Wealth & Finance 2015 Worldwide Tax Guide

Wealth & Finance International | 2015 Worldwide Tax Guide

Taxing Times Partnering with Wealth & Finance are Global Tax Network (GTN), a mobility tax services firm. They spoke to us about the increasingly complex arena of global tax compliance.

Also in the Guide...

Jordans Trust Company Limited Quantum Group East Africa Law Chambers VICCA Chartered Accountants Pearl Cohen Zedek Latzer Baratz Northern Trust

2015 Worldwide Tax Guide www.wealthandfinance-intl.com

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Welcome to the Wealth & Finance 2015 Worldwide Tax Guide Welcome to Wealth & Finance magazine’s 2015 Worldwide Tax Guide.

As an arena that continues to evolve and transform at a phenomenal pace, taxation requires a continued level of expertise and dedication.

With increasing obstacles and hurdles to overcome, professionals and individuals across the globe are constantly implementing some truly innovative and forward thinking strategies to both deliver and exceed expectations for their clients.

In keeping with our distinctly international flavour, this guide takes a look at a diverse range of firms spanning the globe, and get their unique insights into the latest exciting trends and developments shaping this exciting sector.

So to get the inside track from some of the top players in taxation, please read on‌ 4.

East African Law Chambers 6.

Global Tax Network (GTN) 10.

Jordans Trust Company Limited 12.

Northern Trust 18.

Pearl Cohen 20.

Quantum Group 22.

Vicca Chartered Accountants Cover picture courtesy of Valdis Skudre / Shutterstock.com

Wealth & Finance International | 2015 Worldwide Tax Guide

East African Law Chambers East African Law Chambers (EALC) is a medium sized law firm that provides legal services in Tanzania. EALC has a wide range of expertise in banking and finance, competition, employment law, mergers and acquisitions, mining, oil and gas, telecommunications, intellectual property, litigation and arbitration. We also engage in tax compliance and advisory services.

EALC was registered in 2005, started off with two lawyers, and has steadily grown to a staff complement of 20 lawyers. EALC is a member firm of the Bowman Gilfillan Africa Group.

In terms of our region, a young and disjointed customs bloc in the East African Community (EAC) creates its own challenges, mainly as the EAC countries grow at different paces and some find it difficult to implement the tenets of unification. Recent gas discoveries in offshore exploration blocks has also created the need for specialised tax services in the region, and the Revenue Authorities are also grappling with how to tax the influx of investment.

Brian Kangetta heads the Tax Department in EALC, offering tax compliance and advisory services. He provides advisory services in value added tax, personal and corporate income tax, and withholding tax, covering various sectors such as telecommunication, oil and gas, insurance, banking, agriculture, and manufacturing.

From our perspective, the future is quite bright. New investments are coming into Tanzania, and we are well positioned to provide investment advice. As the Tanzania Revenue Authority and clients grapple with tax principles that have not previously been adopted in the market, we have set ourselves apart as an advisor of choice.

Brian also assists clients in resolving tax audit issues raised by the Tanzania Revenue Authority, and represent clients in tax appeals. He also assists clients with tax due diligence assignments as well as tax health-check reviews.

Company: East African Law Chambers Name: Brian Kangetta Email: b.kangetta@ealc.co.tz Web Address: www.ealawchambers.com Address: Plot No. 18, Rukwa Street, Masaki, Dar es Salaam PO Box 38192, Dar es Salaam Telephone: +255 22 260 0854/ +255 787 842 842

These are certianly interesting times when multi-national companies are looking for certainty in the application of tax principles or computation of tax liabilities, whereas the revenue authorities seek to counter arrangements that they believe are eroding the tax base. Tax advisors are therefore called upon to possess indepth understanding of their clients’ businesses as well as international tax principles.

Tax law in East Africa has failed to keep up with business developments over the years, and it is therefore a struggle for revenue authorities and tax practitioners to apply tax principles that are not contained in tax law. Some industries are quite unique, and require special mention in tax legislation, in the absence of which there will always be a tug-of-war between taxpayers and revenue authorities.

EALC has continued to research and gather information as well as international case-law on critical matters, which can then be used to defend client cases.

The firm boasts an experience of over ten years’, offering tax services in the market, which makes the firm stand out among its peers. We have built enviable relationships in the Tanzania Revenue Authority, and a wealth of jurisprudence that can assist in resolving tax disputes.

Furthermore, we successfully represented a client in an appeal before the Tax Revenue Appeals Board, where the quantum of tax in dispute was significant. As well as that we have also assisted a client in resolving a sizeable objection that has been outstanding for more than six years.

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Wealth & Finance International | 2015 Worldwide Tax Guide

Global Tax Compliance Becoming Increasingly Complex Global tax compliance has become increasingly complex for globally mobile individuals, due to expanded overseas banks, financial account reporting and tax compliance requirements. There has been a rise in the number of the estimated six million US citizens living abroad who are giving up their US citizenship. According to the US Treasury Department, a record 3,415 Americans renounced their citizenship in 2014. The rise continues as in the first quarter of 2015 alone, and according to recent data released by the IRS more Americans living outside the US gave up their citizenship than ever before. According to data compiled by Bloomberg, the 1,335 expatriations in the first quarter of 2015 surpassed the previous record by 18%.

