to reduce administrative burden, relieve withholding requirements and (optional) reciprocity of tax information exchange to enhance tax filing and reporting.  On December 18, 2013 The Netherlands signed a bilateral agreement on the implementation of FATCA. Foreign Account Tax Compliance Act Copyright © Capgemini 2014 – All Rights Reserved 3
  • 4. Who is a US Person for US income taxation?  US Citizen  You are liable for US income taxes whether you are a citizen who was born in the United States or outside of the United States with at least 1 parent who is a US Citizen. If you are a naturalized citizen, you are also considered a US Person.  US Resident  Meet the Substantial Presence Test by being be physically present in the United States on at least: 31 days during the current year, and 183 days during the 3year period that includes the current year and the 2 years immediately before that, counting: All the days you were present in the current year, and 1/3 of the days you were present in the first year before the current year, and 1/6 of the days you were present in the second year before the current year.  Meet the Green Card Test; this method applies to any person who has obtained a US Green Card. Foreign Account Tax Compliance Act Copyright © Capgemini 2014 – All Rights Reserved 4
  • 5. Key topics for Netherlands Financial Institutions  Read the book, don’t expect easy answers or shortcuts     Treasury Regulations (544 pages US tax regulations) Intergovernmental Agreement USA – NL Memorandum of Understanding the IGA between USA and NL Exchange of Notes regarding IGA USA – NL  Legal entity analysis  Which of your legal entities are classified as Netherlands Reporting Financial Institutions?  Which of your legal entities are exempt organizations subject to the IGA USANL?  Which of your legal entities, incorporated outside The Netherlands are subject to another IGA, or will have to enter an Foreign Financial Institution Agreement with the US Internal Revenue Service? Foreign Account Tax Compliance Act Copyright © Capgemini 2014 – All Rights Reserved 5
  • 6. Key topics for Netherlands Financial Institutions (continued)  Product analysis  Which of the products you will sell as per July 2014 classify as Financial Account according to the IGA USA – NL?  Which of the products you don’t sell anymore, but administer in a closed-book administration classify as Financial Account according to the IGA USA – NL?  Which of your products, classified as Financial Accounts are reported annually to Belastingdienst? Which aren’t?  Adapt your Product Approval & Review Procedure to check reviewed for FATCA impact.  New account opening  Adjusted customer due diligence to determine whether Account Holders are US Persons according to US tax regulations (which is different from US Persons in other legal contexts)  Implement customer self-certification procedure and check of reasonableness of obtained documentation Foreign Account Tax Compliance Act Copyright © Capgemini 2014 – All Rights Reserved 6
  • 7. Key topics for Netherlands Financial Institutions (continued)  Change of circumstances  Does a change the customer informs you about contain US indicia?  Due diligence of beneficiaries of payments  Implement customer self-certification procedure and check of reasonableness of obtained documentation  Due diligence of pre-existing (pre July 2014) Accounts     Determine accounts not to be reviewed, identified or reported Electronic search for US indicia Enhanced review of High Value (>$1M) accounts Implement customer self-certification procedure and check of reasonableness of obtained documentation  Reporting to Belastingdienst of US Reportable Accounts  Banking and investment management products  Cash Value Insurance or annuity contracts Foreign Account Tax Compliance Act Copyright © Capgemini 2014 – All Rights Reserved 7
  • 8. Key topics for Netherlands Financial Institutions (continued)  Don’t forget  Register with the IRS and obtain a Global Institution Identifying Number (GIIN) for every Foreign Financial Institution.  Legal clauses and general/product terms must reflect FATCA requirements  Payments to non-participating Foreign Financial Institutions  Impact of rollovers  Impact of participating in larger / more complex value chains with e.g. Intermediaries, clearing houses, settlers, investment management funds.  Inform your customers Foreign Account Tax Compliance Act Copyright © Capgemini 2014 – All Rights Reserved 8
  • 9. Major milestones in the Netherlands  April 25, 2014: Foreign Financial Institutions registered with the IRS through the portal will be included in first IRS Foreign Financial Institutions List published June 2, 2014.  July 1, 2014: requirements on identification and review of new Financial Accounts apply.  January 2015: reporting US Reportable Accounts and Account Holders to Belastingdienst  January 2016: reporting US Reportable Accounts and Account Holders to Belastingdienst + reporting of payments to non-participating Foreign Financial Institutions  June 30, 2016: review pre-existing Accounts completed Foreign Account Tax Compliance Act Copyright © Capgemini 2014 – All Rights Reserved 9
  • 10. Key players in the Netherlands  Internal staff      Legal & Compliance Tax Product management, distribution & sales Contract administration IT  Ministerie van Financiën  Belastingdienst  Verbond van Verzekeraars  Nederlandse Vereniging van Banken  Dufas  Tax advisors  Subject Matter Experts  System providers / integrators Foreign Account Tax Compliance Act Copyright © Capgemini 2014 – All Rights Reserved 10
  • 11. Act now  This presentation was just an introduction, a trigger to get your attention.  Don’t wait, act to get your organization compliant to FATCA. You’ll need your time.  Questions?     Henk-Jan van der Klis  henkjan.vander.klis@capgemini.com +31 6 215 777 35  www.henkjanvanderklis.nl Foreign Account Tax Compliance Act Copyright © Capgemini 2014 – All Rights Reserved 11
  • 12. www.capgemini.com The information contained in this presentation is proprietary. It is for Capgemini Internal use only. © 2012 Capgemini. All rights reserved. Rightshore® is a trademark belonging to Capgemini.