Here is the draft agenda of Pierre Moscovici, France’s Minister of Economy and Finance, who is in Washington, D.C. right now for the annual meetings of the IMF and the World Bank.
Scroll down to October 11 and tucked between a G20 meeting of Finance Ministers and a one-on-one chat with his counterpart in Australia is this little item:
12h45 : Entretien avec M. Jack LEW, Secrétaire au Trésor des Etats-Unis d’Amérique suivi de la signature de l’accord entre la France et les Etats-Unis pour améliorer le respect des obligations fiscales à l’échelle internationale et mettre en oeuvre la loi FATCA (Washington, DC).A signing during the lunch hour? Nothing is sacred anymore....
Still, good timing for the US Treasury. This would definitely be a big win for them.
What we still don't know, however, is what kind of Intergovernmental Agreement (IGA) France has agreed to. While all IGAs have this basic principle: "a partner government will require all foreign financial institutions (FFIs) located in its jurisdiction (that are not otherwise exempt) to identify U.S. accounts and report information about U.S. accounts," there are two different ways, two types of agreements, to implement FATCA.
Model I: Financial institutions report to their local tax authorities (in this case the French "fisc") who then passes that information along to the IRS in the United States. In turn, the US agrees to send information about accounts in the US to the tax authorities in the partner country. So, for example, in the German IGA, there is a provision for reciprocity, with information flowing into the US from German FFI's and out of the US to Germany from American banks and financial institutions.
Model II: Financial institutions in that country will pass information directly from the banks and other financial institutions to the US government (IRS). This is the type of agreement signed by Japan.
There are other differences between the two and I encourage you to read at least one of these agreements paying special attention to Annex 1 - how local US accounts will be identified by local banks. For a good side-by-side comparison of the Model I versus the Model II, Deloitte has this chart up on their site.
I am 99.9% certain that France will go for the Model I - the one with a two-way information exchange.
We'll find out tomorrow.
10 comments:
Utterly disgusted. I wonder if he even read my letter.
I guess the French Finance Ministry actually believes they are gonna get some valuable information out of the reciprocity. They will be sadly disappointed, I am sure. Victoria, maybe they need to read yours & Lynne's 'FATCA Reality Check'. Certainly they need some kind of reality check in that Finance Ministry.
100% sure it's Model I
In fact, what has been holding up the IGA is the fact that France wanted more reciprocity (good luck France!)
Unclear that they will get anything more than the UK or Germany
France's Priorities in FATCA negociations:
1) The Government
2) The Banks
3) The People
"Selon nos informations, trois objectifs principaux présidaient les négociations : (i) une volonté de réciprocité plus importante (ii) la mise en place d’un texte qui garantisse la sécurité juridique des établissements financiers (iii) la protection des données personnelles."
http://lecercle.lesechos.fr/entrepreneur/fiscalite/221177683/modele-accord-intergouvernemental-francais-enfin-pret-signature
And the latest....
Rumor has it that signing will be delayed because of the shutdown.
I'll have a look when I get up tomorrow morning though I'm sure someone else will beat me to it. :-).
@Echoing, Excellent link! And one I hadn't seen before. Thank you so much. Some very interesting information, in particular the exclusions (livrets A). A must read. I will translate for tomorrow's post.
(ii) la signature de l’accord IGA devrait entrainer la couverture des institutions financières pour l’enregistrement auprès de l’IRS sans attendre la ratification par le parlement
Interesting. I was under the impression that with a Model 1, the banks did not have to directly register with the IRS, when the data is transferred through the French FISC. I guess I was wrong.
The French government couldn't care less about how the French accidental US Persons, or all their expats working in the US (temporarily or longer)are going to be treated when their data is going to reach the IRS. I bet most are non compliant.
Without being mean spirited, I hope that there's going to be some bad cases and that some scandals are going to emerge when they see the treatment of the people they rated out.
