The unforseen consequences of financial reform
On one side of the Atlantic, politicians and lawmakers moved forward with a legislation aimed at cracking down on tax evaders. In 2010, Congress passed – and President Obama signed into law – the Foreign Account Tax Compliance Act (FATCA), which compels foreign banks to report any individual with an account larger than $50,000. Seemed a sensible solution.
However, reports Der Speigel, with the law slated to take effect in 2013, some European banks have decided that the additional burden of regulatory compliance may not be worth it and will no longer serve American customers.
Refusal to comply results in a punitive 30 percent withholding tax on all payments from the US.