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FACTA Czech USA

If you are a US Citizen, another good reason to keep or move your investments to a USA based financial advisor.

The Czech government recently approved the Finance Ministry's intention to sign an intergovernmental agreement with the USA on providing information on bank accounts of American citizens to the US tax administration. The data would be provided by the Czech tax administration office.

This is in response to a 2010 law in the United States, the Foreign Account Tax Compliance Act  (FATCA) which is intended to assist the IRS in identifying offshore income held byU.S. persons. FATCA identifies offshore income by compelling non-U.S. entities (i.e. foreign banks and investment firms) to report the identities of U.S. accountholders to the IRS, using a new U.S.-sourced withholding tax levied against non-cooperative foreign entities to enforce compliance (a 30% tax on all US based revenue paid to these foreign firms, including interest and dividends). Similarly, FATCA requiresU.S. persons to specifically identify substantial foreign assets (and income related to such assets) beginning on theirU.S. tax returns filed in 2012. Comparing the information it obtains from compliant foreign entities with the newU.S. tax return information, the IRS believes it will quickly be able to identify sources of unreported foreign income and discourage tax evasion. 

Other countries in the E.U. that have already agreed are:UK,Switzerland,France,Germany,Italy,Spain, & Denmark.  Other countries are still in negotiations. 

Thus if you own rental real estate or a business in a non-USA country, your tax reporting requirements have gotten more complicated and even your daily banking may become more expensive to cover the costs of compliance with these new requirements.  By having a US based investment advisor you will at least be comforted to know that you will receive the necessary year-end reporting and paperwork to assist your tax preparer with that portion of your financial life.


About the author: Dan Martin is an American citizen registered representative of Greenberg Financial Group (www.greenbergfinancial.com