FATCA Implementation Attorneys at Law 11th Annual International Estate Planning Institute New York City, 12 & 13 March 2015 Presenters: Anthony Cetta: Citi Trust Wealth Planner, Citigroup (New York, NY) Peter A. Cotorceanu, Of Counsel, Anaford Attorneys at Law, Zurich, Switzerland 0
Heads Up These slides were prepared by Peter Cotorceanu of Anaford Attorneys at Law The views expressed in this presentation are the presenters alone and do not necessarily reflect the views of their respective firms 1
Goals of Presentation Compare and contrast how FATCA and OECD GATCA apply to the trust industry Discuss select practical issues that have arisen in FATCA s implementation KISSS: Stupid, (Keep it Simple (and Slow) but still pitched at 3 levels 2
Part 1 FATCA and OECD Global FATCA (GATCA)
GATCA Coming soon (very, very soon) to a country near you... Early adopters : 01/01/2016 go-live date for newaccount onboarding; first reports due in 2017. Other non-early adopters have committed to same date. Yet others (including Singapore and Switzerland) have committed to 01/01/2017 go-live date for new-account onboarding; first reports due in 2018. Heavily based on FATCA, esp. reciprocal Model 1 IGA 4
GATCA 45 Early Adopters Argentina Finland Liechtenstein Seychelles U.K. OTs: Belgium France Lithuania Slovenia Anguilla Bulgaria Germany Malta South Africa Colombia Greece Mexico Spain BVI Croatia Hungary Netherlands Sweden Bermuda Caymans Cyprus Iceland Norway U.K. Montserra t Czech Republic India Poland U.K. CDs: T&Cs Denmark Ireland Portugal Isle of Man Note: Not Gibraltar Estonia Italy Romania Guernsey Faroe Islands Latvia Seychelles Slovakia Jersey 5
GATCA On 29 October 2014, 51 countries signed a Multi- Lateral Competent Authority Agreement. As of 19 November 2014, the number had increased to 52. In addition to most of the early adopters group (but not Bulgaria, India, or Seychelles), the following countries have signed the agreement: Albania, Aruba, Austria, Curaçao, Gibraltar, Korea, Luxembourg, Mauritius, San Marino, Switzerland 6
GATCA 4 Basic Elements: Model (Reciprocal) Competent Authority Agreement (CAA): Contains some definitions Details information to be exchanged, time and manner of exchange, etc. Common Reporting Standard (CRS): Contains due diligence requirements (e.g., new and pre-existing accounts, individual and entity accounts) Many more definitions Some Non-Reporting FI categories 7
GATCA Commentaries on both CAA and CRS (approx. 150 pages) Various Annexes, e.g., Multilateral and Non- Reciprocal versions of CAA, CRS Schema, etc. 8
GATCA FATCA GATCA Reciprocal Model 1 IGA Model CAA Annex I CRS Annex 2 CRS Guidance Notes Commentaries 9
GATCA and FATCA Compared All reporting to home country (a là Model 1 IGA) Under GATCA, no central registration (but individual countries may require) No GIIN under GATCA No withholding under GATCA 10
GATCA and FATCA Compared GATCA has fewer deemed compliant/nonreporting categories (e.g., no sponsored categories but does include Trustee- Documented Trusts and possibility of using third-party service providers) Under GATCA, IE FIs in non-participating jurisdictions treated as passive NFEEs (but U.S. gets a pass! Or does it? And what about real passive NFFEs in non-participating jurisdictions?) 11
GATCA and FATCA Compared GATCA based on residency only (citizenship irrelevant) GATCA has no USD 50,000 exclusion for preexisting individual accounts. Under GATCA and Model 1 IGA, USD 250,000 exclusion for pre-existing entity accounts allowed only if participating country permits (under Model 2 IGA, exclusion is at election of FI) 12
GATCA and FATCA Compared Under GATCA, different start dates depending on when country enters into agreements with different countries potential for huge mess if not replaced with Big Bang start Under GATCA, need to report date of birth (not required under FATCA) GATCA has no standardised forms such as W- 8BEN-E and W-8IMY 13
GATCA and FATCA Compared Definition of managed Investment Entity FIs: GATCA uses Regs version (i.e., both Managed By and Gross Income tests), not IGA version (only Managed By test) Protectors who are Controlling Persons of FI trusts: select Model 1 IGA Guidance: Only protectors with power to hire and fire GATCA all protectors 14
GATCA and FATCA Compared Discretionary benes as account holders in FI trusts: FATCA Regs and Model 2 IGAs: Only if receive a distribution Model 1 IGAs: All discretionary benes (except as modified by local implementing law/guidance) GATCA: Only if distribution has been paid or made payable 15
GATCA and FATCA Compared Discretionary benes as Controlling Persons of passive NFFE trusts: IGAs: Interpret consistently with FATF Recs., i.e., benes described by class or characteristics can be identified at time of payout or when bene intends to exercise vested rights GATCA: Same, but country may allow local FIs to align definition with definition of account holder in FI trust (i.e., discretionary benes included only if distribution has been paid or made payable ) 16
Part 2 Select Implementation Issues under FATCA
Key Implementation Issues under FATCA Which FATCA rules apply? In general In defining U.S. Controlling Persons of passive NFFEs Entity classification, e.g., PTCs, corporate directors Accounts in FFI trusts Substantial U.S. Owners/ U.S. Controlling Persons of passive NFFEs 18
Questions? (Note: I am in Singapore all this week) 19
Contact information Peter A. Cotorceanu Attorney-at-Law (U.S.A. (Md. & Va.)) Barrister and Solicitor (New Zealand) Of Counsel Anaford AG Tödistr. 53 8002 Zurich peter.cotorceanu@anaford.com www.anaford.com +41 (0)44 567 8805 (Main) +41 (0)44 567 8812 (Direct) +41 (0)79 701 8305 (Mobile) +41 (0)44 567 8806 (Fax) 20
Disclaimer This Presentation is intended solely for information purposes. The views contained in this Presentation may be altered at any time. Although Anaford AG has taken all reasonable care to ensure that the information contained in this presentation is accurate at the time of publication, the details in this presentation do not represent decision-making aids for legal, tax or other matters. Before taking any action, you should consider the suitability of the action to your particular circumstances and discuss with your professional advisers as necessary the specific risks as well as the tax, legal, regulatory, and other implications. Anaford AG would be pleased to provide you with any legal and tax advice on these matters upon your request. 21
Copyright. 2015. All rights reserved. 22