FATCA sneaked onto the statute book on 2010 after being tacked on to President Obama’s economic stimulus legislation, the HIRE Act. It is intended to ensure that all US citizens with interests in overseas bank accounts comply with US tax laws. That is a very simple overview of the law, though. To fully understand it (or, more likely, to be fully baffled by it), one would need to wade through hundreds of pages of legislation, regulations, guidance, inter-governmental agreements and advisory notices issued by the Internal Revenue Service. Alternatively, for a more rewarding experience, you could try wading through treacle instead.
The US Government is on something of a mission to reduce the administrative burden posed by FATCA on taxpayers and financial institutions – and probably itself. In December 2018, it announced proposed regulations intended to reduce the burden on taxpayers … Read More »
Ordinarily, you wouldn’t expect to see companies and investors flow from a low-tax jurisdiction to a high-tax one (although, in the complex world of international finance, it often does in a roundabout kind of way). But sometimes, water can be seen flowing uphill too. In this case, from the United Kingdom to Italy.
The UK isn’t exactly a low-tax jurisdiction. But when compared with Italy, it’s a fiscal paradise. In the World Bank’s ease of doing business index, the UK is positioned 7th out of 190 jurisdictions, with Italy trailing in 46th. Narrowing the comparison down to just tax, and the gap gets significantly wider: the UK is 10th, and Italy is down at 112th. So not exactly the most logical move for a business or investor.
Yet, according to a senior official in the Italian finance ministry, those from the UK … Read More »
HM Revenue and Customs is a revenue authority I don’t feel at all sorry for, after it lost a case recently regarding its powers to tax those who have long since left British shores to pursue a life in greener pastures.
The somewhat unique and often vague concept in British law of tax domicile, which exists alongside tax residence, has probably muddied the waters sufficiently to embolden HMRC to go after those living abroad even when they have only tenuous links with the UK. But it has possibly made the tax authority a little over confident in its claims to tax both British expats and foreign-born individuals who have spent time living, working, and investing in the UK but no longer have ties there. So, in an age when some officials don’t seem to think twice about exercising their powers extra-territorially, the High … Read More »
In the UK, it is interesting that while the Government continues to dismantle the “non-dom” regime, under which wealthy foreign taxpayers (for the most part) don’t pay tax on their overseas earnings as long as those earnings stay offshore, Italy is creating its own non-dom regime, aimed at attracting the sort of entrepreneurial types that have been lured to London for decades, centuries even.
Indeed, a number of European countries that have struggled to compete with the UK on tax now appear to be falling over themselves to lay out the red carpet for London bankers and other highly remunerated professionals who contribute substantial sums in tax. France has been banging this particular drum for a number of months now, albeit without doing much about it, and the German state of Hesse – home to Frankfurt, continental Europe’s main finance center … Read More »
A record 3,415 people handed in their US passports last year. That’s an average of just fewer than 10 renunciations per day. Which, in a country with a population of almost 320m people, is a miniscule amount. I put the latest expatriation statistics into context like this because they tend get a lot of attention, and undeniably the numbers have been rising every year for the last few years. Some anti-government commentators are quick to seize on these figures as evidence of increasing dissatisfaction with the Obama Administration and its heavy-handed tax measures like FATCA. That may well be the case, and I’m certainly no fan of FATCA, nor of President Obama’s policies on tax in general. But it’s hard to say what the real reasons are for expatriation without asking the people who handed in their passports themselves. There … Read More »