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Pensions expert Keith Boniface has come out of a short-lived retirement to launch a joint venture which looks to target US expats in a post-FATCA marketplace.
Expat Pensions USA, as the company will be known, aims to solve the pension problems US expats will face when the Foreign Account Tax Compliance Act comes into place on 1 July.
Boniface will run the company with Angela South, managing director at Expat Pension Providers, a company which provides similar tax solutions to expats from around the world.
FATCA is part of the US Hiring Incentives to Restore Employment Act. It aims to ensure that US persons, wherever they are located and in whatever investment vehicle they hold their assets, are paying the correct amount of US tax.
When the act comes into force, those who are not compliant will suffer a 30% withholding tax on income and gross proceeds.
The main product offered by the company will be a qualifying non UK pension scheme (QNUPS) called the Expat Pensions USA Pension Plan, which is recognised for US tax purposes.
“It is a Maltese contractual pension plan established under advice from US Tax Attorneys and recognised as a qualifying pension under Malta/US taxation agreement,” said South.
“Growth of assets is not subject to any Maltese taxes. Only the growth of the fund, not the original investment, is potentially subject to US tax, and the scheme is set up to legally minimise any potential tax liabilities.”
Boniface said: “If you are an expat US taxpayer living or working outside the USA you are obliged to report all worldwide income and investment gains, and pay appropriate taxes, to the Internal Revenue Service (IRS).
“It is estimated that half a million US expats are currently US tax compliant, but from July they will still face considerable extra tax and expenses.
“More than six million are not US tax compliant, and additionally face considerable IRS sanctions.”