And I hope that in the case of mixed marriages like yours, Victoria, the French spouse is going to make a lot of noise with the banks.
The French demonstrate quite often. This would be a valid reason to do so.
And maybe not... Here is the link and the story...
http://bit.ly/1fnVPak
US-France tax fraud pact falls victim to shutdown
(AFP) – 6 hours ago
Washington — The US government shutdown claimed another victim Thursday, at least for now: a US-French agreement that battles tax evasion.
France was ready to sign the pact providing for information exchange on the offshore financial accounts of US citizens, but the shutdown caused by a budget impasse would not allow it to go forward, French Finance Minister Pierre Moscovici said.
"We were supposed to sign the French-US convention implementing FATCA which, unfortunately, must be delayed at the request of the Americans because of the shutdown and the working conditions at the US Treasury," Moscovici said at a news conference in Washington.
The US Foreign Account Tax Compliance Act (FATCA) aims to block Americans from hiding taxable money around the world. It requires foreign financial institutions to report all assets in accounts held by US citizens to the Internal Revenue Service.
France and the United States had hoped to use the occasion of this week's International Monetary Fund and World Bank annual meetings, and a Group of 20 meeting of finance ministers, to seal their deal in Washington.
But the shutdown of nonessential services has hamstrung US government agencies and sent hundreds of thousands of civil servants home without pay.
Moscovici sounded optimistic that US politicians would find a way out of their political standoff.
"I am convinced that an exit to the crisis is going to be found," he said as the US federal government shutdown dragged on for a 10th day.
The French finance minister dismissed the possibility that the budget battle would force the United States into default for the first time in its history.
"A US payment default would be so serious that it is improbable, even impossible," he said.
The US Treasury estimates it will run out of room to move under the nation's $16.7 trillion borrowing limit as soon as October 17, leaving it unable to pay some bills.
Moscovici added that he shared the view of European Central Bank president Mario Draghi, who said Thursday: "The world still doesn't believe that the US will not find a way out of this."
Copyright © 2013 AFP. All rig
Just posted as breaking news:
“US-France tax fraud pact falls victim to shutdown”
http://www.google.com/hostednews/afp/article/ALeqM5jVCLFrQKhB7FLmO2Q-ZIJ7PuqNJQ?docId=f77ab9cd-462a-497c-9235-d37485f6f65a
Does US Treasury’s inability to sign a unilateral and self-serving FATCA IGA of its own making – due to political and fiscal dysfunction – somehow warn the other party (France) to reconsider the wisdom of entering the agreement? Does anyone see the irony in this?
The real howler is: “The French finance minister dismissed the possibility that the budget battle would force the United States into default for the first time in its history. ‘A US payment default would be so serious that it is improbable, even impossible,’ he said.”
Only fools actually believe that just because events are ‘serious’ they are also ‘impossible’? What about the Titanic sinking, genocide in Rwanda, the Holocaust, nerve gas in Syria, etc. Those were deadly serious – and yet they still happened. This guy is tossing words around without any thought to their meaning. Maybe sounding a bit flustered?
More folly. Just because US raises debt ceiling does not guarantee investors will buy its debt. Does “poor credit risk” sound familiar?
Finally, are US banks gearing up to ask customers if they were born in France?
@Christophe, That's what I'm hoping for. Some really awful examples of French citizens being denied services or being taking for (gasp!) Americans. That should make the press but in case it doesn't I think we should help it along. :-)
As for my French spouse it just gives him one more reason not to vote for the Socialists.
@Marvin, Should have known you'd beat me to it. :-)
Thank you and gros bisous from Versailles.
@Wondering in Canada, Yeah, isn't it interesting how the Google story leaves out half the story? That France will be getting info about French in the US? I wonder if that was deliberate or just the usual myopic "we are the center of the universe" US style of reporting.
Regardless of any reciprocity agreement, the US is expected to be a black hole in the centre of the universe, with information only going in. Never underestimate the gravitational pull of the universe's biggest tax haven.
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