Wednesday, November 21, 2012

The United States and Denmark signed FATCA Bilateral Agreement.

The United States and Denmark signed a reciprocal bilateral agreement and memorandum of understanding setting out a government-to-government approach to implementing the Foreign Account Tax Compliance Act on Nov. 15, 2012.

This is the second intergovernmental agreement (IGA) signed by the United States. The first was with the United Kingdom in September.

The agreement with Denmark is based on the Reciprocal Model 1 Template released by the Treasury in July. It takes effect as of the later of Jan. 1, 2013 or the date on which both parties have notified the other in writing that the necessary internal procedures to prepare for the enforcement of the agreement are complete.

The agreement includes, in its annexes, a list of exactly who or what will qualify as exempt beneficial owners, deemed-compliant financial institutions and exempt products.

Some highlights of the deemed-compliant financial institutions are: small Danish financial institutions with local client bases and no fixed place of business outside of Denmark, certain collective investment vehicles, nonprofit organizations and housing cooperatives.

Additionally, similar to the agreement with the United Kingdom this IGA features three articles not included in the Model 1 Template:

  1. A “most favored nation” provision extending to Denmark any more favorable future terms the U.S. may enter into with another jurisdiction.
  2. Consultation between the two nations in the event that any conflicts arise during the implementation of the agreement and
  3. A provision that all annexes are an integral part of the agreement.
This is in line with our previous post on FATCA Intergovernmental Agreements.

FATCA Problems??? Have a Foreign Bank Account???

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1 comment:

  1. You have to wonder if Congress will ever wake up to these IGA deals that are being made which are NOT in the text of FATCA nor were they part of the intention of Congress when they passed the stupid law. They are obligating America to do things that Congress has not agreed to.

    To make these false reciprocity deals work, they are bringing the cost of FATCA back to the homeland shores with the domestic version of FATCA or DATCA. Will Congress just let that happen silently and let these deals be cemented in place, without an 'advise and consent' process.

    Not to be hyperbolic here, but there is almost a coup d'├ętat of tax policy bureaucratic functionaries over Congressional legislative pejorative that is happening before our eyes, and yet so many are silent and just go along in meek compliance. It is stunning how much the technocrats, have taken over.

    I see there are a few push back stories around.

    This on Forbes. Coerced Foreign Tax Compliance Is Killing American Jobs

    This By [Simon Culhane, Chartered FCSI and CEO of the Chartered Institute for Securities & Investment (CISI), “US ‘a bully’ because of FATCA,” SPEAR’S, Nov. 20, 2012]

    This By [Nigel Green, CEO at the deVere Group, “US Treasury should be called to account on ‘economy-damaging’ FATCA,”, Nov. 16]

    Posted by Marvin Van Horn