The question becomes, is there a correlation between the increasingly complex tax compliance requirements and the increase in the number of US citizens giving up their citizenship? While there can be non-tax related factors which can influence a person’s decision to relinquish US citizenship or lawful US permanent residency (US green card), there is likely a correlation. The daunting task of filing tax returns with the added burden of reporting overseas bank and other financial account information can be a challenging experience for US citizens, US green card holders and US tax residents.

• US citizenship is relinquished; or • US permanent residency is relinquished by a “long-term US resident,” meaning someone who has been a lawful permanent resident of the United States in at least eight of the last 15 years.

And, if any of the following three tests are satisfied: • Tax Liability Test: The individual’s average annual net federal income tax for the five years preceding the year of expatriation exceeds $160,000* (* indexed annually for inflation).

• Net Worth Test: The individuals’ net worth exceeds $2,000,000 upon expatriation.

• Certification and Compliance: The individual fails to certify under penalty of perjury that he or she has met the requirements of the Internal Revenue Code for the five preceding years, or fails to submit evidence of such compliance.

In this article, two senior leaders from Global Tax Network (GTN), UK based Richard Watts Joyce, Regional Managing Director EMEA, and New York based Chris Hall, Managing Director of GTN’s Northeast US region, provide an overview of some of the challenges faced by globally mobile individuals.

The expansion of the foreign asset and reporting rules in the US under the Foreign Account Tax Compliance Act (FATCA) and its pursuit of taxpayers with unreported income from offshore financial accounts has garnered the most attention. However, other countries, including Canada and Italy, have or are considering similar reporting requirements. In addition to the foreign asset reporting requirements, a globally mobile individual should consider income, social security, estate, and gift tax exposure in countries other than their country of residence.

An individual who satisfies this test is then considered a “covered individual,” and the resulting Expatriation Tax is generally calculated by treating the individual’s assets as having been sold on the date of expatriation. The resulting tax may cause hardship for the individual. Since their assets have not actually been sold, they may not have enough available funds to pay the tax related to the deemed sale of the assets.

One way for a green card holder to avoid falling subject to the Expatriation Tax is to track their lawful permanent residency period. If they can legally relinquish the green card before the eight year period has elapsed, it may be possible to avoid the Expatriation Tax, and its related burdens, altogether. It should be noted that a partial year will count as a full year for this test.

Even a change in country of residence can cause tax issues. In many countries, including the US and Canada, certain long term residents or citizens may be subject to a departure tax based on their net worth. The departure tax rules can be quite complex. In the US, for example, the rules regarding Expatriation Tax have been in existence since June 16, 2008. Individuals may become subject to Expatriation Tax, also referred to as “anti-expatriation rules,” if:

If the individual is not able to relinquish their green card before the eight year period, they may still escape the grasp of the expatriation tax

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Wealth & Finance International | 2015 Worldwide Tax Guide

abolished and the overseas workday relief that used to be available to individuals who could claim “not ordinary resident” status has now been defined in statute. This allows certain individuals moving to the UK (with some restrictions on prior UK residency) to claim exemption from UK tax for earnings relating to days spent working outside of the UK for the year of arrival and the following two tax years.

if none of the other tests are satisfied. The individual will need to file the appropriate form to show they did not meet these additional tests. In the end, while it is difficult to outline the many possible scenarios and comment on all of the tax rules that may apply in the year that a person’s US citizenship or green card is relinquished, the need to have an overall awareness of the tax rules and to exercise diligence in planning for such an event remains the same.

However, one of the main conditions for the workday relief is that the proceeds from earnings relating to non-UK workdays must be paid outside of the UK and kept outside. The employment income must also be paid into a “Qualifying Account” in order to be able to make an overseas workday claim and benefit from “Special Mixed Fund Rules” (if the account is not qualifying, the relief is still possible, but is subject to the highly complex normal mixed fund rules, requiring analysis of each and every remittance to the UK). In order to be considered as a “Qualifying Account” the account must meet a number of conditions making pre-assignment planning so vital.

As this example illustrates, the residency status of a globally mobile individual is a key factor for income taxation. It is also important for social security and estate and gift taxes. Residents and non-residents are often subject to significantly different tax rules in a country.

UK tax residency Residency had been a major issue in the UK for many years, falling outside of tax legislation and based mostly on case law. In an effort to reduce uncertainty and bring matters under a legislative framework, HMRC introduced a Statutory Residency Test in April 2013, which has significantly changed the way that tax residency is determined.

