Swiss and US officials sign FATCA in February. Now, a memorandum of understanding has been reached over technicalities
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Switzerland and the United States have signed a memorandum of understanding on technical and administrative interpretations of the agreement on the Foreign Account Tax Compliance Act (FATCA).
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The memorandumwas signed on Friday in Washington by Manuel Sager, Swiss ambassador to the United States, and Mark Mazur, assistant secretary for tax policy.
It summarises the obligations of Swiss financial institutions and confirms the simplified self-declaration process for “exempt Swiss beneficial owners” under the FATCA agreement signed on February 14, 2013.
Finally, it is stated that Swiss financial institutions can generally apply definitions from the implementing provisions of the US Department of the Treasury if these simplify matters relative to the definitions in the FATCA agreement.
New rules
FATCA sets down new rules on conducting future business with US citizens by forcing banks and a range of other institutions to name their clients or apply a 30 per cent withholding tax.
Under the Swiss-negotiated version, banks, securities dealers, insurance companies, trustees, foundation and company administrators would need their clients’ permission before they could identify them to the US authorities.
Financial firms would be obliged to inform the US tax authorities if it has non-compliant accounts and funds.
The identity of any US account holder who refuses to comply with FATCA’s demands could be tracked down by a request for judicial assistance under the double taxation treaty.
Legislation allowing for the sharing of US citizens’ bank data will go before the Swiss parliament later this month.
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