If you are an American expat and looking for somewhere out of reach of the Internal Revenue Service (IRS) and Foreign Account Tax Compliance Act (FATCA)A, then the choice of destinations is shrinking.
So many nations are queuing to sign up to FATCA, the US Treasury agreed a six-month delay in implementing the law from January 1, 2014 until July 1, 2014 to allow the paperwork to catch-up.
FATCA – Country list
Here are three lists of countries that have signed FATCA treaties or are in the throes of discussing the finer details with the US:
Isle of Man
In Active Dialogue
The Cayman Islands
Discussing options for intergovernmental co-operation
British Virgin Islands
The Czech Republic
Isle of Man
United Arab Emirates
The lists come from government sources and statements – but may not be a complete list of all nations in the FATCA network, while some may move up the lists as negotiations progress.
FATCA requires foreign financial institutions and US taxpayers with overseas holdings valued at $50,000 or more to report the details to the IRS.
To reciprocate, US financial institutions will send details of other nationals with accounts in the States to their respective governments.
In effect, tax rules have not changed – governments are just tightening up the loose ends to make sure taxpayers who have failed to declare income or capital gains report the details to their tax authority.
FATCA is a carrot and stick legislation for foreign financial institutions, like banks and investment funds, that penalises them with a US withholding tax on 30% of all financial transactions taking place in the States if they fail to comply with FATCA rules.
Despite opposition in Congress and from US expats, FATCA seems destined to come into force in most of the world’s major financial centres.
The big doubt is whether China will join the network. The nation has little to gain, as the government does not tax the overseas assets or incomes of nationals.
The holes in the FATCA map of the world are in Asia, Africa and Latin America.
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