Capital gains tax changes for non-residents The recent UK Budget Statement also extended the reach of UK capital gains tax to include disposals of UK residential property by non-residents of the UK. Prior to April 6, 2015, any sale of a UK property by a non resident individual would be outside the scope of capital gains tax at the point of sale, provided that the individual was either non-resident when the property was purchased, or spent at least five full tax years outside of the UK. From April 6, 2015 onwards, gains on the sale of UK property owned by non residents will be chargeable to capital gains tax, based on the increase in value from April 6, 2015 onwards. A valuation at that date will be required to determine the base cost for tax purposes.

There are three tests to determine tax residency, namely “automatic non residency”, “automatic residency” and the “UK ties” tests. When completing each test it is necessary to consider each year separately and work through the tests from the top down. Once you can answer “yes” to one of the tests, this determines your residency position for that tax year.

Automatic non-residency will apply in any tax year that an individual: • has been non resident for the prior three years and spends less than 46 days in the UK; or • has been resident in one of the prior three years and spends less than 16 days in the UK; or • leaves the UK to work full time overseas and spends less than 91 days and no more than 30 working days in the UK. Automatic residency will apply in any tax year that an individual: • is present in the UK for 183 days or more; or • has all of their homes in the UK and spends more than 30 days there; or • Works “sufficient hours” in the UK (broadly more than 75% of overall workdays are spent in the UK over a 365 day period)

UK “domicile” status Finally, there has been much political debate over the concept of “domicile” status and associated tax advantage in the UK. Currently, an individual can claim non-domicile status if they are a non-UK citizen moving to the UK and do not intend to remain indefinitely. The status allows exemption from UK on overseas income and gains provided these are not remitted to the UK. A non-domiciled individual that has been tax resident in the UK for at least seven out of the last nine years is required to pay an annual charge of £30,000 to maintain the exemption (effectively from year eight onwards), or commence reporting worldwide income and gains, whether or not remitted. The annual charge increases to £60,000 for individuals who have been resident in the UK in at least 12 of the last 14 years and £90,000 for individuals who have been resident in the UK in at least 17 of the last 20 years.

If you do not meet the requirements for “automatic non residency” or “automatic residency”, then you must look to the “ties test”. This provides the maximum number of days that an individual can spend in the UK before becoming tax resident, according to the number of “connection factors” that they have with the UK. The more connection factors, the lower the number of days that can be spent in the UK before becoming resident, or conversely, the more days that needed to remain outside of the UK to become a non resident.

As part of the 2015 Summer Budget, the newly elected Conservative government declared their intent to introduce new legislation to limit the number of years that a non domicile claim can be maintained. From April 2017 any individual that has been resident in the UK for more than 15 of the past 20 tax years will now be deemed to be domiciled in the UK for tax purposes, without any possibility of paying an annual charge to avoid declaring worldwide income. This will have significant implications for many high net worth overseas nationals residing in the UK.

The rules are extremely complex and require professional UK tax advice prior to any move. An added complication is that, for many globally mobile individuals, the UK domestic rules may be overridden by international tax agreements permitting “treaty” residency to another jurisdiction.

Whilst this can complicate matters further, it can also be an effective planning tool, particularly where domestic UK residency rules provide a less favourable outcome, or a double taxation issue. What is clear is that both domestic and international law must now be considered with any UK inbound or outbound move and whilst the UK rules may now be under a statutory footing, they may still not provide the final answer.

These are just a few of the tax challenges faced by globally mobile individuals. If you have any questions please contact Christopher Hall at chall@gtn.com or +1 (917) 470-9132 or Richard Watts Joyce at rwattsjoyce@globaltaxnetwork.co.uk or +44(0)207 100 2126. The information provided is for general guidance only, and should not be utilized in lieu of obtaining professional advice.

Overseas workday relief As part of these changes, the concept of Ordinary Residence was

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Global Tax Network (“GTN”) is a mobility tax services firm. Global Tax Network Ltd is the UK member firm of GTN. We provide international and domestic mobility program development and support for organizations, including tax planning and preparation services for employees on assignment, transferring to a new host location (e.g., moving to a new country), or working temporarily outside of their home location. We combine excellent client service, technical expertise, and leading-edge technology to provide a full range of Mobility tax services. GTN is dedicated to the tax needs of mobile employees and the organizations that support them, creating a smooth employee experience.

Christopher Hall Managing Director – GTN Northeast Christopher is Managing Director of the GTN Northeast Region. He has over eighteen years of experience in expatriate tax compliance and consulting. Having worked in the UK, Canada, and the U.S., Christopher has significant experience in a wide variety of expatriate related topics including Social Security, pensions, treaty application and planning, and compensation and policy issues. As an expatriate himself, he adds personal experience to the technical knowledge that relates directly to the challenges of making cross border moves. After receiving a BA (Honours) in Economics from the University of Leeds, Christopher began his career in the UK with Arthur Andersen. He is UK tax qualified and an Overseas Member of the Chartered Institute of Taxation in the UK. Prior to joining GTN, Christopher worked in Deloitte’s expatriate tax practice in Toronto and New York for over nine years.

