Following on from our
part 1 summary on the various changes in German law
scheduled for 2016, find out about FATCA, CRS and the
implementation of the Transparency Directive.
Banking and Capital Markets - Structured Finance
FATCA: required US-related reporting
In 2013, Germany and the US agreed to the Foreign Account Tax
Compliance Act (FATCA) with the first FATCA-related report out on
31 July 2015. In short, FATCA is an anti-avoidance tax measure and
designed to prevent US citizens from hiding income and assets
overseas. Under FATCA regulations, German residential financial
institutions with reference to the US are obliged to register
themselves with the German Federal Central Tax Office and with the
US Internal Revenue Service (IRS). These companies must appoint a
responsible officer to take care of filing the required
The German residential financial institutions report specific
data on their bank accounts to the German Federal Central Tax
Office at latest by 31 July of the following tax year. This data is
automatically forwarded by the German authorities to the IRS.
Failure to comply with FATCA requirements result in a 30%
withholding tax on certain US source payments.
CRS – Common Reporting Standards
On 31 December 2015, the German Act for Standard for Automatic
Exchange of Financial Account Information (FKAustG) came into
effect. The aim of the automatic exchange of financial account
information is to avoid cross-border tax fraud and evasion. This
Act implemented the Common Reporting Standards (CRS), which was
developed by the Organisation for Economic Co-operation and
Development (OECD), with G20 countries and in close cooperation
with the EU. Meanwhile, to date, 97 countries have shown intentions
to adopt the Standard for Automatic Exchange of Financial Account
German residents affected by CRS will need to provide specific
data on their financial accounts to the German Federal Central Tax
Office. The first report will be filed for the 2016 fiscal year by
31 July 2017, and then annually by 31 July. The legal basis for CRS
is FATCA, however there are some differences between FATCA and CRS.
The question for applicability depends on whether or not the
residential state and tax office has signed a contract with the
foreign tax authority requesting financial information. Those
obliged to file reports must only register with the local tax
authority, and not with the IRS. No responsible officer is
required. Failure to comply with CRS may result in a fine of EUR
Implementation of the Transparency Directive (2004 /109/EG)
into national law
The implementation of the EU Transparency Directive into German
law in November 2015 led to changes to the Securities Trading Act
(WPHG), causing various new notification duties as well as
increased sanctions for violations of these duties. The thresholds
which trigger notification duties on the acquisition or sale of
shares which grant voting rights are set by a German issuer. They
are no longer calculated on the level of each company, but are
consolidated on a group level. If the parent company files a
respective notification, the affiliated companies are relieved from
their duty to file a notification.
The effective date for notification duties on the sale or the
acquisition of shares has been brought forward. While previously
the notification duty was triggered with the actual settlement of a
deal, according to the new legislation, the duty is triggered with
the trade of the shares even if the transfer is still pending.
Another change imposed is the abolition of mandatory quarterly
reporting for issuers of securities that are admitted to a
regulated market. The deadline for the issuance mandatory
semi-annual reporting has been extended from two months to three
Amendments in legislation also lead to tighter sanctions for the
non-filing of notifications. Fines that have been imposed have
increased drastically; corporations can be penalised up to Euro 10
million or as much as 5% of annual turnover. The German federal
financial supervisory agency (BaFin) is obligated to publish its
decisions to impose sanctions on its website, naming affected
persons or corporations ("naming and shaming"). The
changes also lead to an extension of potential notification duty
violations, which can result in a temporary loss of shareholder
An additional notification duty had been imposed on all issuers
whose securities are admitted to trading on a regulated market, and
have chosen Germany as home member state. As of 26 November 2015,
they must publish this decision immediately.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The implementation of the mandatory exchange of initial and variation margin for non-cleared OTC derivative trades in the EU commenced on 4 February for financial counterparties with the largest derivatives portfolios.
In 2016, the French financial regulators, the ACPR and the AMF, continued to pay particular attention to infringements in matters of anti-money laundering and anti-terrorism, internal control procedures, conflicts of interest and market abuses.
The latest report from our Centre for Regulatory Strategy, EMEA outlines the new requirements around the exchange and holding of collateral, and sets out the best practices and advanced techniques to respond effectively to the resulting collateral management challenge.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).