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FATCA

The Foreign Account Tax Compliance Act, a 2010 United States federal law requiring all non-US financial institutions to turn over to Uncle Sam their records of the assets and identities of US citizens living abroad to the Department of the Treasury, appears to be a two-way mirror, at least when it comes to the Israeli Tax Authority.

An Israeli Tax Authority press release on Monday confirmed that, as part of applying FATCA in Israel, not only did the US receive information about American citizens’ Israeli bank accounts, but the opposite was achieved as well: the Israeli tax folks have received data on more than 35,000 Israeli-held accounts in US financial institutions.

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According to Israeli law, an Israeli citizen is allowed to maintain a bank account abroad, but they must report to the Israeli Tax Authority their income from the account (interest, dividends, capital gains). The information that was turned over by the Americans was apparently a rich deposit of data, judging by the almost gleeful tone of the press release (usually they don’t a have a reputation for a great sense of humor).

The data exchange between Israel and the US is part of an ongoing process of collecting financial information from abroad on Israeli citizens, part of an initiative of the OECD. Last May, Tax Authority Director Moshe Asher signed a Common Reporting Standard (CRS) agreement to facilitate automatic data exchange with various countries in 2017 and 2018.

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