Richard Watts-Joyce Regional Managing Director - EMEA Richard is a co-founder and partner of the UK office of GTN, where he assists high net worth individuals, non domiciles and professional sportspersons with international tax planning and compliance. In addition to advising private clients, Richard also assists companies with tax policy development and planning for international assignment programs. Richard has over 20 years of experience in international tax consulting, having previously worked within the London offices of KPMG and PricewaterhouseCoopers specializing in international executive tax planning and compliance for multinational companies. He then spent a number of years at Watson Wyatt Partners, assisting clients with international executive compensation structures and incentive schemes for board level directors, before establishing Global Tax Network Ltd in 2001. Richard has a BSc Honours Degree from the London School of Economics and qualified as a member of the Association of Taxation Technicians in 1995 and the Chartered Institute of Taxation in 1999.

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Jordans Trust Company Limited Jordans Trust Company Limited is part of the Jordans Group, which has a 150 year heritage. The group brings together a unique team of lawyers, accountants, corporate governance experts, trust managers, company secretaries, data providers and property search specialists.

Jordans Trust Company is experienced in forming trusts and foundations as well as providing ongoing support to these organisations once established. We also offer UK and international tax planning advice. We work with clients based all over the world, ranging from sole traders to multi-national corporations.

Another benefit of forming a company in the UK is that UK corporation tax rates are low – and falling with the standard UK corporation tax rate being 20%.

The effective UK corporation tax rate, after deduction of expenses and the application of reliefs and charges, will of course be much lower than 20%. Additionally, a UK company is not subject to UK corporation tax on its foreign dividends in the majority of cases.

I am Director and Principal of Jordans Trust Company Limited and head up a team of more than seventy staff located at our head office in the UK and at our offices in BVI, Cyprus, Hong Kong, Jersey and Seychelles.

These factors now makes UK companies very advantageous as international holding companies - particularly for those non-EU investors who want a gateway into Europe.

My responsibilities include addressing client matters, directly providing bespoke tax advice and for developing and implementing Jordans’ business development strategy.

It has been said that there is no one quite like us. We are the only trust company with a law firm and an accountancy practice under one roof.

Jordans Corporate Law was established in September 2013 and has advised Jordans Trust Company clients on diverse matters such as UK company share reorganisations, employment contracts, commercial agreements and UK regulatory issues.

I advise on a wide variety of planning structures required in key global jurisdictions for my clients, who include entrepreneurs, property developers, high net worth families and leading international trust companies.

As part of my job I speak at conferences, and write articles on international tax planning issues for a wide variety of publications.

Our accounting services division was established in April 2008 and enables us to offer an integrated service so clients don’t have to shop around. They get to work with the organisation they know and trust.

The UK is arguably the world’s leading international corporate domicile, and a UK company can be incorporated within a few hours. There are no minimum capital requirements, and no need for the participation of a notary public in the incorporation process. Company formation costs are also proportionate – for instance, the UK no longer imposes capital duty on authorised or issued share capital.

Another important point about our firm is that directors are accessible to our customers, which makes a big difference to clients to know that they are speaking to an experienced individual. Because of our scale we keep our service personal and know our clients well.

It is for these reasons that so many entrepreneurs within EU and EEA countries incorporate UK companies for limited liability trading in their own, home countries.

We’re often complimented on our innovative approach to client matters - and that only comes from having the right mixture of technical expertise and an in-depth understanding of the client’s specific issue, based on a close working relationship with them.

Jordans incorporate large numbers of UK companies for use in Germany, Italy and France – as well as other locations – to carry out local trades or business carried on in those countries by their resident entrepreneurs.

We are the first independent trust and company services business of our kind to obtain a practice assurance and supervision for compliance with Money Laundering Regulations from a professional body such as ICAEW.

The UK also has generous audit exemption rules, and that generally makes producing and filing statutory accounts very low cost.

It’s always challenging in the offshore industry, and particularly now when there are significant legislative changes taking place. However, we are seeing successes with our strategy of expansion into new markets

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for Jordans Trust Company. We have made significant new gains in the Chinese, Russian and Italian markets, with our increased business resulting in a recent office move for our Seychelles office.

Over the coming months we are continuing with our strategy to develop in new markets and we will continue to build on the natural strength that comes from being a part of the Jordans Group.

Working on a global basis means that we are often faced with the universal challenges posed by political and economic changes which often change the rules of the countries we operate in. It means we always have to be flexible in our outlook.

For example, in the Cyprus market opportunities have arisen following the banking crises. We have found many of our partners looking beyond our core products in the BVI and Seychelles. There is a keen interest in our Hong Kong operation, as well as our UK corporate, legal and tax advisory services, which will give us plenty of exciting new ventures over the coming years.

