Germany – another stumbling block for America’s dangerous new FATCA law?

27 Feb

Germany’s lack of urgency on the signing-up to an intergovernmental agreement (IGA) with the US on its problematic Foreign Account Tax Compliance Act (FATCA) is additional proof, in my opinion, that this dangerous US tax project is stumbling – even before it’s launched on 1st January next year.


The European powerhouse’s apparent ‘mañana’ attitude towards completing an IGA will be particularly frustrating for the US Treasury as it was hoped it would be one of FATCA’s five original ‘partners’- alongside France, Italy, Spain and the UK – and because it is the current economic and political master of Europe.


To date, of the ‘original five’, only Spain and the UK have agreed to IGAs.


Additionally, Washington will be worried by Germany’s non-hurried stance to sign its FATCA IGA, because another economic giant, China, looks like it is also ‘kicking the can down the road’ on the matter.  This is probably due to the fact that FATCA is extraordinarily onerous and costly to comply with, it contradicts certain regional regulations, and, vitally, due to US financial institutions not having to report activities back to China on their Chinese clients’ financial affairs, reciprocity is virtually non-existent, meaning it would gain nothing from it.


I’d imagine that is a massive worry to the US that politically and economically influential Germany and China – the largest economy in Europe, and the world’s second largest and fastest-growing major economy, respectively – are, at best, being slow on the uptake, and at worst, showing signs of utter indifference to its misguided FATCA mission.


FATCA, I believe, should be repealed by the White House as, if it comes into effect, it will cut overseas investment into the US, killing American jobs; it punishes American expats and US firms which have dealings outside America; and it threatens important yet delicate international trade and diplomatic relations.  Plus, of course, it’ll do almost nothing to address tax evasion.

Nigel Green deVere Group

Blog written 27th February


  1. I hope you’re right and Germany, China, Canada and others will hold out. I can’t understand how any country can be willing to allow the laws of another country to override their own banking, privacy and equality laws or constitutions.

  2. Meanwhile, some senators are calling for the strengtening of FATCA. The offshore asset war continues (see links below). Things would be simpler and more accepted by foreign countries if FATCA impacted only non-residents. The US must get rid of citizenship based taxation. It can’t have both FATCA and citizenship based taxation.
    And I agree with Blaze’s comment above. What’s in it for foreign governments that they’re all signing up? It can’t be just the thresholding threat of 30%. There must be things we don’t know about…

    Subtitle A–Deterring the Use of Tax Havens for Tax Evasion
    Sec. 101. Authorizing special measures against foreign jurisdictions, financial institutions, and others that significantly impede United States tax enforcement.
    Sec. 102. Strengthening the Foreign Account Tax Compliance Act (FATCA).
    Subtitle B–Other Measures To Combat Tax Haven and Tax Shelter Abuses
    Sec. 111. Country-by-country reporting.
    Sec. 112. Penalty for failing to disclose offshore holdings.

  3. Reuters is telling us, that U.S. Treasury closer to inking foreign tax info-sharing deals

    “The U.S. Treasury on Monday initialed an intergovernmental agreement (IGA) with Germany, for instance. The deal still needs final approval by both countries’ tax officials, but shows progress being made in implementing the Foreign Account Tax Compliance Act (FATCA).”

    “Germany was “the next big domino to fall” in Treasury’s IGA process, said Jonathan Jackel, a lawyer with Burt, Staples & Maner LLP. The German deal was “a positive development” for additional IGAs, he said.’

    So, it would appear that Reuters is doing the IRS marketing for them, to make this all seem inevitable. What is interesting to me, is there is no discussion of what these agreements are. Are they Treaties, Executive Agreements, Competent Authority agreements, or some other animal, or is this what ever you want / need it to be. For the Foreign government it is a bi-lateral Treaty, but for the US, it is a CA, and no Advise and Consent is necessary. Very clever, and no one asks. Mission accomplished.

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