Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013
Charles Muller, Deputy Director General, ALFI

7929

FATCA could fundamentally change the way funds are distributed, says ALFI

RELATED TOPICS​

FATCA could fundamentally change the way funds are distributed, according to Charles Muller (pictured), Deputy Director General of ALFI, the Association of Luxembourg Funds Industry.  “Implementation will be a long and costly process and it will be the European investor who pays the price as US investors are very rarely invested in European funds," he says.

The Foreign Account Tax Compliance Act, or FATCA, was enacted in March 2010 by the US government to combat tax evasion by US taxpayers.  

FATCA is due to be implemented on 1 January 2013. It affects funds invested in the US market including, but not limited to, funds of funds, exchange-traded funds, hedge funds, private equity and venture capital funds, other managed funds, commodity pools, and other investment vehicles.

Foreign Financial Institutions (including investment funds, fund management companies and banks) will have to report investors who are taxable in the US to the US tax authorities or suffer a 30% withholding tax on interest, dividends and even gross proceeds.

Complying with FATCA might potentially mean reorganising the distribution system, creating a new flow of information that, some say, will cost up to USD40 per investor.

Implementing FATCA could potentially mean that hundreds of thousands of Foreign Financial Institutions will have to sign agreements with the IRS.

ALFI and EFAMA have been looking at this issue since it was announced and have recently met with Treasury to try and make the timeline of events more realistic. ALFI firmly believes that FATCA will be a huge project for both sides – for fund managers outside the US, and the US officials themselves – to undertake, and more time is needed to prepare for this.  

Muller says: “Our aim is not to stop FATCA – in any case, the law has been voted in – but to find ways to accommodate the law, to help the US achieve their goal of catching tax evaders, while at the same time finding ways to lighten the administrative burden that is put on us, and the subsequent cost burden that will be put on investors.

“Whatever happens evading FATCA is not an option for the European fund industry – or elsewhere in the world – firstly because the law has been passed, and secondly because the net has been cast so wide that it is hard to escape.  Unless you never want to invest in the US again.”

Latest News

EFAMA has commented on today’s vote by the European Parliament in favour of a new..
Morgan Stanley Investment Management (MSIM) has announced the launch of the MS INVF Systematic Liquid..
Confidence in the continuing strength of bitcoin and Ethereum is driving wider interest in altcoins..

Related Articles

Juan Nozal, Mapfre Asset Management
Juan Nozal, Fixed Income Portfolio Manager at MAPFRE Asset Management, talks about the outlook for fixed income assets over 2024, in what he predicts will be an outstanding year for this asset class...
Juan Nozal, Fixed Income Portfolio Manager at MAPFRE Asset Management, talks about the outlook for fixed income assets over 2024,..
n response to the increased attention to climate change risk, institutional investors, asset managers, and asset owners in the US are committed to implementing a variety of measures to address climate change and reach their net-zero goals, according to Cerulli Associates...
n response to the increased attention to climate change risk, institutional investors, asset managers, and asset owners in the US..
Lord Hollick, House of Lords
A House of Lords committee has raised “significant concerns” over the role of UK regulators, their ability to operate with genuine independence from government and how they are held to account...
A House of Lords committee has raised “significant concerns” over the role of UK regulators, their ability to operate with..
Rob Edwards, Morningstar
The complexities of assessing performance from responsible investment strategies have been laid bare after Morningstar’s ESG indices delivered a mixed bag in 2023...
The complexities of assessing performance from responsible investment strategies have been laid bare after Morningstar’s ESG indices delivered a mixed..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by