Israel Prepares to Carry Out FATCA Agreement with US – Los Angeles Income Tax Planning & Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on July 29, 2014

On June 30, 2014, the Israeli Finance Ministry signed an intergovernmental agreement with the United States which provides for both countries to exchange information on financial accounts held by their respective citizens in the other’s country. The agreement makes Israel the 28th country to sign a Foreign Account Tax Compliance (FATCA) accord with the United States. FATCA, enacted in 2010, requires foreign financial institutions to report information on accounts held by Americans under penalty of, in some cases, a 30% withholding tax on their US-source income.

Under the first phase of the accord, Israel is expected to transfer detailed information on American-held financial accounts to US tax authorities by September 30, 2015. The information to be handed over includes specific details, such as interest, dividends, and source income, of accounts held in Israel by US citizens, US residents, holders of US work permits, and any legal entity in which US citizens possess a material holding. The balances in those accounts as of Dec. 31, 2014, will also be included in the information provided by Israel.

Importantly, the agreement is not legally binding until the Israeli parliament, called the Knesset, ratifies it. The Knesset must do before the end of the year, otherwise the accord will be cancelled on Sep. 30, 2015.

Some types of accounts – primarily those considered unlikely to be used for tax evasion - are exempt from this agreement. These accounts include US-held pension savings, continuing education funds of salaried employees, provident funds designated for a specific purpose, and trustees of employee option plans.

                Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.

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