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In general, the sources of tax law are found in:
1) Hard law -> refers generally to legal obligations that are binding on the parties involved and which
can be legally enforced before a court
2) Case law -> judicial decisions (precedents)
3) Soft law -> term used to denote agreements, principles and declarations, doctrines that are not
legally binding
Mechanisms to exchange information:
1) Upon request (EOIR)
2) Spontaneous (SEOI)
3) Automatic exchange (AEOI)
- The AEOI is understood to involve the systematic and periodic transmission of “bulk” taxpayer
information by the source country to the residence country concerning various categories of
income (e.g. dividends, interest, royalties, salaries, pensions, etc.).
Historical background1:
Ever since the financial crisis (2008) and the (tax) scandals that emerged thereafter 2 combined with the
rise of information technology (and digitalization of the economy), domestic tax systems have shown
their limits.
o In particular, these developments highlighted the inability of states to tackle tax issues having
an international character.
Accordingly, in April 2009 at the London Summit, the OECD committed to bring greater
openness and transparency to cross-border financial services by reshaping and
modernizing the international tax architecture. This was important in order to:
i. Fight tax evasion;
ii. End bank secrecy and tax havens;
iii. Address tax avoidance and aggressive tax planning by MNCs
Timeline of relevant developments:
1
In the past years there has been an important shift in the field of tax law from:
1) Bilateral to multilateral;
2) Upon request to automatic exchange of information (EoI)
3) Domestic law to international guidelines
2
LGT Liechtenstein; UBS - Bradley Birkenfeld, Panama papers
, o FATCA -> The Foreign Account Tax Compliance Act (FATCA), which was passed as part of the HIRE
Act, generally requires that foreign financial Institutions and certain other non-financial foreign
entities report on the foreign assets held by their U.S. account holders or be subject to withholding
on withholdable payments. The HIRE Act also contained legislation requiring U.S. persons to
report, depending on the value, their foreign financial accounts and foreign assets.
- Information
o Financial information
o US tax residency/citizenship
- Bilaterality – Unilaterality
o IGA 1 and IGA 2
o US broad ≠ Abroad US
- 30% WHT (source)
o Register Collaborator FFI
o Recalcitrant Accountholder
- Financial Institutions:
o Collaborate
o Withholding agents (US Code)
- Previous accounts +50.000$ (insurances
+250.000)
- Only FATCA purposes
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