Are you following the development of the reporting under FATCA?

The Nordic Long Term Savings Market

In the middle of February 2013, The Swedish Ministry of Finance sent a document to the US Treasury Department about how Sweden intends to report the requested control data under Foreign Account Tax Compliance Act (FATCA), the American regulatory framework that aims to combat tax evasion. Where an agreement is reached the transference of information takes place through the Swedish Tax Agency. This means that in Sweden we adhere to the practise and industry standards which were established regarding who reports to the American tax authorities. This will make it easier for all players, not just those who are obliged to report but also for ourselves who are developing effective IT solutions to provide data to the Swedish Tax Agency as well as the tax authorities Skatteetaten in Norway and Skat in Denmark.

Standard system provides cost benefits

Since the agreement needs to be negotiated, we do not currently know about or how it differs from the agreements that have already been signed with Great Britain, Germany, French, Italy, Spain, Norway and Denmark or when the agreement can be completed. The Swedish market differs from the other Nordic countries with large volumes of endowment insurances linked to deposits and the premium-defined share of occupational pensions with unit-linked insurance as forms of management. This may mean that certain types of insurance will be reported. In all likelihood, it will also require legislative measures to get the flow of information to comply with the agreement. Once this is in place, the Swedish Tax Agency can specify what data they need from the players who are obliged to report. In the last ten years Itello has reported data for control data to the Swedish Tax Agency for our life insurance customers.

Reuse saves time on development, testing and implementation

The experiences of reporting control data to the Swedish Tax Agency means that we will be able to reuse previous knowledge to solve this type of problem. Because all of our customers have the same version and data model in Inca it makes it easier to create a generic solution for reporting. Obviously our customers’ products are different, but they are configured with the same component-based approach. We have our responsibility but in a long-term partnership with our customers they must take their responsibility too. We do not know the detail of what is involved, but understanding the implications of FATCA and the definitions of “US persons” and the interpretation of the rules and laws they operate within are we think the responsibility of the customer. For those players who for various reasons choose not to adhere to the industry standard, but instead choose to report directly, discussions are in progress at an international level where coordination with the TRACE system is seen as a possible way. Just the task of entering the people and what holdings they have in which insurance and savings products covered by FATCA is an extensive, time and cost consuming one for the players. To then create processes, procedures and adaptions of the many different systems to administer agreements and savings means considerable additional costs. It is probably right for the players who have operations in many countries and therefore need to report to many tax authorities. We at Itello have chosen to link our solution to the industry standard – reporting under FATCA through each country’s tax authority.