Pensions and Privacy
Many countries have laws imposing secrecy on information about retirement plans (pensions) and this is in essence why FATCA allows for the ‘limited conditional’ category.
By their very nature, retirement plans are viewed and governed differently. There are sanctions on dealing with retirement plan information which only a Regulator can decide on. There are so many organizations with powers of search and seizure these days that might otherwise demand access to sensitive information. Preventing this is important because retirement plans are proprietary.
Moreover, the US Treasury has formally determined that pensions carry a low risk of tax evasion and they are therefore exempt from FATCA reporting.
| Government regulated, registered and recognized overseas retirement plan |
| Everyone wants to understand why they are hearing this from us and have not heard of it from other professionals in this space. We have many ways of explaining ”Why you have not heard of this before” but they all come down to these four reasons. 1. CPA’s can tell you what forms need to be filed. They get paid on the basis of how many forms they can file for you. 2. Tax Attorneys can tell you if what you are doing is compliant or not. In-fact the things Attorneys could produce on their word processor in the past actually do not work today. Tax Attorneys do not make recommendations of what you should do or how you should do it! 3. Trust Company’s sell off-the-shelf products…. we could say more but think that about covers it. 4. Independent Financial Advisors, Financial Consultants, Registered Investment Advisers or what else you have is not interested in recommending overseas retirement programs because they lose their client; which means, the client can certainly pay for an adviser out of a separate pocket but an adviser is not going to receive fee, brokerage or commission from the Trustee/Administrator because the Trustee/Administrator has an investment adviser. |
Simplified Tax Reporting
The rule is simple: no W8 BEN-E, no transactions in U.S. dollars, but what exactly is a W8 BEN-E Declaration? A W8 has been in existence for a long time. It is a declaration by a non-U.S. individual concerning their tax status for U.S. tax purposes. The W8 BEN declaration used to be very simple: a foreign company would declare that it was not a U.S. company, not U.S. controlled and that it didn’t have U.S. income. This was all that was necessary to allow any foreign company’s U.S. counterparty to remit gross income rather than deducting the required amount.
This has all changed since the introduction of FATCA, which has resulted in the introduction of the new W8 BEN-E declaration. Unless the investment platform is able to sign a W8 BEN-E on behalf of the individual, they cannot be party to any U.S.-dollar investment without having some level of FATCA registration.
The FATCA status ‘limited conditional’ means that the institution is exempt from reporting because it is deemed to be compliant and restricted information secrecy laws override FATCA.. This is explicitly for foreign retirement plans as exempt beneficial owners and also for administrators of FATCA identification number pension funds.
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