Mag. iur. Natascha Branz bn@fiebich.com Tel.: +43 316 324453-16 JPA Tax Club Dublin 16.06.2016 The role of the U.S. as a tax haven Mag. iur. Natascha Branz bn@fiebich.com Tel.: +43 316 324453-16

Contents Global transparency initiatives Actions of the European Union U.S. as a major financial centre U.S. as a tax haven? Evaluation reports Investigations Main issues of U.S. Anonymous companies No automatic exchange of bank account information U.S. Announcement of new measures to improve financial transparency Recommendations to support global transparency

Global transparency initiatives Combating financial crimes Tax evasion Money laundering Corruption Registration of beneficial ownership for companies Automatic exchange of bank account information between administrations

Action of the EU 4th anti-money laundering Directive 2015/849 OECD´s common reporting standard (CRS) for automatic exchange of financial account information (AEOI) EU is participating Annual exchange about all residents Not included: ownership of fix assets (houses, yachts, gold, art) Identification of beneficial owners U.S. no participation in the CRS

U.S. as a major financial centre 20% of the global market share of financial service for non-residents USD appr. 17 billion foreign assets (2013) USD 2.900 billion foreign direct investment (2014) picture: www.economist.com / James Fryer

U.S. as a tax haven? Investigation 2012 (Findley, Nielson and Sharman, www.griffith.edu.au) “…obtaining an anonymous shell company is therefore easier in the U.S. than in the rest of the world…” “Wyoming, Delaware and Nevada are among the worst in being he most likely to supply untraceable shell companies […] to foreign clients.” Tax Justice Network´s Financial Secrecy Index 2015 U.S. 3rd top jurisdiction IMF Analysis 2015 as follow up of the FATF report 2006 U.S. authorities cannot obtain beneficial ownership information of corporations and trusts in an adequate, accurate, timely fashion

Main issues of U.S. Availability of anonymous companies Company registration is regulated by 50 states´ law In 14 states companies may be created identifying neither shareholders nor managers Federal level: Employer Identification Number (EIN) Neither Global nor reciprocal automatic exchange of bank account information Refused to join the trend for multilateral automatic exchange of information U.S. domestic law: Foreign Account Tax Compliance Act (FATCA) 30% withholding tax in case of noncompliance

U.S. new measures On May 5th, 2016 the U.S. announced 3 new measures to improve its financial transparency: Customer Due Diligence Final Rule Adding new requirements on financial institutions to collect and verify beneficial owners information Legislative proposal on beneficial ownership Foreign-owned, single-member liability companies (LLCs) should obtain EIN But these measures “(…) are not ambitious enough (…) to close the current gaps in US laws, which allow bad actors to deliberately use U.S. companies to hide money laundering, tax evasion and other illicit financial activities (…).” 

Recommendations I According a study commissioned by the Greens/EFA Group in the European Parliament, the EU should promote that all countries: Establish central public registries of beneficial ownership for all types of legal persons and legal arrangements Commit to global automatic exchange of information pursuant to the OECD´s CRS Publish aggregate information on the financial assets held by non-residents

Recommendations II In order to encourage the level playing field in terms of automatic exchange of information, the EU could: Include the U.S. on their upcoming European blacklist of tax havens (expected for summer) Establish a withholding tax scheme, on all EU-sourced payments against non-compliant financial institutions

Sources Study „The role of the U.S. as a tax haven – Implications for Europe“ commissioned by the Greens/EFA Group in the European Parliament: http://www.greens-efa.eu/fileadmin/dam/Documents/TAXE_committee/ The_US_as_a_tax_haven_Implications_for_Europe_11_May_FINAL.pdf Online sources: http://www.greens-efa.eu/de/the-role-of-the-united-states-as-a-tax-haven-15525.html http://www.bloomberg.com/news/articles/2016-01-27/the-world-s-favorite-new-tax-haven-is-the-united-states http://www.economist.com/news/international/21693219-having-launched-and-led-battle-against-offshore-tax-evasion-america-now-part

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