Fatca welcomed but Volcker remains a problem
The European funds industry has welcomed a decision by the US authorities to co-operate with the Europeans in revising its proposed Fatca rules. Particularly welcomed is the intention of building a regulatory system for the funds sector that is acceptable on both sides of the Atlantic.
Efama said in a statement: “We are gratified that the proposed regulations reflect the receptiveness of the US rule makers to working with Efama to develop operating rules under Fatca that are sensitive to the concerns and the needs of the European funds industry.”
European fund managers stand to save up to a reported $1bn in costs associated with reporting obligations under Facta, according to the Irish Funds Industry Association. Ken Owens, chairman of the IFIA, said: “This is most welcome news and demonstrates a practical approach to European fund managers meeting their reporting obligations under Fatca.”
Fatca originally required foreign funds to enter into an agreement with the US Internal Revenue Service or face large tax penalties on US source income or gross proceeds from disposals. The new proposals mean that companies in Fatca partnering countries will only have to register with the IRS, effectively removing legal issues facing foreign institutions seeking to comply with Fatca.
Efama welcomed the response of the US “to how European funds are structured and to the practical business realities of how funds operate. Most importantly, the proposed regulations build on EFAMA’s proposals to treat many funds and their distributors as deemed compliant where they present a low risk of being a vehicle for US tax evasion.”
There is still room for improvement, says Peter de Proft, director general of Efama. He says: “Although the proposed regulations address many of the difficulties faced by the funds industry, we hope that the regulations will be further refined as the US Treasury and IRS continue the process of moving toward final regulations. Efama will continue its dialogue with the US government to ensure that the final regulations address the remaining issues of relevance to the European funds industry.”