With apologies to Winston Churchill, however the financial landscape in terms of financial disclosure and the reporting of overseas assets has been turned on its head. Throughout 2013 tax authorities across the world have been falling over themselves to sign up to new inter governmental agreements for one simple reason –to enable states to get information about the income (earned or passive) its taxpayers generate abroad. The aim is quite clear, that is to prevent tax evasion through automatic exchange of information between States and the move to implement these reforms is accelerating.
Back in April 2013 the G5 (UK, France, Germany, Spain and Italy) entered into a pilot agreement to for multilateral exchange of information based on the FATCA model. Under the G5 model States agree to automatically share bank account information of taxpayers in their jurisdiction but resident in another State. Thirty seven countries have now agreed to participate including most recently Luxembourg, Ireland and Malta.
In the UK the Crown Dependencies (Jersey, Guernsey and the Isle of Man) have agreed to automatically give information to HMRC relating to the financial affairs of UK resident clients and several overseas territories including Bermuda, Cayman Islands and BVI have also committed to share information with the UK.
A few weeks ago, in November, Gibraltar signed its own agreement with the UK confirming automatic exchange of information in adherence to the FATCA protocol.
Where does all that leave you and me? Without labouring the point it means that we have to make clear our intention to stay within the law and look for solutions that will mitigate any tax liability rather than try and avoid it by secrecy, ignorance or intent. Modelo 720 and the proposed EU Savings Directive reforms were sticking plaster solutions whilst FATCA and the new regime of automatic disclosure are more akin to open heart surgery.
Of course some sceptics will say it will never work and that governments will quickly move onto some other area of interest or concern. Believe this at your peril; there is fresh desire from governments throughout the world to implement the new regime and eradicate fiscal loss and revenue through non disclosure. The world has shrunk beyond measure when it comes to hiding assets and even the great bastions of secrecy like Switzerland and Luxembourg, the Channel Islands and the Overseas Territories have all fallen into line rather than risk being isolated in the new climate of disclosure.
Why not make a financial resolution for 2015 to sit down with a professional adviser and discuss in confidence your position and the options available to you. There are solutions which will enable you to hold your assets in a transparent and tax efficient manner removing the risk of non compliance with your tax authority. If your affairs are already in order why not take advantage of a financial health check to ensure assets are held in the most efficient way possible. Of course you may choose to do nothing and ignore the inevitable, in which case we wish you well and advise you to take great care when dealing with the authorities and your respective financial institutions.
This is my worst nightmare. I’m U.S. citezin landed in Canada, but not Canadian. I moved here with my parents while still a minor. I’ve had no income in at least 15 years, but I do have some spousal RRSP’s. I will have a portion of my husband’s pension if he passes before me. From my understanding I will not get Old Age pension because I’m not Canadian. I will have a bit of Canada Pension from the few years I worked (22yrs) buy my wages were abysmal so my cpp will be very small. I’m 61 now, and I’m scared to death at what my financial situation will be in the future. Seeing that I can not afford to pay any tax professional, or lawyer to help me with this mess well let’s just say I can’t deal with this. I also have a sister who’s in the same situation. My brother moved back to the USA, we don’t have that option. I also hear that my husband is supposed to file some U.S. tax forms. What is that all about???One of my brother’s son’s moved back to Canada. He was born here, and my brother took out US citezinship for all his children. My nephew is disabled, (mental illness) newly married with a son. I am his payee, and do his taxes. His wife prefers me to handle his financial affairs. I’d rather not do it, but they are not capable. They need more help than I can give them I don’t know where to turn for myself or my family. We are all low income. My nephew could be getting more disability because he’s married and now has a son, but he won’t go across the border to social security with me, because he was stripped searched and his fear of that border exceeds the need for more income.So yes I want to bury my head in the sand and hope it all just goes away.
Shama,
If you are U.S. Citizen or Green Card Holder, independently of your other nationalities or country of residence you must file your annual individual tax return, Form 1040, in the U.S. It does not mean that you have to pay anything, but you must report you worldwide income and the foreign taxes paid in another country. If you have low income as you mention, you might owe no tax to the IRS. Please contact us by email for further information info@ustaxconsultants.es