The German lower house of parliament has adopted the draft intergovernmental agreement (IGA) between Germany and the US, according to Tax-News.com.
The Foreign Account Tax Compliance Act (FATCA) Model 2 agreement with the US is aimed at improving the automatic exchange of information between the tax authorities of both partner states.
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The bill provides the legal basis for the incorporation of the US FATCA provisions into the German law. A provision in the FATCA Act will make it compulsory for the foreign financial institutions to notify the US tax authorities of accounts held by US clients and failing to do so will expose those institutions to a tax deduction of 30% on earnings on US investment at the source. The law is anticipated to come into force in 2015.
Germany’s notification to the US tax authorities on accounts held by US citizens and corporations is likely to commence from September 2015. This notification will cover the year 2013. The IGA ensures that US will also provide Germany with tax-relevant information.
German Bundestag has rejected an application filed by the Social Democrats (SPD) for combating the aggressive tax planning and tax avoidance of large international corporations.
It has also rejected an application by both the SPD and the Green Party, demanding the introduction of a country-by-country reporting system in Germany a law to ensure that the tax payments of multinational businesses are transparent in the future.
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By GlobalDataOn June 4, PBI reported that Germany and the US have signed an intergovernmental agreement (IGA) focused at improving tax information sharing.