Company: Jordans Trust Company Limited Name: Martin Palmer, BA (Hons) Law, ADIT Email: mpalmer@jordanstrustcompany.com Web Address: www.jordanstrustcompany.com Address: 21 St Thomas Street, Bristol, BS1 6JS, UK Telephone: +44 (0)117 918 1321

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U.S. Foreign Account Tax Compliance Act in Full Swing with a Global Reach

By Suzanne Shier, Chief Wealth Planning and Tax Strategist at Northern Trust

Withholding and Disclosure to Advance Transparency FATCA imposes a 30% withholding tax on certain U.S.-source payments to foreign financial institutions (including banks, brokers, custodians, investment funds and private investment companies) that fail to provide documentation of their FATCA compliance, including the reporting of their U.S. account holders. As a result, foreign financial institutions, including investment funds and private investment companies, have begun reporting their U.S. account holders, or, in some cases, exited their U.S. account holders from the institutions. FATCA also imposes additional reporting requirements for certain U.S. taxpayers with foreign financial assets, in addition to the long-standing FinCEN 114 Foreign Bank Account Reporting (FBAR).

Global tax transparency is advancing by leaps and bounds.

The U.S.-initiated Foreign Account Tax Compliance Act (FATCA), unknown to many just a few years ago, is now in full swing with a global reach. FATCA defies any simple summary. The following are some of the highlights.

Objective of FATCA The primary objective of FATCA, enacted in 2010, followed by a series of notices and regulations in the intervening years, is to reduce tax avoidance by U.S. persons with respect to income from financial assets held outside the United States. FATCA is designed to induce foreign financial institutions to report U.S. account owners (both U.S. taxpayers and foreign entities in which U.S. taxpayers own a substantial interest) to the Internai Revenue Service (IRS) or to their local tax authorities for sharing with the IRS and to increase disclosure requirements for certain U.S. taxpayers.

Reporting Models The FATCA regulations apply broadly to any financial institution, with implications for both U.S. and non-U.S. domiciled institutions. In addition, certain jurisdictions have implemented FATCA via one of two intergovernmental reporting models: Model 1 and Model 2.

Although the objective of FATCA appears at first blush to be limited in scope, its impact is far-reaching and extends beyond U.S. citizens, U.S. residents and traditional financial institutions. This has come as a surprise to many in the global community. In fact, FATCA has expanded from a U.S.-based initiative to a global network of intergovernmental agreements, and continues to evolve as the OECD Common Reporting Standard is adopted by increasing numbers of countries. Diligence is required by taxpayers and by financial institutions to identify tax residency and classification and determine tax withholding and tax information reporting obligations under increasingly stringent global initiatives.

A foreign financial institution that has entered into an intergovernmental agreement based on what is commonly known as “Model 1” will be required to comply with their jurisdiction’s own set of rules, which in some cases may vary from and override the FATCA regulations. The Model 1 intergovernmental agreement establishes a framework for foreign financial institutions to report directly to their own tax authorities, followed by an automatic exchange of information under existing tax treaties or tax information exchange agreements with the IRS.

FATCA has important implications for: • U.S. withholding agents making withholdable U.S. source income payments to foreign financial institutions • Foreign financial institutions to which payments that may be subject to withholding may be made • U.S. taxpayers with foreign financial assets and accounts • Persons who are neither U.S. citizens nor U.S. residents subject to expanded U.S. tax withholding under FATCA

Foreign financial institutions located in jurisdictions that have entered into an intergovernmental agreement based on a second model of the intergovernmental agreement (Model 2), will be permitted under local law to comply with the terms of a foreign financial institution agreement with the IRS, including reporting directly to the U.S. government. Model 2 foreign financial institutions will therefore be required to implement FATCA by following the provisions of the FATCA regulations, except to the extent expressly modified by their country’s intergovernmental agreement.

Stepping back and taking a high-level 360-degree view of FATCA from these various vantage points is helpful to gain a more holistic understanding of its implications for the global family, investor and advisor.

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photo.ua / Shutterstock.com

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FATCA and Form 8938 for U.S. Taxpayers For U.S. persons, Form 8938 (Statement of Specified Foreign Financial Assets) was new under FATCA for tax years beginning after March 18, 2010 (effectively, the 2011 tax year for calendar year individual taxpayers). The purpose of this form is to report the ownership of specified foreign financial assets if the total value of those assets exceeds the statutory reporting threshold, listed below. Form 8938 reporting is in addition to, not in place of, any required FinCEN 114 FBAR reporting.

As of June 30, 2015, 75 jurisdictions have signed an intergovernmental agreement. Another 37 jurisdictions have reached agreements in substance that are awaiting finalization. The obligations imposed on foreign financial institutions under the intergovernmental agreements vary in important respects from those described in the FATCA regulations. The details of the requirements for financial institutions in countries that have signed an intergovernmental agreement will be addressed in the local law implementing the intergovernmental agreement and will vary by jurisdiction. Many jurisdictions have not yet passed local legislation implementing the agreements or provided additional guidance, resulting in continued uncertainty with respect to the details of compliance.

Form 8938 must be filed by persons who are required to file an U.S. income tax return and who are one of the following: a U.S. citizen, a U.S. resident alien, a non-resident alien who elects to be treated as a resident alien to file a joint income tax return, or a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico. Entity filing requirements (including for trusts) are expected to be established

by Treasury regulations.

