Income tax is optional in the United States

US law will also apply in Germany from 2015 The unknown danger from America


Excursus: US tax system

The USA, like most states, tax according to the world income principle. Anyone who is subject to tax in one state must pay tax on their entire worldwide income, regardless of where the income was generated. According to American tax laws, taxpayers or persons with a US connection are not only persons who are resident or resident in the USA. Rather, tax liability is linked to citizenship and comparable legal positions. As a result, those affected include all US citizens, persons in possession of a US green card and all persons who are unrestrictedly taxable in the US based on the "Substantial Presence Test".

The latter group of people includes people who have been or have stayed in the USA for a certain period of time. The aforementioned taxpayers are also required to submit an annual US tax return. Unless an application for an extension of the deadline has been made, this is

(i) by April 15 ("US Individual Income TaxReturn", Form 1040), for natural persons with unlimited tax liability, or

(ii) by June 16 for U.S. Nonresident Alien Income Tax Return, Form 1040NR. In addition, a self-assessment principle applies in US procedural law. This means that the taxpayer - unlike in Germany - is fundamentally solely responsible for determining and paying his taxes.

In addition to the tax declaration obligations, other reporting and disclosure obligations may also come into question. For example, Americans have been required to disclose information about foreign bank accounts under certain conditions since the 1970s. This obligation applies to US persons who have a foreign account or who are authorized to sign for it. As a relief, an exemption from the declaration obligation applies if the maximum balances from all affected foreign accounts, added together, have not exceeded the amount of US $ 10,000 per year.

The disclosure must be made annually by the 30th June of the year following the calendar year in which the tax declaration is required. Anyone who does not comply with the disclosure obligation risks considerable tax and criminal consequences.

>> Enlarge


Way out to global tax transparency

Tax and disclosure obligations in the USA do not cease to exist, as in many European countries, with the final move and permanent relocation of residence abroad. However, this is not known to many people. It is therefore not uncommon for US-related individuals to have unknowingly failed to meet their US tax obligations in recent years, thereby violating tax (criminal) law. This doesn't even have to have resulted in substantial tax debt in the US.

As in Germany, the IRS in the USA also offers various programs for previously neglected reporting and declaration obligations, with which the way back to tax compliance is to be paved with at least significantly milder sanctions. These include, for example, the Streamlined Filing Procedure (SFP) and Offshore Voluntary Disclosure Program (OVDP).

For cases in which no taxes are owed and there is only a breach of duty with regard to the reporting obligations, there has recently been the option of making up for omissions via a separate procedure, the so-called Delinquent FBAR Submission Procedure, or by submitting Delinquent International Information Returns.


About the authors:
Dr. Claudia Klümpen-Neusel has been working for the consulting company PwC in Financial Services / Private Client Solutions since 2011. As a German Tax Leader, she advises private and corporate customers, family offices and foundations on tax law matters, especially on issues relating to succession planning and tax asset structuring. Before that she worked for Law & Taxes in the HSBC Trinkaus Family Office.

Ferdinand Klempa has been working in the Tax & Legal Financial Services department at PwC in the auditing department since 2009. Since mid-2014, he and his colleagues have been building a competence center for the U.S. Tax compliance for private individuals. He also advises on private equity, investment funds and investor reporting.