Foreign account tax compliance act (FATCA) impact to Netherlands Financial Institutions

Foreign Account Tax Compliance Act

(FATCA) impact to Financial Institutions

in the Netherlands

Henk-Jan van der KlisFinancial Services Domain Solutions

2Copyright © Capgemini 2014 – All Rights Reserved


The agenda for the next 6 months…and beyond

FATCA in a nutshellUS Person for US income taxesKey topics for Netherlands Financial InstitutionsMajor milestones in The NetherlandsKey players



FATCA in a nutshell

US enacted Foreign Account Tax Compliance Act (FATCA) in 2010 as part of Hiring Incentives to Restore Employment (HIRE) Act Combat tax evasion by US Persons holding investments in offshore locations

Additions to US Internal Revenue Code Requirements imposed on Foreign Financial Institutions to identify, review and report US

Persons and their US Reportable Accounts, plus withholding. Non-compliance by a Foreign (non-US) Financial Institution would invoke a 30%

withholding tax on gross proceeds from US activities.

Bilateral intergovernmental agreements to reduce administrative burden, relieve withholding requirements and (optional) reciprocity of tax information exchange to enhance tax filing and reporting.

On December 18, 2013 The Netherlands signed a bilateral agreement on the implementation of FATCA.



Who is a US Person for US income taxation?

US Citizen You are liable for US income taxes whether you are a citizen who was born in

the United States or outside of the United States with at least 1 parent who is a US Citizen. If you are a naturalized citizen, you are also considered a US Person.

US Resident Meet the Substantial Presence Test by being be physically present in the United

States on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting: All the days you were present in the current year, and 1/3 of the days you were present in the first year before the current year, and 1/6 of the days you were present in the second year before the current year.

Meet the Green Card Test; this method applies to any person who has obtained a US Green Card.



Key topics for Netherlands Financial Institutions

Read the book, don’t expect easy answers or shortcuts Treasury Regulations (544 pages US tax regulations) Intergovernmental Agreement USA – NL Memorandum of Understanding the IGA between USA and NL Exchange of Notes regarding IGA USA – NL

Legal entity analysis Which of your legal entities are classified as Netherlands Reporting Financial

Institutions? Which of your legal entities are exempt organizations subject to the IGA USA-

NL? Which of your legal entities, incorporated outside The Netherlands are subject to

another IGA, or will have to enter an Foreign Financial Institution Agreement with the US Internal Revenue Service?



Key topics for Netherlands Financial Institutions (continued)

Product analysis Which of the products you will sell as per July 2014 classify as Financial Account

according to the IGA USA – NL? Which of the products you don’t sell anymore, but administer in a closed-book

administration classify as Financial Account according to the IGA USA – NL? Which of your products, classified as Financial Accounts are reported annually

to Belastingdienst? Which aren’t? Adapt your Product Approval & Review Procedure to check reviewed for FATCA

impact.

New account opening Adjusted customer due diligence to determine whether Account Holders are US

Persons according to US tax regulations (which is different from US Persons in other legal contexts)

Implement customer self-certification procedure and check of reasonableness of obtained documentation




Change of circumstances Does a change the customer informs you about contain US indicia? Due diligence of beneficiaries of payments Implement customer self-certification procedure and check of reasonableness of

obtained documentation

Due diligence of pre-existing (pre July 2014) Accounts Determine accounts not to be reviewed, identified or reported Electronic search for US indicia Enhanced review of High Value (>$1M) accounts Implement customer self-certification procedure and check of reasonableness of

obtained documentation

Reporting to Belastingdienst of US Reportable Accounts Banking and investment management products Cash Value Insurance or annuity contracts




Don’t forget Register with the IRS and obtain a Global Institution Identifying Number (GIIN)

for every Foreign Financial Institution. Legal clauses and general/product terms must reflect FATCA requirements Payments to non-participating Foreign Financial Institutions Impact of rollovers Impact of participating in larger / more complex value chains with e.g.

Intermediaries, clearing houses, settlers, investment management funds.

Inform your customers



Major milestones in the Netherlands

April 25, 2014: Foreign Financial Institutions registered with the IRS through the portal will be included in first IRS Foreign Financial Institutions List published June 2, 2014.

July 1, 2014: requirements on identification and review of new Financial Accounts apply.

January 2015: reporting US Reportable Accounts and Account Holders to Belastingdienst

January 2016: reporting US Reportable Accounts and Account Holders to Belastingdienst + reporting of payments to non-participating Foreign Financial Institutions

June 30, 2016: review pre-existing Accounts completed



Key players in the Netherlands

Internal staff Legal & Compliance Tax Product management, distribution & sales Contract administration IT

Ministerie van FinanciënBelastingdienstVerbond van VerzekeraarsNederlandse Vereniging van BankenDufasTax advisorsSubject Matter ExpertsSystem providers / integrators



Act now

This presentation was just an introduction, a trigger to get your attention.

Don’t wait, act to get your organization compliant to FATCA. You’ll need your time.

Questions? Henk-Jan van der Klis [email protected] +31 6 215 777 35 www.henkjanvanderklis.nl

mailto:[email protected]

http://www.henkjanvanderklis.nl/

The information contained in this presentation is proprietary.It is for Capgemini Internal use only. © 2012 Capgemini. All rights reserved.

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Foreign account tax compliance act (FATCA) impact to Netherlands Financial Institutions

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