Foreign Financial Institutions Foreign financial institutions include non-U.S. professionally managed investment entities that derive most of their income from investments.

The definition of investment entity is broad, and will typically encompass not only banks, brokers, custodians and investment funds, but also private investment companies. It ordinarily will not include trusts or companies established exclusively for religious, charitable, scientific, cultural or educational purposes or trusts or companies that generate less than 50% of their gross income from financial assets.

Status as a foreign financial institution, including private investment companies, invokes a number of obligations under FATCA, including, but not limited to: • Registering with the IRS, if applicable, to obtain a Global Intermediary Identification Number (GIIN) • Undertaking due diligence procedures to document, identify, verify and record the FATCA status of each account holder and other payees • Applying, as required, FATCA withholding on certain payments of U.S.-sourced income • Reporting to the IRS, or local government, as applicable, on account holders that are “specified U.S. persons” • Adopting a compliance program and, if applicable, designating a responsible officer to periodically certify compliance with FATCA to the IRS.

The assets required to be reported are financial accounts maintained by a foreign financial institution and stock or securities issued by a nonU.S. person that are held for investment, any interest in a foreign entity (including a trust) and any financial instrument or contract with an issuer or counterparty that is not a U.S. person. Assets held by an U.S. custodian are not required to be reported on Form 8938. In addition, a foreign financial asset is not required to be reported on Form 8938 if the asset is required to be reported (and is reported) on a timely filed Form 3520 (Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts), Form 5471 (Information Return of U.S. Persons with Respect to Certain Foreign Corporation), Form 8621 (Information Return by Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), Form 8865 (Return of U.S. Persons with Respect to Certain Foreign Partnerships) or Form 8891 (U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans). However, a person is required to identify on Form 8938 the forms on which he or she reported the assets and how many of the forms he or she filed and is required to include the value of the assets reported elsewhere to determine whether the person meets the applicable filing threshold for Form 8938.

There are exceptions whereby a foreign financial institution otherwise subject to these requirements may be deemed compliant. For example, another foreign financial institution or a U.S. financial institution may take on a foreign financial institution’s reporting obligations - a sponsoring entity for a sponsored entity. And a passive investment entity, such as a private investment company that is not professionally managed, may be considered a “non-financial foreign entity” and may avoid FATCA withholding by providing a certification that it does not have any “substantial” U.S. owners, or, alternatively, it may provide the name, address and taxpayer identification number of each “substantial” U.S. owner.

For the purposes of Form 8938 filing, a person generally is deemed to be the owner of assets held in a grantor trust of which he or she is treated as the owner under the grantor trust rules of the Internal Revenue Code. The beneficiary of a foreign non-grantor trust or a foreign estate is required to report his or her interest if he or she knows of the interest or has reason to know of the interest based on information that is readily available to him or her. A person will be deemed to know of his or her interest if he or she received a distribution from a trust. If a person is the beneficiary of a foreign trust, the maximum value of his or her interest in the trust is the sum of (i) the value of the cash or other property distributed to him or her during the year, and (ii) the actuarial valuation

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of his or her right as a beneficiary to receive mandatory distributions as of the last day of the tax year. If a person has an interest in a foreign estate, the maximum value of the interest is the fair market value of the interest as of the last day of the tax year. The treatment of contingent and discretionary interests remains to be fully addressed.

She is an adjunct professor in the Master of Laws in Taxation Program at Northwestern University Law School and also a frequent speaker and author. Suzanne earned her bachelor’s degree with distinction in economics and sociology from the University of Michigan, her law degree, cum laude, from the Loyola University Chicago School of Law and a master of laws in taxation from the DePaul University College of Law. She serves on the Boards of Directors of Gads Hill Center and the Chicago Coalition of Women’s Initiatives in Law and as Chairperson of the Board of Directors of Chicago Scholars, a college access program for high potential urban students. Suzanne is a fellow of the American College of Trust and Estate Counsel where she is a member of the International Committee and a member of the International Bar Association, the Society of Trust and Estate Practitioners, the American Bar Association and the Chicago Estate Planning Council.

Status Foreign Financial Assets Form 8938 is attached to and is required to be filed by the due date of a person’s annual income tax return, including extensions. There is a $10,000 fine for failure to file form 8938, and if the failure continues for more than 90 days after the IRS mails a notice of failure to file, an additional $50,000 penalty.

FATCA Withholding and New U.S. Tax Forms for NRAs Persons who are neither citizens nor residents of the U.S. (NRAs) have long been subject to withholding requirements on certain fixed, determinable, periodic or annual (FDAP) U.S. source income under Section 1441 of the Internal Revenue Code (NRA withholding), subject to modification under applicable income tax treaties. Under FATCA, an NRA who is not FATCA compliant (meaning they have not provided the required U.S. tax status documentation) is subject to broader FATCA withholding.

About Northern Trust Wealth Management Northern Trust Wealth Management specializes in goals-driven financial advice backed by innovative technology and a strong fiduciary heritage.

Northern Trust Wealth Management is ranked among the top 10 U.S. wealth managers with $232 billion in assets under management as of June 30, 2015, and a wide network of wealth management offices across the United States and abroad. The Financial Times Group has named Northern Trust Best Private Bank in the USA for six consecutive years. In 2014 Northern Trust was also named Best Private Bank for Socially Responsible Investing.

Payments subject to withholding under FATCA in the event of FATCA non-compliance include types of U.S.-source income that are otherwise excluded from NRA withholding, including, for example: • Portfolio interest; • Bank deposit interest paid by non-U.S. branches of U.S. banks (beginning January 1, 2017); • Gross proceeds from the sale of U.S. securities (beginning January 1, 2018); and • “Foreign pass-thru payments” (beginning no earlier than January 1, 2019, and yet to be defined in Treasury regulations).

The Northern Trust Company is an Equal Housing Lender. Member FDIC. About Northern Trust Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has offices in the United States in 19 states and Washington, D.C., and 20 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2015, Northern Trust had assets under custody of US$6.2 trillion, and assets under management of US$946 billion. For more than 125 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit northerntrust.com or follow us on Twitter @NorthernTrust.

Moreover, FATCA withholding may not be reduced or eliminated simply by making a treaty claim on a Form W-8. Where an account holder is not FATCA-compliant, full 30% FATCA withholding will apply. When FATCA withholding is required, the withholding agent does not also impose withholding under the existing NRA rules. Conversely, where an account holder is FATCA compliant, FATCA withholding will not apply and withholding under the existing NRA withholding rules will apply (subject to treaty rates). The IRS Forms W-8 currently required under the existing NRA rules have been updated to include FATCA requirements.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at http://www. northerntrust.com/disclosures.

Conclusion The confluence of the global economy, international investment and personal mobility in the modern day has resulted in a wealth and tax planning and compliance landscape that is dynamic, to say the least.

Some uncertainty remains around the implementation of FATCA and further developments continue to unfold.

About Suzanne L. Shier Suzanne L. Shier is the chief wealth planning and tax strategist for Wealth Management at Northern Trust, where she is responsible for leading the Wealth Management wealth planning group and for providing thought leadership on federal tax issues of interest to clients, with a special emphasis on tax policy and legislation, charitable giving, cross-border trust design and fiduciary law. Prior to joining Northern Trust, Suzanne spent 26 years as a partner at Chapman and Cutler LLP in Chicago, ultimately leading the firm’s Trusts and Estates Practice Group, representing individuals, charitable organizations, and corporate fiduciaries in a full range of estate planning and fiduciary services, including cross-border planning, and fiduciary administration matters.

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Pearl Cohen Israel - Changing International Taxation, Cross-Border IP Tax Planning and Exchange of Information The recent joining as a member to OECD in 2010 has contributed many changes to Israel’s approach to matters pertaining to international taxation. We got in touch with Henriette Fuchs, Partner at Pearl Cohen Zedek Latzer Baratz, to receive a few of their insights regarding the impact of these changes.

After a significant overhaul to a system of taxation on world-wide income in 2003, Israel abandoned its previous ‘territorial’ taxation legislation. As a result, taxation in an international context has since gained significant importance in Israel.

to ensure that the ownership of intellectual property remains in - or even returns to - Israel.

The Tax Department of Pearl Cohen Zedek Latzer Baratz As a firm primarily internationally oriented, Pearl Cohen, and its tax department, typically look ‘across the border’. Historically a firm strong in intellectual property, patents and international commercial law, the tax team of Pearl Cohen is highly versed in cross border tax and IP tax related issues. As Israel’s membership to OECD has been taking hold, and international tax structuring and planning in Israel has matured, the tax department of firm, under the management of Henriette Fuchs, has gained an excellent name.

Since this major tax reform, anti-avoidance and discouragement of deferral of income have often been at the centre of discussion with tax payers. CFC income, transfer pricing regulations, corporate tax residency and taxation of trusts are among the many recurring points of focus.

In order for Israel to battle undeclared wealth, various legislative changes were implemented while the recent draft budget laws for 2015-2016 propose a large number of legislative amendments. On the eve of the September-2015 deadline for submission of anonymous requests for “voluntary disclosure”, the legal and accounting profession became subject to certain anti-money laundering reporting rules. In parallel voluntary disclosure will stay in place until the end of 2016. Legislation is also being considered currently, proposing to classify a transgression of tax requirements as a ‘crime’ as well under the laws for Prohibition of Money Laundering, which will give the tax authorities newer and much more far-reaching tools.

Among the main challenges successfully dealt with by the Henriette’s team at Pearl Cohen has been the development of IP related transfer pricing strategy for a large MNE’s reconciling a multi-jurisdictional business model into a sound tax structure offering clients certainty in advance, backed by the tax authorities in Israel by a ruling. Similarly so has the tax department developed - together with our nationally recognized and leading IT experts, as a # 1 patent & IP firm, tax strategies for our clients, oftentimes services the providers of Cloud-based.

Moreover, Israel’s Ministry of Finance notified the OECD that by the end of 2018, Israel will adopt the common reporting standard for the international ‘automatic exchange of financial account information for tax purposes’. Pending changes to tax laws intended to facilitate the release of financial information in a multinational context, this would formally authorise the tax authorities to release such information. Alongside this, discussion on how to increase domestic tax collection and how to expand the enforcement of tax laws continues.

Company: Pearl Cohen Zedek Latzer Baratz Name: Henriette Fuchs Email: HFuchs@PearlCohen.com Web Address: https://pearlcohen.com/professionals/henriette-fuchs/ Address: 132, Menahem Begin Road Azrieli Center, Round Tower, 18th floor Tel-Aviv 6702101, Israel Telephone: + 972 3 6073769

The strength of its world-renowned, high-tech and innovative industries has been greatly promoted by Israel’s tax benefits. Evidence of this can be seen in the accumulated sum of exits in Israeli start-ups in the first quarter of 2015 alone, totalling to $860 million. At present, government committees are studying measures for further modernisation and expansion of tech tax benefits in the context of global competition, looking 18

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Quantum Group (Malta) Quantum Group is a boutique organisation based in Malta providing a comprehensive package of business incorporation, legal and tax advisory and support services. Our team includes accountants, bankers, lawyers and executives with years of experience in corporate finance and transactions, tax and business advisory services.

Our core entity QUANTUM CORPORATE SERVICES LIMITED is licenced by the Malta Financial Services Authority to provide incorporation services in addition to providing advisory, accounting and business support services. Through our fully owned subsidiary ARX TRUSTEES LIMITED (licenced by the MFSA), we provide trustee, fiduciary and administration services.

We are positioned to assist and advise local and multinational clients operating in Malta and other jurisdictions. We collaborate with foreign-based firms and consultants to advise on cross-border transactions and to better assist clients that conduct business in multiple jurisdictions. Our clients include family owned businesses and multinationals hailing from various industries including energy, funds and capital markets, manufacturing and distribution, marine and aviation, pharmaceutical and internet betting and gaming.

Our firm is a partner of WTS [Tax and Legal Consulting] Alliance (www.wts.com), a global network of selected consulting firms represented in more than 100 countries worldwide, focused on tax, legal and consulting.

Quantum Group. 188, 21st September Avenue, Naxxar NXR1012 MALTA T+356.2010.6700 (TimeZone-CET) damien.fiott@quantumpartners.eu www.quantumpartners.eu

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Vicca Chartered Accountants Vicca Chartered Accountants is a solution based accounting practice that specialises in individually tailored business solutions for medium and large enterprises.

Expanding internationally is no longer a domain reserved for big corporates. Going global often starts at home and our services are frequently sought by emerging and innovative businesses seeking to benefit from the Australian research adevelopment incentives and export marketing grants.

At the other end of the spectrum, we are currently assisting a technology company establish into the Australian market to benefit from our generous research and development concessions. Outbound we have secured clients with generous export marketing rebate on export market development.

Our experience with international business structuring and multiple jurisdictional taxation and cross border issues is critical when assisting offshore companies who are seeking to create and/or maintain a corporate presence in Australia. When entering into a new market the decision on whether to set up a special purpose subsidiary entity or a branch of a corporate holding entity requires serious consideration.

The choice of a branch entity in the new jurisdiction generally has the benefit of access to tax credits from the flow out of post-tax repatriated income, however branches can bring litigious issues back to its parent entity.

Australia is a successful incubator for technology products, however because our market is small compared to the global market we continue to assist companies in expanding into offshore markets.

Nonetheless, it is a stable jurisdiction to do business in and we welcome the opportunity to assist you to further your company’s expansion.

Company: Vicca Chartered Accountants Web: www.viccaca.com Address: 16/127 Creek St, Brisbane QLD 4001, Australia Phone:+61 7 3221 9444

When deciding on how to structure into a new jurisdiction, keeping the end game in mind is paramount, is it ones strategy to create a new market and a profit stream that flows therefrom or is the end in mind to establish and sell down ones interest in the shorter to medium term? ls your investment a standalone investment or are you seeking joint venture participation? These questions require thorough thought and analysis at the start of the decision making process.

In terms of our region, Australia has an established capital gains tax regime. Changes in 2012 have further denied non-residents access to capital gains discounts on the sale of Australian assets, however discounts still applies to portfolio interests where less than 50% of the company’s assets are Australian real property.

Typically, clients operating globally experience issues with repatriating profits, navigating through indirect taxes or remunerating expatriate employees. If not carefully considered, these can also erode the monetary benefits of overseas expansion and hamper an organisation’s success.

Recently we assisted one of Italy’s largest civil infrastructure company to enter the Australian market. We took on the early role as director and assisted them in establishing their entity, securing a substantial infrastructure contract in Australia and power generation design and construct contract in PNG.

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